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 !!!

Saturday, January 31, 2015

SPX -- Monthly

The monthly chart for the SPX has provided pleasant and easy reading since late 2011 as
there have been no genuine, threatening moments. That has changed with the Jan. 2015
edition. SPX Monthly


The chart still shows the SPX in a cyclical bull market. More controversially, I regard the
market to be in a long range bull dating back to 1982, as I read long term market charts
epochally as outlined in the 12/30 SPX monthly post.


Chart trend lines dating back to 2011 have recently been violated, but without sustained
negative follow through. There has been an elevation in volatility, and the short run direction
of the market as measured by its 25 day m/a is essentially flat even though the longer run
direction remains up. However, there are worrisome indications now on the monthly chart.


Note the 14 month RSI. It has been in an uptrend since early 2009. it was closing in on
a substantial overbought level toward year's end 2014, but the uptrend has been broken in
recent months and has turned down. The break in RSI is a warning or cautionary sign.


Of more importance is the near break in the monthly MACD shown in the panel right below
RSI. Looking back over the past 20 years, breaks in the monthly MACD have coincided with
either significant price corrections or the development of bear markets as in both 2000 and
2007. Now, rising MACD has yet to be be violated and the market can, in turn, rally up
in the next month or so. However, since changes in trend for the monthly MACD do not
occur all that often, it is worth noting how tenuous the position of the SPX is just now.


The cyclical conditions for the development of a bear market are not in place, but a break
ahead in MACD, if only for a few months, could signal a market correction as occurred in
201l.

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