Welcome to my blog Humble Student of the Markets These are my musings about the markets (mostly equities), hedge funds and investments in general. The Atlanta Fed’s labor market spider chart shows steady improvement on all dimensions, indicating imminent wage and cost-post pressures. These oversold conditions suggest that any stock market weakness in reaction to the Paris attacks should be viewed as temporary and a buying opportunity. On an intermediate term basis, I view the market action last week in the context of a breather in the wake of a Zweig Breadth Thrust, which is a powerful bullish momentum signal that lasts many months (see Bingo! In effect, the stock market is now integral to the economy as a measure of sentiment and evidence that all is well with the economy as a whole.
The U.S. stock market is integral to the global financial system in two that investment banks, pension funds, insurers and multitudes of 401K retirement plans are dependent on current equity valuations, a crash would impair virtually the entire spectrum of finance from hedge funds to banks to insurers to pension plans. By turning the health of the economy into a reflection of the stock market, the Status Quo has made the stock market into the one bellwether that matters. I’m still looking for it to get oversold at some point and that would be the time to buy some calls.
The stock market is now the signal everyone follows: if stocks are rising, we’re told that means the economy is healthy. The stock market addresses this asymmetry by signaling what’s really going on via price: if the market sells off, that tells even those with little other information that all is not well in the economy. This explains why a rising stock market is now essential to the Status Quo: if the market reverses, everyone who sees mostly stagnation in their corner of the economy will realize that is the norm, not a local aberration. The major stock indexes are closer to overbought than to oversold at the moment.
If the market is indeed now too big to fail, the Fed will be forced to take unprecedented action if the decline hurtles past correction to carnage and full-blown meltdown. If you enjoyed this site for at least 2 hours this year, and you donate $25, you already received more entertainment than you did from the movie. The summation index is trying to turn back up. It really should be a lackluster week in the market and today exemplifies that. Gold was off a bit on the futures today as the US dollar reversed yesterdays losses. We are close to new all time highs in the S&P 500, as a repeat of this week would get us there.
The strength in GE is another plus if it is a precursor for the overall market as it often is. Some of the weekly technical indicators for the major stock indices are getting overbought. I still think that the S&P 500 will reach new all time highs before the end of the year. Most of the foreign stock markets were higher last night and that is a positive as well. I’m back to thinking that we will set new all time highs before the end of the year. Another technique I like to use is the G..A.T. technique or the Greatest of All Time technique.