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发帖数: 1972 | 2 We have remained bullish over the last ten weeks; however that doesn’t mean
we have sat idly back 100% allocated to equities, riding the S&P back and
forth within the 100 point congestion zone. We remain bullish as the market
passed an important test last Friday by settling well above 1204.00 (1219.
00 to be
exact). 1204.00 represented the upper region of our congestion zone (1114.00
– 1204.00) which captured 90% of price action for the last 11 weeks.
Regardless of the upside break-out, for the last eight trading days we have
identified key resistance between 1235.00- 1255.00(combination of the green
Moving Average Line and the blue horizontal resistance line which we have
had in place for several months; see chart above of the S&P). This region
is currently posing the next big challenge for a market which has had to
consistently deal with poor fundamental news. Thus far, as it is playing
out day to day, the Index hit a high of 1230.00 (just under initial
resistance of 1235.00) on Tuesday, and has since come under pressure the
last two trading days. For our readers, we have suggested during previous
rallies to reduce risk at the upper range of 1186 to 1204. If you have been
reading our free research you took action and bought the S&P 500 at 1090
when we hit the intraday low of 1074 on Oct 4th.
So where is the market headed?
Nothing has fundamentally changed in the last 11 weeks. Companies began reporting earnings two weeks ago, with 70% of the S&P companies that have reported beating their estimates. We believe this rally is purely constructed on human behavior – behavioral finance. You can see from the chart above the natural progression of human behavior in the markets: you have a cycle led by optimism, excitement, relief, anxiety, denial, panic, maximum amount of pain, and lastly, optimism.
These human behaviors are purely based on primal survival instincts. Our theory is that we are approaching the optimism phase with a potential EU resolution, which will be followed by excitement. We believe that the optimism phase will get us to the 1245 to 1255 level on the S&P 500.
Then we will have the excitement phase getting us to the 1300 level, where we would then be sellers. Remember, fundamentally nothing has really changed; the global economy is still deleveraging and is only three years into this process, which historically can last ten years.
We are first and foremost technicians and believe that human behavior leads to price action and ultimately price discovery. We do, however, overlay Macro trends when considering trade or
investment ideas. For long term investors, look for the 1255 region to take a little off the table at 1300 to raise more cash. For the short term trade, we would be buyers at the 50 Day Moving Average of 1179 to get long for a year-end rally.
Now we are technicians first and believe human behaviors leads to price action and ultimately price discovery. However, we do overlay Macro trends when considering trade or investment ideas. For long term investors, look for the 1255 region to take a little off the table and 1300 to raise more cash. For the short term trade we would be buyers to the 50 Day Moving Average of 1179 to get long into a longer trader for a yearend rally.
If our theory is correct, you want to tactically position your portfolio with growth sector, Basic Materials, Services, Technology, Industrial goods and Energy. Some examples of individual equities with bullish trends within these sectors are as follows. |
