I added long positions Thursday and Friday of last week in the trading portfolio and the market handed me my lunch today. We broke below the trend line so it is possible that we will trend down further. It looks like the Debt issue (ours and theirs) won’t go away.
I am always suspicious; too, that there may be market manipulation going on designed to bring market prices down so the manipulators (whoever they are) can buy things on the cheap. Let’s face it, if a flash crash (huge drop in the market that was so bad the SEC stepped in and canceled trades) can be caused by a few computer trading firms that stopped trading, the capability is there to manipulate the market. I like that explanation better than I was stupid for taking on so much risk. I will find out tomorrow whether I need to dump those positions.
So…if you’ve read this blog for a while, you know one of my favorite market commentators is John Hussman, PhD of Hussman Funds. This week he says, “The stock market continues to be strenuously overvalued here, with a variety of historically reliable methods indicating probable total returns for the S&P 500 of only about 3.5% over the coming decade. This does not necessarily imply much about near-term market returns, though the continuing syndrome of overvalued, overbought, overbullish, rising-yield conditions does contribute to near-term risk.” - John Hussman, PhD, weekly Market Commentary, Hussman Funds.com
He also presents the average length of Bull markets within secular (long-term) bear trends. If you look at his data, you see that (based on average past history) we are due for this Bull trend to end…now. I updated the “Comparison of the 1966 Bear Market to the Present” bear a few days back and my conclusion is similar to Mr. Hussman. Just based on the 1966 Bear market, the current Bull would end in September.
Now that is just average data and I continue to hope we will be able to get back to the old highs (1550). Only time will tell. Be vigilant.
The Navigate the stock Market analysis is Hold today. Price action improved - the down days just haven’t been that big. VIX is in good shape. Overall I am still not overly worried. I’ll worry tomorrow if we break down again.
NTMS switched to BUY on 20 April at S&P 500 = 1330. Since then, NTMS analysis has been Buy or Hold (it is Hold today); therefore, I am 100% invested in stocks. This is way too aggressive and I don’t recommend it unless you have an extremely high tolerance for risk. I am also 2x-long with 80% of my trading portfolio using SSO and the Rydex 2xS&P 500 fund (which I may regret tomorrow). This is way, way, too aggressive…
