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 !!!

Wednesday, October 29, 2014

Stock Market -- SPX

As discussed in prior posts during Oct., the stock market did get itself oversold. Moreover, it
did take out short term trend resistance at 1940, and did move higher as expected. The volume
has been better and the downside leaders like the Russell 2000 small cap index have led the
way in a broad based positive response off the closing interim low of 1860 put in several
sessions ago. The market is now 2.2% overbought on a momentum basis against its 25 day m/a
and it would not be surprising to see a little consolidation near the current level of just over
SPX 1980. You will note on the chart that the market has had trouble since early Jul. holding
the 1980 level. SPX Daily

The recovery off the 1860 low has been far too rapid to be sustained for very long. In fact,
in the days ahead, the SPX could drop 2-3% from the current 1982 level and still be on a respect-
able positive trajectory.

Naturally, there is no law against the SPX continuing its current moon shot upward course
until it hits a very robust all - round overbought with the SPX topping its 25 day m/a by 5%.
That would be a little freakish since the market never sold off that much to begin with, but
traders have been headstrong to re-establish long positions. Put less politely, the herd stampeded
out in mid - Sep. and has been stampeding back in during the more recent sessions.

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