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, May 24, 2010

Stock Market -- Technical

The confirmed short term downtrend is obvious enough. the market
is substantially oversold and is at levels to support a rally. But, one
right an oversold market has, is to get itself more oversold. I do not
short significant oversolds, so my penchant now for a trade is to look
for a bounce / recovery, and at a minimum the preference is to first
see some stabilization in the short term price oscillators as this
development would signify a loss in negative price momentum.

The market did not make a classic serious top. The bad news is that
we have an uncharacteristically deep short term oversold for a
cyclical bull market. and that means you have to be more cautious
on the long side with perhaps a gradual fill when you get the short
term set-up you prefer.

When I look at my NYSE buying pressure vs. selling pressure
measures, the market is moderately oversold at -50 and deeply
and very reliably oversold at below -100. We are currently a
tad below -50, so this measure is still risky. My cycle work
suggests a 13 - 15 week bottoming pattern is just now upon us.
So, there could be a sharp price recovery in place by the end of
next week.

I try to keep technical and fundamental analysis separate on the
premise that when two widely different disciplines tell you the same
thing, your chances of being correct are better than when you rely
on just one discipline. But, sometimes using both techniques in
one analysis can be handy, and I plan to do that a little later this

SP 500 weekly chart.

1 comment:

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