Written by Dave Young, President and Founder of Paragon Wealth Management
I haven't written a blog post recently because their hasn't been a lot to report on in the past month.
We ended 2013 with the Dow Industrials at 16576. The markets held in a very tight range until January 20th. From January 21st to February 3rd the Dow dropped about 1000 points which sounds like a lot but it was only 6%.
After the drop, all of the doom and gloom crowd came out and started proclaiming the start of a new bear market. The market responded with a positive snap back rally. Ever since that rally the market has stayed in a relatively tight trading range between 16,000 and 16,400.
Last year's strong performance was in anticipation of a strengthening economy. While the economy has strengthened and done relatively well this year, there hasn't been any meaningful news to take the market higher. At the same time, against the backdrop of a strengthening economy there hasn't been any bad news to take the market lower either.
The market feels a little toppy but seems stuck in a trading range. The NASDAQ and Russell 2000 have been weak which is concerning. Our sector leaders have recently been rotating out of favor while more conservative sectors have moved up in the rankings. We are close to being pushed more conservative by our indicators but not quite there yet. We are essentially in a holding pattern but on full alert and watching our indicators closely.