Those quotes aren’t mine. There is no word of caution.

Yes, the fundamentals looks very good, but the technical underpinnings are showing signs of weakness. The numbers of stocks making new highs each day are becoming less. There is a huge divergence in the Dow Jones Industrial Average and the Dow Jones Transportation Index that could be the precursor of a DOW Theory bear signal. The number of “insiders” (corporate executives) selling there own stock is running at the rate of 6 to one. Six shares sold for each one bought. Do they know something about their companies they aren’t telling.

In a bull market the NASDAQ outperforms the DOW, but that has changed in the past few months.

One of the good signs is the continued advance of the 200 day moving average of all the major indexes – DJIA, DJTI, Wilshire 5000, S&P500 and many others. Many of the major market indexes of other large countries have weakened, but not broken. It is a foregone conclusion if the U.S. stock market gets a cold these countries will contract pneumonia.

The U.S. must continue strong and the American consumer must keep buying or the entire world’s markets will collapse. Sounds pretty dire, but that is the truth. At this time the consumer is spending more than he makes. That tells that the savings rate is just about zero. What will these folks do when retirement time comes?

At every market top the economy looks as if it will continue strong and go up forever. Some unforeseen (or foreseen, but refused to be acknowledged) event takes place. Almost without exception for more than 100 years it has been the action of the Federal Reserve that has sunk the boat. They never seem to know when to stop raising interest rates or curtailing money supply. Currently they and all the central banks of the world are racing each other to see which country can run the fiat presses the fastest. Somewhere the madness will end and everyone will suffer. There is no preset time table.

To understand the Federal Reserve, why it was created and how it works read "The Creature from Jekyll Island". It is not a dull financial history, but reads more like a detective story about the secrecy of its formation and how a small group have taken over and control the world’s currencies.

Today it is buy, buy, buy as we run full speed toward to cliff’s edge.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know. Copyright 2006 All rights reserved.

Copyright 2007 Albert W. Thomas All rights reserved. Author of "IF IT DOESN'T GO UP, DON'T BUY IT!"