I was on Yahoo Finance Breakout on Thursday afternoon explaining the technical conditions that are necessary to confirm the May 20, May 22 highs for the five major equity averages; the Dow Industrial Average, the S&P 500, the Nasdaq, the Dow transportation average, and the Russell 2000. Here's the video: Friday's Close Will Determine if the Top Is in for Stocks: Suttmeier.In my career I have always found it easier to call a market bottom than to call a market top. At a top it seems like momentum just won't stop as the bulls continue to buy weakness. At a bottom no one wants to buy, and that's when stocks are at their cheapest and the old-school dollar-cost averaging method is tossed out. Dollar-cost averaging is an important ingredient of my buy-and-trade strategy. The problem at a bottom is that investors neglected to book profits and raise cash at the prior top.
An important risk to consider longer term this year is the reversion to the mean which are the 200-day simple moving averages at 13,903 Dow Industrials, 1499.7 S&P 500, 3164 Nasdaq, 5636 Dow Transports and 887.36 Russell 2000. All major averages have crossed their 200-day SMA in every year of the new millennium except 2013 so far.