by Graham Summers, Gains Pains & Capital:
Today is the first day for market trading in 2014.
In the very short-term, financial institutions will be repositioning their portfolios to start the year. This will likely mean more buying power in the markets.
The markets have broken out of the large wedge pattern formed in 2011-2012 and are entering a blow off top. Wall Street is decidedly bullish now. There is no telling how high this rally can go based on momentum. Manias are always more powerful than one expects. And this is nothing if not a mania (investors are buying stocks at a rate not seen since the Tech Bubble).
Investors who choose to ride this momentum should be cautious. The market is already overbought and overextended. If I were to liken it to anything it would be 1999. We all know how stocks did 1-2 years out from that.
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