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 !!!

Saturday, November 19, 2011

Stock Market Weekly

Technical
The market rallied powerfully -- nearly 20% -- over most of the course of Oct. As readers know,
I was lucky to call that bottom, and as I mentioned in an 11/8 post, I thought the $SPX would have
to take out the late Oct. high of 1285 "to keep the believers believing". Well, the latter event did
not occur, and the short term downturn now underway shows that the number of believers are
declining. I am glad I did some good guessing, but the action since early Oct. has been grotesque.
First, a 20% move up for the market in a month followed by a slower but steady fade with no
follow through off the initial impulse wave. The weekly chart is still positive but it is fading. $SPX
This is wrenching turbulence for a strongly disciplined trader like me. It is not fear or greed that is
bothersome, it is vexation at such sloppy, volatile action.

I think the market is at the point on the weekly chart where we need to see positive action very soon or
watch the SPX complete either a partial or full whipsaw of a genuinely strong lift off of the early
Oct. low since the overbought condition has been largely wrung out. I am content to let the
smarter folks handle it.

Fundamental
My weekly cyclical fundamental indicator turned down Apr. 8 of this year and hit a low point
on Oct 21. Since then, it has been drifting a little bit higher, paced by a fresh decline in new
claims for unemployment insurance and some stronger weekly retail sales and production data.
The powerful move up for the SPX in Oct. was very much out of line with the action of the
fundamental indicator. However, the downtrend of the indicator may have pretty much ended.
The big weak spot for this indicator this year has been the large decline of industrial commodities
prices since early Apr. with this composite having fallen a full 17.5% on slower global output
growth and expectations of further weakness ahead. The trends in the stock market and sensitive
materials prices have matched up decently well over the past 10 years or so. So, it may be
important to stocks to see industrial commodities do better ahead. for a recent comparison of
the two markets, try here.

2 comments:

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