Tuesday, April 28, 2009

Maybe the panic isn't over yet

Hi there, and welcome back to RI's S&P 500 blog.



The previously reported breach of the upper end of the 'panic' bear chanel that was recently reported may have been a little haste. New confusion with regard to what are now being called 'legacy' assets by the big banks and an anticipation of poor earnings, have brought the recent rally into question. It seems ironic when one looks at the chart above and sees that the recent optimism hasn't even broken the most recently trading sell signal, go figure.

Considering too the upcoming cliche.....'sell in May and walk away', one shouldn't be too surprised if we indeed do have to take a pause here. Consider too the January Barometer and one also is left with the feeling that the market may have to move to the downside in the not too distant future. Lets hope I am wrong and we do indeed have a further upleg to go as we head into May...


As has been the case for some time, investors still have no reason to be invested in the S&P 500 (and US stocks in general). Weekly Traders should be short the US market from the indicated points and Daily traders should be very selectively long. While I do personally remain long a number of issues as we head into the anticipated seasonal peak in May (mostly in Venture Cap issues related to the metals markets), make no mistake, I plan to liquidate these short term trades soon, especially if I start seeing M tops...


That's all for this week,
Brian Beamish FCSI
the_rational_investor@yahoo.com
the-rational-investor.com

Wednesday, April 22, 2009

Panic is subsiding but no buy yet

Hi there, and welcome back to RI's S&P 500 blog.



Here is the cover commentary from this quarter's RI newsletter:

"Hello again from the Rational Investor. The first quarter of 2009 is now behind us and it is time to look forward into the spring. As is often the case, the markets are enjoying a seasonal bounce off of the lows made last fall. This time around, we seem to be ‘climbing the wall of worry’ regarding the economy and the duration of the current recession. Ironically, it is at the time when the talking-heads are most pessimistic one ought to be interested in the market. And only when they turn bullish should we consider exiting. How long this current rally can last is anyone’s guess but considering the bearish economic backdrop, the horrible January Barometer reading, and a market that has now relieved the oversold condition it was in a few months ago, a seasonal top may materialize sooner rather than later. Regardless, the market is moving higher so as one pier use to tell me, “make hay while the sun’s shining my boy”…"
(for your subscription to the rational Investor please visit the web site at http://www.the-rational-investor.com)

I think this sums up the market well. As investor optimism gowns into the typical seasonal peak one ought to look for a serious test of the current stop point somewhere near the 95.00 area on the SPY. Once the seasonal top is in I would expect the lows of the winter to be tested once again. It would only be at the point where the market tests that low (and it is not breached) and the reverses and turns back up through whatever high we register over the coming weeks to truly believe the market (and the economy) has turned the proverbial corner.


Considering the January Barometer's reading (go to the web site for that article) traders are not expecting this market to bottom just yet. Until this 'W' pattern does come in, I will temper my enthusiasm. Having said that, as the above commentary says...there are few periods of the year when the bullish sentiment pushes the market higher. We are in that kind of period now. For those bullish traders out there -enjoy it while it lasts. Once the seasonal window closes (I am using the June deadline for the conversion from analogue to digital TV service as my catalyst) I shall once again look back to the downside as we head into both the summer doldrums and then the fall.

That's all for this week,
Brian Beamish FCSI
the_rational_investor@yahoo.com
the-rational-investor.com