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 !!!

Friday, August 10, 2012

Stock Market Weekly

Weekly Chart
Belatedly, My SPX weekly chart confirmed the recent rally this week, with positive turns in
MACD and price momentum as well as a continued uptrend in RSI. SPX Weekly Chart My
proprietary 40 wk. price oscillator -- which I use to gauge how much capital to play with in
the market -- also turned positive, again belatedly. I think I mentioned several weeks back that
the recent rally, light on weekly price momentum, would bring me late to the party, and so it has.

Back on Apr. 5, I posted that the weekly chart suggested a 3 -6 month overbought for the SPX
based on a large premium it had to the 40 wk. m/a. Well, the market is little changed from the
early Apr. reading and the overbought is no longer glaring as the 40 wk has moved up under
the SPX. As discussed last month I made decent money trading deep oversolds in oil and the
broader commodites market, but I regret not playing the current rally. For equities, the experience
proved (again) that very successful disciplines do not always work.

For now, I plan to watch how the SPX handles resistance in the 1400 - 1430 range especially
since my primary gauge does whipsaw from time to time.

Fundamentals
The SPX is up about 11.8% for the year so far. My weekly cyclical fundamental indicator is
up but 5.4% on the year. I can make a case for a higher p/e ratio for the market based on
reduced inflation pressure and a still positive earnings trend, but I suspect investors have
lifted the SPX return over the short run fundamentals primarily to include the expectation that
further monetary easing may be at hand either by the Fed or the ECB or both. The premise
here is that a continued global slowdown of economic growth is really "good news" in that
 it moves the world closer to the day of new QE programs.

There can be many a slip between the cup and the lip. As a guy who is well into my "golden"
years, I have come to appreciate the sagacity of that old admonition and leave the field of
future policy speculation to the younger and more daring.

1 comment:

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