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 !!!

Sunday, October 16, 2011

Stock Market -- Weekly

Technical -- Weekly Chart
The daily SPX chart indicates a short term overbought, and the easiest thing to do would be to
flag it in a post and move on. But, the weekly chart has been more telling this year, and it is pointing
to a possible positive reversal as downtrend measures of price momentum are close to positive
reversal. Check out the trend positions of RSI, ADX +DI and 12/26 wk MACD on the chart. Note
as well that my 40 wk price oscillator has, however fitfully, also turned up. Now the market
reserves the right to whipsaw and trap the bulls here, but to me, the weekly chart implies that
players should pay extra close attention to how the next week or two play out as the market is in
its most challenging position in several months.

Short Run Fundamentals
My weekly cyclical fundamental indicator does remain in a downtrend that started in early Apr. It
rallied modestly over the month of Jul. but resumed its downtrend in early Aug. It is now running
flat since mid-Sep., and this counts as another development worthy of attention.

Conclusion
I continue to lean in the direction of the view that the sharp sell off in the market since the end of
Jul. represents a steep correction in a cyclical bull market rather than the advent of a new bear
market. But I think it is a close call and I am reluctant to throw in the towel on it because I still
see a way the economy can right itself provided the real wage and the employment situation
can build on the improvement evidenced in Sept. and the private sector credit market continues
to thaw out. But, it is getting wearying and I am beginning to wonder whether I am just being
stubborn. It remains fair to say that the burden of proof remains with the bulls.

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