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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 !!!

Wednesday, January 12, 2011

US Stock Market

Technical
I had been expecting the market to have a short but sharp sell off over the past ten odd trading
days because key indicators pointed to intense and seldom rewarded speculative short term
activity. There has been some easing in these measures, but not in others such as RSI and
the CBOE weekly equities only put / call ratio.

The market remains in a firm uptrend. It has been continuously but modestly overbought on my
short term price oscillator and ditto my short run market breadth measures. The SP 500 is now
running 11.7% over its 200 day m/a. That represents a moderate overbought viewed a bit longer
term. The extended view 40 day RSI is now overbought at 60+%.

Obviously, there is a correction due before long, but it is hard to be more than wary with
trending factors so solidly positive for now. SP 500 chart.

Fundamentals
I will be brief here as a longer post on the fundamentals is coming soon. Core measures
remain positive, but there is still a headwind coming from inadequate growth of broader,
credit driven measures of liquidity. The market probably got a little extra lift in recent
months from rotation out of Treasuries into stocks, a move that does not require sharp
incremental liquidity (See chart below). My weekly coincident fundamental indicator
continues to rise, powered by a fast rise in sensitive materials prices and a hefty recent
decline of unemployment insurance claims. The coincident indicator turned up sharply
with stocks in early Sept., 2010.

Here is a chart which compares the SP 500 Spyder with the long Treasury price. Chart.

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