About Me

Retired chief investment officer and former NYSE firm partner with 40 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, January 16, 2012

Stock Market -- Longer Term Technical

Here the focus is on the SP 500 viewed monthly and going back through the mid - 1990s. SPX
A careful look shows a couple of noteworthy caution flags including the rollover of MACD in
recent months as well as now negative momentum (shown in the link as the 10 month rate of change).
The bright spot here is the stochastic measure which does show improving short term price
momentum. The SPX experienced near bear markets in both 2010 and last year, but the 2011
decline resulted in more technical damage to the longer term picture and it is going to be very
much more difficult to expect a continuation of the cyclical bull market without the kind of
strong positive price action that would reverse especially the MACD reading. Now reversals of
that sort do occur (See 1998 and 2006 on chart), but turns to the positive need to come within a
few months time.

I also observe angle of trajectory for the stock market (best done on hard copy). The underlying
positive trajectory for the current cycle advance has flagged sharply with time which is a normal
development, but remains strong enough to support a very respectable advance over the course
this year. By the same token, the uptrend line off the 2009 low has eased to the point where
a break of trend below the SPX 1150 level over the next 3-4 months would make the bull case
awfully hard to stay with.

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