THE “EARNINGS ARE BAKED IN” CROWD IS BEGINNING TO GIVE UP
This slow, steady climb is surely causing the "earnings are baked in" crowd to reluctantly throw in the towel. This was very necessary in order for the markets to begin responding to the numerous indicators that have been telling us of the fact that things are getting somewhat overheated and we are due for a break.
I have reiterated that market tops in January following a previously bullish year are indeed rare. This market will not be the exception. However, the always endearing drunken chop will now be free to begin, as the long side becomes overcrowded and the bears continually attempt to find the top.
Bottom line: next week will not be as smooth as this week was. We are closer to the beginnings of an extended period of consolidation, as opposed to any monstrous run up. Caution reigns supreme.
