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.
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Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one
should consult with an investment professional to consider whether the
investment is appropriate for the individuals risk profile. This is not
intended to be investment advice or a solicitation to purchase any of the
securities listed here. I will not be held liable or responsible for any losses
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