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A week ago I wrote about a fraudulent investment practice commonly known as a ponzi scheme. Today I need to give a market report because market activity over the past week has many investors worried. In other words, stocks have corrected the past few days and some folks are starting to panic.

About a half mile from my home is the base of a fairly significant mountain. It rises to more than 11,000 feet. Most of it is quite steep. I don’t know anyone who can hike from the bottom to the summit without taking some rest stops along the way. Since mid-August, major stock indices have been in a steep climb–perhaps too steep. What we’ve seen over the past few days is probably nothing more than a brief rest stop. For now, wailing and hair pulling is premature.

Below is a chart that provides a clear picture of the current situation. It shows the daily price activity of the Nasdaq. The gold line is a simple 50-day moving average (MA). Notice that the recent pullback has only brought the price about halfway back to that average. The green line is a trendline that has stopped all of the market’s minor corrections over the past three months. The bottom portion of the chart is a Relative Strength Index showing that the Nasdaq is still trending above the 50 level even with the recent downturn.

At this point, the market uptrend that began in August is still secure. Stocks cannot advance every single day anymore than I can climb a mountain without taking some (frequent) breathers. The current advance has been so strong that it would not be surprising to see stocks move sideways for much of November. But there certainly are no fundamental, economic or technical reasons for this correction to become more severe or prolonged. I am highly confident that major stock indices will end the year higher than the present level.

Right now the only thing that would cause me to be concerned about the continuation of this advance would be to see the indices break below their 50-day MAs. Otherwise it would take a significant unexpected event to derail stocks: A terrorist attack on a major oilfield or pipeline. An escalation of the war into Iran, etc.

A glace through the universe of exchange-traded funds shows that virtually all industry and market sectors are moving ahead over the past eight weeks. Those going in the opposite direction are exactly what one would expect during a strong bull market move: gold, oil and ETFs that short stock indices.

Strategis Financial Group has a unique strategy that invests in a basket of large cap stocks. The strategy manager uses a program of mathematical derivatives to identify stocks that are on the rise. As one would expect, the strategy has done very well during this rising market, but it got an even bigger boost this week when one of its holdings, American Power Conversion Corp. (APCC), was being bought out. The news propelled the stock price upward by about 30% in a single day.

Have a great weekend.