Louise Yamada Sees Dow Theory Buy Signal
With the Transportation sector, along with Dow Jones Industrial Average hitting new highs, renowned technician Louise Yamada says a Dow Theory buy signal is in effect.
Looking at the S&P 500 nearing its all-time high and at a potential triple top, Yamada doesn’t see the market being overextended. Yamada discussed the charactertics of the tops in 2000 and 2007, as compared to the situation now. Yamada said we currently have “momentum confirmation,” and achieved a very high level of new highs at the peak in late February, with a favorable advance/decline line.
Yamada sees major support at the lows from November (S&P 500 hit 1,343 on November 16, 2012).
Yamada said we’ll get a pull-back at some point, but the question being at what level.
In January, Yamada was looking for outperformance by the emerging markets and recommended the Financial Select Sector SPDR (XLF)[link].