Powered By Blogger

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 !!!

Thursday, May 24, 2007

Stock Market -- Psychology & Technical

No momentum this week, so a day of profit taking was
in the offing. But there was also a frisson of concern
as well. What if the economy is close to re-accelerating
and perhaps doing so in a less than benign inflation
environment? That could freeze the Fed. Worse, the Fed
could tighten down the road...This little thought is
supported by data showing strength in orders and home
sales as well as a weakening bond market and a slight
tilt up in the dollar. Even the gold bugs are showing
hesitation. Well, it is worth keeping in the back of your
mind.

Most know the market got itself overbought and extended and
that a key indicator -- MACD -- has turned down. Watch the
market against the first two lines of trend defense -- the
10 and 25 day moving averages. Here is the SP500 chart.

If a correction is about to unfold, the 10 day M/A will turn
down, break below the 25 and lead both down behind the market.

No comments: