The yin and yang of equities can also be described as overbot and oversold.
The recent volatility has investors confused. If you had The PPT you would easily be able to identify when the market is at these pivot points and thus take advantage instead of being a part of mutual fund outflows or just sitting on the sidelines.
(click to enlarge)
Looking at the chart of the S&P we have a similar scenario to last June. The question is will we repeat history and rally hard into the end of the year or will we continue the same pattern ?
Of course if i had this answer then i would not be posting this article and would be counting my expected billions.
At any rate, last year we knew the EU crisis was coming, but at that time it was still largely on the horizon. We also did not have the possibility of seeing global growth downgrades coupled with earnings estimate downgrades.
The S&P has had a trading range only to be met with a lower trading range; and recently this week we entered bear market territory marking a low of about 1075. Looking at the chart the average price i would expect the S&P to grab on the upside is 1165. As a matter of fact we got close to this level this morning.
As always we never see an exact line and could expect upside to as much as 1180. Beyond that is complete froth land IMO.
The key points to determine if this mornings pundits are right, (all calling for a market to scream higher into the years end with high estimates of 1325 S&P,) is of course Europe first. Any real move towards leveraging the EFSF will send markets higher. The second point, at least for our markets, are earnings guidance.
To play it safe look to sell rips in the 1160-1180 range and buy the dips in the 1075 -1100 range.
FYI The PPT is now reading 3.60 on the SPY which is the threshold of overbot territory.
Given tomorrow’s important employment number i will refrain from making any moves until after the data comes out.
After covering shorts Monday & Tuesday morning and making a killing there was no need to play in a sketchy market.
GLT
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“FYI The PPT is now reading 3.60 on the SPY which is the threshold of overbot territory.”
Should this really be posted here in the non-member section?
why not Mad Scientist…it is only a blue moon style giveaway and as of this morning it seems to show again deadly accuracy.