It is time for the Bull to take another look at the technical underpinnings of the U.S. stock market. Money flows, the most important near-term gauge we watch, are still positive. In fact, these have broadened and encompass more and more sectors in the market. More instructive, cyclical sectors are especially strong. This is very important because it indicates confidence in the overall economy.

Participation has also broadened. Small-cap stocks have been outperforming large companies since the start of the third quarter. They are playing catch-up after having been left behind earlier in the year. Small-cap performance again indicates confidence in the broader economy.

Stock market momentum is strong. Really good markets run away and do not make it easy to get in; they must be chased. No pull backs, just relentless advances. So far, the Dow Jones Industrial average is up 13 days in a row. It’s as good an indicator as any!

Sentiment among investors is still cautious. So many stock market strategists were crying recession for so long, that many investors have been on the edge of their seats looking for one. Any negative metric was surely the start of the downturn – not to be. The economy has gained momentum, not lost it. The latest read for GDP growth for the second quarter was up 2.4%, defying expectations again. General caution is very positive for maintaining an uptrend.

This is a Bull market and a strong one. Treat it as such and stay steady my friends.

The Lonely Bull