Market Recap for the Week

Market has taken off this week.  The technicals look stretched but the old saying is don’t fight the trend and the trend is definitely up.  Final earnings results for Q3 came out and they really weren’t very good for both the top and bottom line, especially when you take the small and mid-caps into consideration.  With prices going up and earnings not following suit there is a question of whether prices are getting stretched.  The argument goes that PE ratio is not really stretched when you look at it from a historical point of view although it is at a 12 month high.  Prices have not been supported by earnings or economics for the last 18 months.  The truth of the matter is that this is a liquidity driven market and with interest rates so low the search for yield pushes stocks up.  With Yellen saying that there is no reason to raise rates in testimony this week, liquidity looks to be with us for some time.  At this point the best you can do is wait for prices to move off overbought levels and jump in until there is a clear indication that the Fed will taper.