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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 !!!

Wednesday, December 14, 2011

Stock Market

Looking back toward Oct. the stock market staged significant "fake out" rallies leading up to the
EU summits of Nov. 4 and Dec. 9. The summits failed to satisfy investors that the EU was set to
handle the crisis up to investor / trader expectations and the rallies have fizzled. So, the market
is headed south again although the downtrend is not yet fully confirmed while US shares are only
mildly oversold. The stock market is in risk off mode as the US dollar continues to trend up
and the Euro continues to trend down.

You will need to be careful here through the end of the year, as traders are breathing fire to have a
year's-end "Santa Claus" rally. This means that if the spinners in the EU up and say some market
friendly things, the USD will drop and the SPX will lift off and up, if only for a short while.
The Street itself may join the game of happy talk about the EU just to help stoke the fire. In this
hair trigger environment, such could happen especially since the Euro area bond traders are
about set to close the books for the year, leaving the huge tests for 2012.

My strategy here is only to play deep oversolds and overboughts. Thus, the SPX, which closed
out today at 1212, would not make it onto my radar until the roughly 1160 area, unless something
clear out of the blue happens.


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