Do not let yourself be tainted with a barren skepticism.
-- Louis Pasteur
The market has resisted all attempts to correct. We know why it's not crashing -- it has to do with mass psychology, but what’s preventing it from letting out a significant dose of steam? The table below might hold the answer. We looked at all 30 components of the Dow monthly timelines using our indicators and the results were quite surprising, to say the least. On the monthly charts, each bar represents one month’s worth of data so these are long-term charts and usually provide a much clearer picture of what the futures holds as opposed to the shorter-term charts.
28 components of the Dow components are trading in the oversold ranges varying from mild to extremely oversold. Conventional logic would have you believe that all the Dow components would be trading in the overbought ranges, but that's just not the case.
Conclusion
The strength the Dow 30 stocks are showing on the monthly charts clearly indicates that the most hated stock-market bull still has plenty of room to run before it drops dead from exhaustion. However at the moment, the stock market is rather overbought, which we covered recently, so it would not surprise us if it did let off some steam. In fact, we would view it as a bullish and healthy development if the market were to pullback before trending higher. Oil and the Dow tend to trend together -- oil pulled back, bottomed out in the 39-40 range as expected and is now trending up.
The Dow could take a similar path; experience a mild-to-moderate correction and then move up to new highs.
We have more ability than will power, and it is often an excuse to ourselves that we imagine that things are impossible.
-- Francois De La Rochefoucauld