About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Monday, June 09, 2008

Stock Market -- Technical

As discussed in the 5/27 post, the short term outlook for stocks
had turned shaky, as one could see the 10 and 25 day M/A s set
to roll over. And so they have on the SP 500, with the market now
mildly oversold in the short run.

Back in late May, it was mentioned that the market was also
working off a powerful intermediate term overbought (6 - 13 wks).
That has been completed and we are now neutral on the
appropriate oscillators. I am a little concerned about the 14 week
stochastic. That is on a mechanical sell (See chart link below). The
stochastic can whipsaw around, so I use it in conjunction with a
number of other measures.

From a trading perspective, I would not mind seeing the market
correct further as that would set up a decent short term long
trade. But alas, not being a timer, I would have to say the
intermediate indicators are in a "no man's land" as far as direction
for the next several weeks is concerned.

On a long term basis, the SP 500 is going to need to rise above 1400
and stay there from here on out by mid - 2008, or else the secular
bull case will need some significant revision in terms of the plot
going forward. With 1982 as a base, the secular case is fast fading.
However, I have long preferred the 1987 low as a base because so
many fundamental pro-earnings growth changes were implemented
in the corporate world in the wake of the '87 debacle. Since breaks in
a well established long term price trend should never be ignored,
we have a topic that will require more discussion as the year
progresses.

The weekly chart for the SP 500 is here.

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