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Friday, August 3, 2012

S&P 500 Technical Analysis, August 3, 2012


S&P 500 Technical Analysis, August 3, 2012





Changed things up a bit and added the bullish percentage of S&P 500 stocks and Russell 2000 Index to the equation. 

The chart is bullish with moves up punctuated by selloffs that are bought with the S&P 500 making higher highs and higher lows.  The RSI is holding steady between 50 and 70 indicating a market that is neither overbought nor oversold; just right for a nice advance.

Here are my problems.  The Russell 2000 (pink line) has lagged the advance along with the bullish percentage of S&P 500 stocks meaning that this is not a broad based rally.  Rather it is just a few issues.

The rallies have been driven by news events like Draghi’s comments last week which did not get followed up on during the ECB meeting indicating the market was being driven by news more than fundamentals and technicals.  As an aside, Merkel left for a weekend hiking in the countryside just before Draghi made his comments so she could not snuff out the fire.

On the fundamental side, earnings growth slowed considerably in the last quarter and estimates are for zero growth in the third quarter.  Zero earnings growth does not drive PE multiple expansion. 

Despite the prognostications and charts showing a bullish slant through the end of the year because it is an election year my thoughts go back to 2000 and 2008. 

Something does not smell right and my contrarian nature has been leading me to stay in cash and be more bearish.

Disclosure:  I am short the broad market.






First Quarter Update is Now Available!!!!

The first quarter update is now available through Smashwords, the world’s largest independent ebook distributor for just $4.99, by clicking here.  In this update I take a look at the political climate and how it will affect investing over the next quarter as elections in Greece and France take center stage with the national election ramping up in the United States. 

The contents are as follows:

Chapter 1:  Where do we go from here?
Chapter 2:  Election Risk is Rising in Europe
Chapter 3:  An Early Look at the 2012 Elections
Chapter 4:  What happens for the next three months?
Chapter 5:  Three Long Ideas Update
Chapter 6:  Finale

The next update will be in early July covering gold and silver and putting some meat into my call for $2800 gold and $75 silver next year. 

Smartwords distributes to Apple, Barnes & Noble, Sony, Kobo, Diesel, and others along with instructions on downloading to your Kindle meaning that this and future work will be available in multiple formats from mobi to ebook to pdf. 

If you wish to place a banner ad and help distribute the 2012 Investment Forecast and future works I am offering a 25% commission on all sales.  You can find more information here: 




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