What happens when the market has price increases for one week that border on being shocking?

They must also be viewed in the context of the advance/decline ratio. If both the Nasdaq and S&P 500 close at record highs, and the Dow Industrials are going through the roof - that's O.K., but it's nothing compared to the strength in the favored few.

That said, what does it mean to me? I'm glad you asked. To me, it means that the market is ripe for a bout of profit taking at the very least. At the first sign of market weakness, I may decide to sell my "trading" stocks in which I have a profit. I usually continue to hold my electric utilities and "investment" stocks, which I call my stocks for life. I always recommend against market timing the latter issues, as it is too tough, even for the pro's.

Sure, I might be too conservative, but I don't think so. I'm certainly not recommending selling short, selling naked calls, or buying puts; that's too aggressive, and you never know when these big increases will end. But at least you can take some chips off the table, and you will have meaningful buying power whenever that inevitable set-back comes. Maybe cash isn't king yet, but it's at least a prince. Stay tuned.

The Market Pro