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 !!!

Sunday, January 12, 2014

Stock Market -- Weekly

Fundamentals
With the exception of the past nine months, I have done an excellent job of projecting and
analyzing this bull market since the outset of 2009. I do not see a seamless transition to a
faster growing economy that will shortly no longer require the Fed's QE program to sustain
it as a done deal. So, I have a more conservative view about the capitalization of earnings
than the investor consensus, but their confidence has carried the day against my more
restrained optimism thus leaving me wrong on the recent past. The SPX just closed out last
week at 1842, and here I am thinking 1700 would be a fine upper boundary for a market
that must go through the test of a critical year as we watch how the economy holds up during
a period when the Fed may well start withdrawing liquidity support. I was happy to have
some nicely profitable oil price trades last year to salve the wound of a bad stock market call.


Technical
The link ahead is for the SP 500 index with indicators on a weekly basis. SPX The market is
in consolidation mode in the very short term but remains in the powerful 20% annual
uptrend in evidence since latter 2011. As has been the case recently, it is overbought, and is
extended, with a lengthy 50+ MACD last rivaled by 1999 when the market was carving out
the left shoulder of a grand top registered in 2000. More to the point, history shows you
need to be a little wary of such  lengthy overbought situations as have now.


The next FOMC meeting comes up in a little over two weeks and will be Ms. Yellen's first
as Fed chair. It will be interesting to see if the market stays in a fairly tight range until the
Fed tips its hand on QE and forward rate guidance. The current consolidation is signaling
such.

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