Why market is defying short term technical indicators ????

Market goes through many changes as it transitions from "fear based trading to more stable & uptrending environment"

We were too used to fear based "short term trading" since March of 09......

Market is FUNDAMENTAL based..... NOT technical anymore......

For over four weeks now that we have stayed above RSI which deemed "unattainable" based on extreme short term trading or past history........

Last four weeks of above norm RSI which is being sustained is a "new phenomenon" & everybody is struggling with that..calling for caution & correction of severe magnitude.....BUT it is NOT happening ????

Ever since the low of Feb 8th.....10 DMA has tracked nicely & S&P 500 have stayed above..this proves that selling has been almost non-existent or absorbed easily for last 8 weeks......this was the period that short term traders almost gave up on this market or went NEGATIVE & had BEARISH posture...

Last eight weeks have been a "turning point" for this market.......market TAPE has become stable & UPTRENDING.....

Retail investors as of April 8th reading is only 43% bullish..which is lower than 49% bullish @ the start of 2010......when we started the last correction of 10% in this market......

SO...what has changed ????

Market TAPE is predicting a new environment of stable & sustained growth in worldwide economy...minor issues like Greece will be absorbed without impacting overall trend......

Market is PREDICTING better economy than us mortals whose consensus estimates keeps changing with each stat.........

IF market TAPE is predicting sustained GROWTH worldwide & ignoring all the NOISE...then this COULD be the biggest bull market in a long time.....

Dow 11,000 or S&P 500 1200 COULD be history in a hurry.....

TAPE has forced me to change my mind since end of March when i sold VXX & QID shortly after.....writing was on the wall saying pay attention to tape.... market goes HIGHER....which continues till this day....

YES..RSI is @ the highest point in last 12 months..but if you look @ RSI for last three years it is @ an average level of slightly above 50 and high in 3 years is above 70....so lot more room on the upside.....

For my OWN trading ...I have increased my exposure to market to 50% with strong bullish bias....

YES..there is Option Expiry this week which may give another buying opportunity for a day or so..but "trend remains your friend"

Nobody can tell where we go from here exactly ...BUT TAPE is decidedly bullish.......

The biggest change is for me that.... I am taking a longer term view in my stock selections NOW..........with strong emphasis on fundamentals of each company i evaluate or buy...

Here is my $ allocation of my portfolio with fundamental analysis :

AGU.. 37.12% AG next year PE 11.71
RIMM 28.13% Tech next year PE 11.80
MU...21.04% Tech next year PE 7.30
TC...13.71% Moly Mining next year PE 7.29

The above set of stocks gives me enough diversification & hopefully will participate in any rally or MAY even go against the TREND as they are all UNDERVALUED...

Overall , i feel it is a fairly CONSERVATIVE selection of stocks......

Please ENSURE your OWN comfort level as markets are highly UNPREDICTABLE @ all times.

Good luck with your OWN homework.

BLOG does NOT give buy or sell.

Saleem