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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 !!!

Tuesday, June 02, 2009

Stock Market

The strong rally underway since early Mar. remains intact. There
is another short term overbought in place now and the market
remains o-bought out through 13 weeks as well. The trajectory of
the rally is now verging on unusually strong. The SP500 closed
today at 945, and I would be happy if it was down somewhere
around 865-885. So, I think it is nearing a point where it is overdue
for a pull back, even though there are no indications yet of
difficulties with trend. I have linked to a chart which features an
intermediate term MACD and a 40 day RSI. Note that the RSI is
moving toward an intermediate term o-bought at 60%. CHART.

As readers know, I am on the hook for a cyclical bull market call.
Now, it is normal for a cyclical advance in stocks to pre-date a
positive turn in earnings (6.5 months on average). Still, the SP500
is now running about 45% above very depressed 12 months net per
share. Granted that the 12 month figure contains one unprecedented
red ink quarter -- Dec. '08 -- when companies wrote off everything
they could get away with, the 45% premium is a whopper -- large
by historic standards. In short, this baby is counting on the green
shoots to turn into stronger fibre soon. A pause in the upward
trajectory of the market for a month or two would not bother me at

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