We had a bit of a discussion on Friday kicked off by ehsaale. I have been thinking about his comments over the weekend, and would just like to make a couple of points – OK – I have been in the upslanting wedge brigade and yes at this stage it has gone out the top. Is it just a throw-over or the beginning of another major move in the market - that hasn’t been confirmed one way or the other.
But ..... our index is where it was last November which is the market that most of us are MAINLY dealing in so unless you have been stock picking, then it has basically been a sideways move. So nothing missed there.
On the SPX – it has come from 666 five years ago. So in the big scheme of things, we are talking about a few days move to an even higher high. Is that a disaster? I don’t think so. I do admit that I was worried that if the SPX did break topside we might go into a parabolic move and this still may occur but I doubt it – at least not without some sort of correction.
As usual in booms on Wall Street – margin lending put the fire under the market. Margin lending this time around topped at a new all time high in February and has since ticked down. In 2007, margin lending topped two months before the market crumbled. As well the NAAIM figures which I find very helpful are showing that my set of geniuses are now almost fully invested – but they can go leveraged long.
And then there is the performance of the RUT this year. When you think about markets, you can easily understand that when investors start to get a bit worried, they will sell their second liners and hold their leaders. Just need to go back to 2007 to see that this was the case when that top was formed.
And yes, the XJO thread has gone quiet but people leave for different reasons. Some months ago I had to take things easy for medical reasons but at the February low when the doom and disaster agents were running rife, I couldn’t stand not coming back to put my views forth. Old habits die hard – been writing about markets for so many years, that I get itchy fingers now when I am not putting thoughts on paper.
If you are negative and want to have a worry, have a look at the long term chart of WBC. Has formed an upslanting triangle pattern sitting on its old highs. Or even the FT for that matter.
On to more general matters - the Indian market at another new high. I have loved that chart for so long. Just wish I had been clever enough to make it my chart of the year. I do think it is getting close to a few targets now though.
But the really frustrating index is Shanghai. It was trading around these levels this time last year. There have been a number of occasions when I thought it was really going to break topside but every time it has failed. Going to spend some time this week looking into it a bit further. Anyone got anything or theories on this one. We all know it is important for us.
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