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 !!!

Sunday, January 26, 2020

SPX -- Note

By the end of last week (Jan. 17) The SPX had become sharply overbought for the intermediate
term:
       > High RSI and Money Flow, elevated MACD. The market was then over a 10% premium
          to its 40 wk. m/a.
      > Put to Call ratio had fallen to low levels, signaling excess of optimism (bottom panel of
         chart).

When the SPX is this strongly overbought, history indicates only a 1 in 4 chance long side
players can make decent money over the next 6 - 12 months from the highs recorded.

With the new corona virus (which carries a pneumonia kicker that can be fatal) as backdrop,
edgy market players are using this new uncertainty to take profits after the recent strong leg up.
It is too early to tell the eventual economic damage from this accelerating disease.

Weekly SPX Chart 

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