Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Investors Remain Invested But Alert!

Stock-Markets / Stock Markets 2013 Mar 16, 2013 - 06:36 PM GMT

By: Sy_Harding

Stock-Markets

As the old investing maxim goes ‘the trend is your friend – until it ends’.

The trend of this year’s winter rally has been okay so far. The Dow has gained 15.9% since its November 15 low. Last winter the Dow gained 24.6% from the previous October until the favorable season ended May 1.


However, this winter’s favorable season rally is already making headlines since it has the Dow and S&P 500 back to their levels prior to the 2008-2009 financial melt-down. And having ‘come back’ as in Wall Street’s assurance that ‘the market always comes back’, it finally has investors returning, after four straight years of pulling money out of the market.

The rally should have further to go.

From the technical side, momentum and internal strength indicators remain positive. The consensus of the 35 technical indicators we use in our advisory service remains on the intermediate-term buy signal. From the fundamental side, the economic reports remain mostly positive, and the ‘big-picture’ worries regarding the fiscal cliff, budget deficits, the eurozone debt crisis and so forth, remain subdued.

So it is a time to remain invested.

But it is also a time to be alert and watchful.

As has happened in each of the last three winters, while the significant problems facing the economy are being ignored in the euphoria over the winter rally and the continuing positive economic reports, the problems have not gone away. They will have to come to the forefront again at some point, most probably in the summer months again.

Meanwhile, although it’s only mid-March the market has already gained as much as it averaged in the beginning of each of the last three years before topping out each time into corrections.

The S&P 500 is up 10.0% so far this year.

To begin the year 2010, it gained only 9.2% to its April 23 top before experiencing a 15.6% correction. In 2011 it managed only a gain of 8.4% to its April 29 top before experiencing a 19.4% correction. Last year was better. It gained 13.1% to a March 26 top before experiencing a 10.8% correction.

Perhaps this year it can do as well or even better than last year.

I’m expecting it will, while being especially alert, since nothing has changed in my expectation at last fall’s buy signal that the economy and market will again run into problems once the favorable season ends. And this time it may be a bigger decline than has been experienced in the last three summers.

There are several situations that play into that expectation.

Some are related to historical patterns.

This year, it’s not just the annual pattern of the market making most of its gains in the favorable season of the winter months, and experiencing most of its corrections in the summer months. It’s also that this is the first year of a presidential term, and the history is the tendency for any problems or needed corrections to take place in the first year or two (or both) of the Four-Year Presidential Cycle, and then for all the stops to be pulled out in the last two years to make sure the economy and stock market are recovered again by the time the next presidential election rolls around.

Then there is the fact that over the last 100 years cyclical bull markets have lasted an average of about four years, and this one has already done so. That timing seems to also tie in with the potential for a downturn in the first year of the Four-Year Presidential Cycle.

Then there are those remaining complications for the economy before it can be fully recovered from the 2008 crisis. Those are the significant cuts in government spending and increases in taxes needed to bring the budget deficits under control, both already slated to begin this year, and for the Fed to unload all the bonds and other assets it piled onto its balance sheet in its stimulus efforts, and get its easy-money policies reversed to normalcy.

Already we’re seeing early signs of the likely problems lying ahead from cutbacks in government spending and increased taxes, in Friday’s report that Consumer Confidence fell from 77.6 in February to 71.8 in March, much worse than the consensus forecast of an improvement to 78.0.

Short-term, the Dow has been up for ten straight days, and has again become short-term overbought above its 50-day moving average, and subject to another pull-back from that overbought condition. The last one, a month ago, amounted to only a 3% decline before the rally resumed. But could the next one mark an early end to the favorable season rally this year?

For all these reasons my advice is to remain invested, but have an exit plan in place that will keep the profits, and even potentially transition to going after profits again from the downside in short sales and inverse etf’s.  

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2013 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Sy Harding Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in