Here are the current streaks in the markets…

  • S&P 500 up 12 of the 14 trading days in April
  • Euro up 6 weeks in a row, up 11 of the last 12 weeks
  • Gold up 7 weeks in a row, up 14 of the last 15 weeks

All of these are not typical trend moves, they are more typical of an exhaustion move before a turning point, or at the very least the signs of a maturing rally. And when we’re getting close to the May part of the catchphrase “sell in May and go away”, I’m starting to get a little risk averse.

For comparison, the peak in Gold’s price in May of 2006 was the result of 9 up weeks in a row… while the run-up in 2006 was much steeper than the current rise (and a real exhaustion move), the similarity in to today’s one-way price action should at the very least be noted.

I don’t consider this a bearish argument, so much as an argument for risk control. I for one will be watching my stop losses and won’t be surprised if we have a correction soon, or the beginnings of a typical summer range-bound market for the S&P. Now is not the time for new, aggressive long positions in the broad stock market.

All evidence this morning points to the opposite case — two big buyouts are in the headlines (ABN Amro and Medimmune), and if the buyouts continue, the market could continue to inch higher for a while, winning streaks be damned.

As for Gold, we’re near the top of the trading range that gold has been confined to since last May. Odds are on a continuation of the range.

The dollar is an interesting case too. It seems like everyone is bearish on the dollar, which could cause a bit of a surprise (and short-covering rally) if we see any relative strength in the medium term. I’m not betting on a USD rally, but I’m not betting against it either.