Close, But No Signal


Helped by rebounding oil prices and cautious optimism on the fiscal crisis in Greece, broad indexes like the S&P 500 and Wilshire 5000 reached all-time highs this month. Encouragingly, the small-stock Russell 2000 and S&P SmallCap 600 indexes also hit new highs, as did the S&P Midcap 400 Index.

The Dow Industrials closed Feb. 18 just 0.1% below the December all-time high of 18,053.71. The Dow Transports sit just 1.5% below their own all-time high of 9,217.44.

Under the Dow Theory, both the Industrials and Transports need to reach significant highs for a bull-market reconfirmation. So, without closes above the December highs, some uncertainty regarding the business outlook will remain — and the Jan. 30 closing lows of 17,164.95 on the Industrials and 8,649.32 on the Transports will remain actionable bear-market points.

For now, with the broad market showing strength and our growth-at-a-good-price approach working nicely, we intend to watch the averages while holding about 85% of our buy lists in stocks. With a bull-market confirmation, our stock-market exposure will be raised to 90% or 95%.

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