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 !!!

Monday, November 08, 2010

Stock Market -- Technical

The rise in the market last week to a new cycle high reconfirms that the US is experiencing a
cyclical bull market. I count this new upleg as #2 and of course hope for a third down the
road. Second uplegs can last longer than the first, initial surge but can be far more gradual.
However, there are enough exceptions to this generalization that it can only be used as a
very rough rule of thumb.

The market is clearly overbought now on measures going out 13 weeks and is very mildly
overbought on measures running out to 40 weeks. Since overbought markets can get even
more overbought, it is wise to give trend break measures more weight in making both
trading and investment decisions of consequence unless you have a specific objective
in mind (like loafing through the holidays as in my case).

The trajectory of the market off the 3/09 cyclical low is very strong and anticipates a
period of fine performance in earnings as well as a degree of recovery in the market's
p/e ratio. Nothing slouchy here, but you need to remember the power of the trajectory in
the recovery in cyclical earnings to date as well.

The NYSE adv / dec line has over the years developed into a very broad, primarily mid
and smaller cap measure. Since the mids / smalls have been the US leaders for over a
decade, I have found this line to be helpful in analyzing the market. It is around a new
all-time high and is well worth keeping an eye on. $NYAD.

No comments: