TSG – Rally getting long in the tooth?

Dear Trader,

TSG Stock Market Letter
Week Ending April 10, 2009
Topics Discussed This Week:

* Rally five weeks old…
* Leaders jump out
* Falling consumer spending in the spotlight
* Still in sell mode but…
* Elliott says a correction still due…but…

Stocks finished their fifth consecutive week of gains. Given the
weak performances Monday … Dear Trader,

TSG Stock Market Letter
Week Ending April 10, 2009
Topics Discussed This Week:

* Rally five weeks old…
* Leaders jump out
* Falling consumer spending in the spotlight
* Still in sell mode but…
* Elliott says a correction still due…but…

Stocks finished their fifth consecutive week of gains. Given the
weak performances Monday and Tuesday with the S&P500 dropping
more than 3%, Thursday’s strong close with a gain of nearly 4%
was a pleasant surprise for the bulls for a number of reasons.

It came on the last trading day of a holiday shortened week and
a strong close on the last trading day is a bullish sign. This
means that investors are confident enough to hold over the
weekend and a long one at that.

However, weekly volumes were below average and that should be a
concern. Other concerns include the fact that the SPX finished
the week 8% above its 50-day moving average (DMA) which makes it
quite overbought. Prior occurrences over the last ten years
where the index has traded more than 7.5% above its 50 DMA have
led mostly to short-term pullbacks according to Bespoke
Investment Group.

A number of stock sectors are trading in overbought territory as
well and Consumer Discretionary and Financials are currently at
their most overbought levels in a year.

Next week will be a crucial test to determine whether this is
just another bear rally or the beginning of something more
durable…

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