Look: I am eager to learn stuff I don't know--which requires actively courting and posting smart disagreement.

But as you will understand, I don't like to post things that mischaracterize and are aimed to mislead.

-- Brad Delong

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Everything that appears on this blog is the copyrighted property of somebody. Often, but not always, that somebody is me. For things that are not mine, I either have obtained permission, or claim fair use. Feel free to quote me, but attribute, please. My photos and poetry are dear to my heart, and may not be used without permission. Ditto, my other intellectual property, such as charts and graphs. I'm probably willing to share. Let's talk. Violators will be damned for all eternity to the circle of hell populated by Rosanne Barr, Mrs Miller [look her up], and trombonists who are unable play in tune. You cannot possibly imagine the agony. If you have a question, email me: jazzbumpa@gmail.com. I'll answer when I feel like it. Cheers!

Tuesday, August 2, 2011

Taking Stock

The S&P 500 Index at 1271.91 and falling, just slipped below the lower bound of an upward-slanting trend channel that began at the 3/12/09 close of  679.53.  The market has been trending sideways since mid-February of this year.  Sideways moves are hard to figure.  Is it a pause on the way to new highs or the beginning of a new downward phase?  My money is on the latter.  Corporate profits are ridiculously high - but none of that is based on growth.  And what growth prospects do you see on the horizon, at any term length?
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UPDATE:  Here are some views posted by Rebecca Wilder at AB.

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There is a support band around 1256 to 1272, starting in late March of this year.  If that gets broken, the next potential support might be around 1000 to 1050.   Beyond that, it's the 2009 bottom.

Long and short term momentum measures have been stagnant, at best, during this sideways phase, and are about to fall through 0.

I'm anticipating a big decline, but I've been pessimistic for the greatest part of a decade.

We shall see.

UPDATE 2: While I was playing taxi for granddaughters this afternoon, the stock market took a head-first dive into the sewer.   The DJI was down 265.87, or 2.19%.   The S&P 500 was off 32.89, or 2.56%.  The Nasdaq fell 75.37, or 2.75%.  The bluer the chip, the less the decline.  In other words, riskier issues overachieved in leading the losses.  The flip side of a flight to safety is a flight from risk.

This placed the S&P 500 close at the yearly low, negative for the year to date, and slightly under the 1256 to 1272 support level range cited above.  This is merely a peek over the brink, not a crash through the barrier.   But, with 7 straight down days (8 for the DJI,) it's pretty clear that upside momentum is spent for the nonce.  This does not guarantee an immediate steep drop. In fact, I would be quite surprised if there isn't a bit of a bounce tomorrow, since nothing moves in a straight line.  But I am now quite sure that over the next span of weeks to months stock movement will be negative.
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2 comments:

Suzan said...

Well, at least there's growth in the overseas markets.

Ready to move?

Cause I know you love to travel!

Love ya,

S

Jazzbumpa said...

Hi Suz -

I was just telling my lovely wife that if I won the lottery, I'd move the whole clan to some (hopefully) safe location. Problem is, I'm not sure where to find it. Scandinavia, maybe, or France?

If the U.S. goes down the tubes, I don't see what chance the rest of the world has. I foresee a long, deep depression, followed by WW III.

On the bright side, maybe a nuclear winter will counteract AGW.

Wow - WASF!
JzB