Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter


Stock Market Investors Remain Invested But Alert!

Stock-Markets / Stock Markets 2013 Mar 16, 2013 - 06:36 PM GMT

By: Sy_Harding


As the old investing maxim goes ‘the trend is your friend – until it ends’.

The trend of this year’s winter rally has been okay so far. The Dow has gained 15.9% since its November 15 low. Last winter the Dow gained 24.6% from the previous October until the favorable season ended May 1.

However, this winter’s favorable season rally is already making headlines since it has the Dow and S&P 500 back to their levels prior to the 2008-2009 financial melt-down. And having ‘come back’ as in Wall Street’s assurance that ‘the market always comes back’, it finally has investors returning, after four straight years of pulling money out of the market.

The rally should have further to go.

From the technical side, momentum and internal strength indicators remain positive. The consensus of the 35 technical indicators we use in our advisory service remains on the intermediate-term buy signal. From the fundamental side, the economic reports remain mostly positive, and the ‘big-picture’ worries regarding the fiscal cliff, budget deficits, the eurozone debt crisis and so forth, remain subdued.

So it is a time to remain invested.

But it is also a time to be alert and watchful.

As has happened in each of the last three winters, while the significant problems facing the economy are being ignored in the euphoria over the winter rally and the continuing positive economic reports, the problems have not gone away. They will have to come to the forefront again at some point, most probably in the summer months again.

Meanwhile, although it’s only mid-March the market has already gained as much as it averaged in the beginning of each of the last three years before topping out each time into corrections.

The S&P 500 is up 10.0% so far this year.

To begin the year 2010, it gained only 9.2% to its April 23 top before experiencing a 15.6% correction. In 2011 it managed only a gain of 8.4% to its April 29 top before experiencing a 19.4% correction. Last year was better. It gained 13.1% to a March 26 top before experiencing a 10.8% correction.

Perhaps this year it can do as well or even better than last year.

I’m expecting it will, while being especially alert, since nothing has changed in my expectation at last fall’s buy signal that the economy and market will again run into problems once the favorable season ends. And this time it may be a bigger decline than has been experienced in the last three summers.

There are several situations that play into that expectation.

Some are related to historical patterns.

This year, it’s not just the annual pattern of the market making most of its gains in the favorable season of the winter months, and experiencing most of its corrections in the summer months. It’s also that this is the first year of a presidential term, and the history is the tendency for any problems or needed corrections to take place in the first year or two (or both) of the Four-Year Presidential Cycle, and then for all the stops to be pulled out in the last two years to make sure the economy and stock market are recovered again by the time the next presidential election rolls around.

Then there is the fact that over the last 100 years cyclical bull markets have lasted an average of about four years, and this one has already done so. That timing seems to also tie in with the potential for a downturn in the first year of the Four-Year Presidential Cycle.

Then there are those remaining complications for the economy before it can be fully recovered from the 2008 crisis. Those are the significant cuts in government spending and increases in taxes needed to bring the budget deficits under control, both already slated to begin this year, and for the Fed to unload all the bonds and other assets it piled onto its balance sheet in its stimulus efforts, and get its easy-money policies reversed to normalcy.

Already we’re seeing early signs of the likely problems lying ahead from cutbacks in government spending and increased taxes, in Friday’s report that Consumer Confidence fell from 77.6 in February to 71.8 in March, much worse than the consensus forecast of an improvement to 78.0.

Short-term, the Dow has been up for ten straight days, and has again become short-term overbought above its 50-day moving average, and subject to another pull-back from that overbought condition. The last one, a month ago, amounted to only a 3% decline before the rally resumed. But could the next one mark an early end to the favorable season rally this year?

For all these reasons my advice is to remain invested, but have an exit plan in place that will keep the profits, and even potentially transition to going after profits again from the downside in short sales and inverse etf’s.  

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2013 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Sy Harding Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules