There are a lot of stocks that look overextended, but the market refuses to correct. Until buyers go on strike and stop buying the dips, this market will slowly keep grinding higher. Just be careful initiating new longs around these levels. The S&P, Dow 30, Dow Transports and the Russell 2000 have all been trading sideways for over a week. I’m not saying we are topping, but there are signs of exhaustion. FedEx and Caterpillar used to be considered bellwethers not too long ago. General Electric stopped hitting 52 week highs exactly two weeks ago. Oracle’s results were decent, but they still reflected a deceleration in earnings. Obviously a breakout to new highs invalidates this argument, but I just want to warn you to be careful in this environment. Things can change very quickly and you should always be prepared for any scenario.
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