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 !!!

Saturday, September 26, 2015

SPX -- Weekly Technical

The market remains in correction mode and continues on an intermediate term sell signal. Recent
 price action does throw the idea of a quick spike or "V" bottom as occurred over 2012 - 2014
into doubt. My longer term, smoothed momentum indicator is at a mild -4. This compares to a
mild -7 at the worst of the 2011 correction, but does show the market to have near term vulnerability, 
 even if it was to subsequently recover and move well higher in the months ahead.  SPX Weekly

The chart shows significant technical damage to the SPX. The evidence on the chart is not sufficient
to imply that a bear market has begun. Simply look back at 2011 and also recall the fierce, positive
whipsaw that happened in the latter part of 1998. However, even if the market recovers and moves
on, the protracted deterioration of momentum as seen in the MACD  panel of the chart, suggests a
rapid and dramatic positive reversal in MACD would be the less probable case.

The bottom panel of the chart shows the intermediate term stochastic. It is giving an oversold reading.
The norm is to get two of these a year and they are often tradeable even in a more marked downturn.
This is the first one since late 2012. An oversold stochastic reading can whipsaw, but they are always
interesting and require attention.

The reasonable possibility of further near term market weakness notwithstanding, I am guessing that
the market will experience another extended, but mild upturn which could carry to a new high for
the SPX. This is based on a fundamental judgment as opposed to the current technical position of
the market and I would not bet on it until we see positive reversals in the indicators shown on the
chart.



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