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Wednesday, June 6, 2012

Are we in a Bull Market...year end rally?

Charts are limiting in effectiveness to help judge future direction.   Past performance has zero for future performance.  However, I do find them interesting to try to give context to where things stand from a historical perspective.

Back on September 11, 11, I posted how the bear market is back.  That judgement was based upon long term indicators that have historically been good indicators of future market performance.  Since the upturn from 2009 however, the indicators have not been as clean as previous downturns.   The indicators have flip-flopped in short timeframes.   The September 11 downturn has already been reversed, around February 2012.   However, I did not change my bear image at the top of my blog.  Why? China turning down, Europe in turmoil, Australia real estate bursting, etc.   Because of all of this I am still nervous that we are going to see a deflationary collapse in the markets at any time.

However, I need to try to remain impartial and not emotionally attached to a future outcome.   Using this long term trading indicator as a guide, the 20 SMA is starting to top out, possibly curve down, indicating bear market once it crosses by a significant amount.  (1-2%)    If in the weeks ahead we can manage to turn 20 sma up, I will change my bear to a bull on the top of my blog, referring to this post.

There is nothing to stop the markets from immediately nose diving after i switch to the bull image.  But given all the facts, the market may buck the bear into elections.

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