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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 !!!

Tuesday, December 25, 2012

SPX -- Weekly Chart

I use weekly charts as a very important aid in determining how much capital to allocate to
the equity market. The oversold in Nov. was not deep enough to capture my interest and the
indicators I rely on most are all not yet positive owing to the sluggish 12 wk. ROC or
price momentum measure. SPX Weekly Chart  I also pay careful attention to the behavior
of a 40 week price oscillator. You can do about the same with a daily SPX chart and a
200 day m/a oscillator shown here via Index Indicators. This latter chart shows a weak
upturn in the smoothed 200 day m/a oscillator for the SPX. Neither the 200 day or 40 wk.
m/a oscillators have been strong enough to confirm an intermediate term positve reversal.
So, I blew this one and if the market continues to rally, I'll have to decide whether to chase
it (ugh!)

If you return to the II chart of the SPX and the 200 day m/a oscillator you will note that there
is a downtrend in place for the oscillator itself. Looking back over the past 25 - 30 years,
that downtrending pattern in the oscillator is usually not a good sign for bulls. One way to
get around this type of situation is to look for a positve reversal of the downtrend in the
oscillator which is strong enough to create a reversal that breaks the downtrend line to the
upside. History says the longs usually get hurt while waiting, although there are two very
interesting counter - examples, namely Q 3 2010 and Q 4 2011, when rapid sell offs were
followed by powerful positive action in line with QE developments by the Fed.

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