A clip from Larry’s blog post August
15, 2012
Quote: The S&P 500 is at the top
end of the 10 week recovery channel and very close to major resistance from the
52-week highs, at the same time VIX is telling us to be cautious. So what does
one do here?
1) If preservation of capital is more
important than gains; go to cash.
2) If maximum upside gains is the goal;
wait for the market to do something bearish (say a close below 1385) and go to
cash. If new highs are made trail stops tight under daily lows.
Some combination of these two is where
most people’s heads should be at. We do not know what the Fed will do, but we
know that seasonality is strong in Sept-Oct during election years when the
Democrats run the White House. But here too we only have a small sample size
and the results, while supportive, are statistically insignificant. If greed is
entering your thought process at this point get rid of it, when the outcome is
as unclear as it is today, one should be cutting exposure to markets. We remain
extremely cautious at this point. End Quote:
Again I can’t comment on Larry’s
analysis because I don’t follow the VIX or seasonality and I don’t care who
will win the U.S. election –
but I do care when two U.S.
economy sensitive bellwethers like SPDR S&P Homebuilders (XHB) and the Market
Vectors Retail ETF (RTH) exchange traded funds post new 52-week highs. The XHB is a basket of U.S. home builders and the RTH is a basket of U.S.
retail stores. The bullish price action of these two diverse consumer asset
classes rule out the probability of a U.S. recession.
Posts
No comments:
Post a Comment