Reply To: This Summer?

TS Paul

Thanks very much for posting, and I promise I am not going to monopolize the message board and race to be the first to respond to everything.

For this summer? I don’t know what the next month or two will hold (and I certainly expect some blips), but I do feel fairly confident that the S Fund (and C Fund) will end the year higher than it is now, and that’s more the time period I feel comfortable looking at. And if I could short the F Fund, I would do it, because I am very confident it will be lower.

As far as that particular article, I am not a big fan of technical analysis. My investing life has been spent in pursuit of a system which is simple and works to predict movements in the stock market, so TA has a lot of appeal. I did a lot of reading and experimentation and was never able to satisfy myself that there was a way to successfully apply it. That is when I moved on to how the bigger economic picture and indicators from outside of the market impacts the stock (and bond) markets for making my decisions.

It may well be a rough summer for stocks, but I don’t know if the advance-decline line is a bell weather. When I look at the chart below, I see that there was a significant deviation in June and the market fell, but then immediately started back up and went on to new highs. The deviation is less pronounced now, so does that mean a smaller fall and then more highs again? Or does that just mean that the A-D line will come back up to meet the S&P as it sometimes does?

advance decline tsp allocationThe hedge funds with their MIT statisticians and super computers can’t trade successfully on these things, so in my simple view of the world I tend to see technical analysis as a financial version of palm reading. I know that’s heresy to the “inverted teacup” crowd. In looking at individual stocks I do look at moving averages and trend lines, but I don’t buy into the

That’s just one guy’s opinion. What does everyone else think the summer holds?

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