July 18, 2013 at 3:48 pm #466
This was on seekingalpha.com today – was wondering what people’s thoughts were about this summer. S Fund (and C) have been on a roll…
Thursday, July 18, 3:29 PM ET
The stock market’s (VTI, SPY, DIA) in for a rough summer, says Guggenheim’s Scott Minerd as his favorite indicator – the advance/decline line – dropped more than the indices during June’s decline, suggesting something bigger coming soon. The action is very similar to what we saw in 2007, he says. The deteriorating technical picture combined with worrying signs for the global economy makes this a rally to sell, not buy.July 18, 2013 at 8:04 pm #468
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?
The 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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The TSP Allocation Guide www.TSPallocation.comJuly 20, 2013 at 5:45 pm #485
Thanks TS – much appreciated. I think next week will be a good one with earnings – just a hunch. We’ll see…
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