Having been out of town on vacation last week, we return to Los Angeles to find the markets at a most interesting juncture. As it happens, we see a number of potentially major turning points shaping up in the days just ahead. In today’s somewhat abbreviated update, we walk investors thru our take on some of the key capital markets.
Early last week, Gary Dorsch wrote a timely article titled: "Chinese Red-Chips Show Signs of Fatigue." In his article, Gary pointed out the parabolic move in the Shanghai stock market and signs of a possible reversal. I especially liked one of his charts (below) that discussed the psychological underpinnings to the reversal because that's what charting is—the sum of mass psychology.
The rally off the March lows has been something to behold with the S&P 500 up more than 45%. The market has climbed a wall of worry as many financial pundits were repeatedly looking for a market top for the bear trend to continue or a significant pullback to at least offer them a chance to reenter the market.
To date the Obama Administration has thrown an unprecedented amount of stimulus at the economy, with the latest bit of stimulus being the $1 billion Cash for Clunkers program that lawmakers were “surprised” was depleted so quickly. Really? Who wouldn’t want free money thrown their way?
There is a lot of talk about this market being overbought. There’s just as much talk about how many investors aren’t in this rally and they want in. Let’s start the talk for those that ARE in this market – what now? What are some signs to watch out for? Are you day-trading in and out of positions? Why not let those winners run? Here are some guidelines to help let those profits run in a trending environment.
Back in February an article was penned in which the case was made for a period of underperformance in gold relative to the general stock market (Gold, Is the Future Still Bright or Fading?). In this article a case is made for a strong second half for both gold and precious metal stocks.
It has been a really fast moving series of events in the stock market over the last few weeks and the outlook has changed pretty radically in just the last 10 days. I am always monitoring events and important developments in my indicators and on the charts.
While the financial media is certainly going to be clamoring over the all but certain improvement in Q2 GDP numbers set to be released later in the month, should investors? Is the worst behind us and are there clear skies ahead, or is the picture far from rosy? These are the vital questions investors need to ask themselves as their answers to them will dictate how they invest going forward.
It was only a few days ago when everyone was commenting on the head and shoulder topping pattern and expecting a decline in the S&P 500 to the low 800s. CNBC anchors who know nothing of technical analysis were even commenting on it as the financial media were all abuzz with the pattern, with Google Trends key word search showing a dramatic increase in Internet search and news reference volume highlighting the frenzy behind the pattern.