“As of last week, the Market Climate for stocks remained characterized by an overvalued, overbought, overbullish, rising-yields syndrome that has historically been quite hostile for stocks, but with what I've called "unpleasant skew" - a seemingly relentless series of slight, marginal new highs, typically followed by an abrupt vertical plunge that wipes out weeks or months of progress in a few sessions.” January 31, 2011 Weekly Market Comment by John P Hussman, Ph.D. (used with permission of Hussman Funds - http://www.hussmanfunds.com)
Indicators improved today; the Vix dropped around 10%; but as I have been suggesting, and as Mr. Hussman eloquently reminds us, caution is the watchword as this market seemingly goes up without end.
For the past 3-weeks, the graph of S&P price is much less steep, i.e. the daily rate of advance has slowed significantly and we have seen lower lows. For chartists, this “megaphone” pattern may show the top is near. I’m not much into charts, but there is some logic here since it is a graphical representation of Mr. Hussman’s observation, at least in the short term.
The NTSM analysis currently recommends HOLD as it has since 28 January. Given the big move up today, it is tempting to call a top now, but I’ll follow the NTSM guidance instead.
I am still 100% long in retirement accounts. My trading portfolio is all cash. (This is an absurdly aggressive position (for an old guy) and I don’t recommend it unless you have an extremely high tolerance for risk.
