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• The rally is under weigh ... A look at the market internals.

Hello Everyone,

This week we are looking deep into the market as we so often do.

So far... it looks like the market has turned around Big Time from where we were a few weeks ago when we talked about buying the oversold condition.

So are we over bought now? I don't think so. Look at this...

Generally when we look at this chart we look for a buying opportunity when we get a white candle under 30 and a sell signal when we get a red candle above 70. I think that leaves a little more room to the upside from here.

Aside from that, the DOW 30 has been in a trading range for the last 2 years and I think that it's high time for a break out to a new high.

It's really pretty simple, more than 65% of companies are beating estimates quarter after quarter. Some people think the markets are extremely under valued since the bubble popped and still we have not seen much growth.

If the markets are supposed to go up consistently over time, I think we are a few years behind on "real value" now. I look for the DOW to break out of the trading range as it goes higher than 10700.

The first leg up has already started and there should be a small retreat and then higher still by the end of the year.

Of course... that is just my opinion. We'll see what happens.

Last time we used the moving averages in the newsletter, it was a completely different picture than today. Look at how the numbers have changed to show more and more stocks crossing over their own moving averages.

The numbers get progressively better in each category, of course the longer averages take longer to turn around completely, but they are trying.

This looks like a strong broad based rally and we look for it to continue. So far... YTD there are 12 of 30 dow stocks up and 45 of the NASDAQ 100 are up for the year with 2 even and 53 down.

The full list of the DOW and NASDAQ YTD performance is available in the desktop portal. These are better than the internal numbers we looked at three weeks ago.

Finally... We are putting tegether some new things that should be very interesting. Look for the details coming soon!

Until Next Time...

Best wishes and Good Investing,
Bill McKinley & Doug Newberry
The Investing Systems Network