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Posted by Senan
Although I'm not a fully fledged subscriber to the ideals of total mechanical investing through technical analysis, this past week I have been following with interest a few blogs dissecting the past weeks movements.
See S&P 500 Support Levels for example.
The charts are very interesting. This week, equities came off their year highs to finish roughly down to their levels of 2 weeks ago. The charts examine many facets such as volume and moving average. Apparently the sales volume was very heavy by comparison to the purchase volume which produced the same swing in the opposite direction. What this tells me is that when investors get spooked, they get spooked big time. Presumably lots of activity designed to lock in some valuable profits.
There's also a sense about now, that over the past months it could be that professional investors who waited on the sidelines during the initial rally have now rejoined the fray for fear of being accused of completely missing out on one of historys biggest market rallies. This momentum buying is anemic as it is not backed by a consensus approach. Not everyone agrees that the market is heading in the right direction given the uncertain economic outlook.
Therefore I retain my view that the coming months will provide better investment opportunity than the current market levels. If you are fully invested, watch your stocks. Ensure your long-term plays are suitable and ensure you have planned (and will execute) exit strategies for your short-term plays. A note on the longs, this blog is an interesting insight into the benefits of dividends.
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mental stimulation, ...or just somewhere to pass 5 minutes! This spot is an informal look at the world of money, finance,
investing, busines, politics, etc. etc.
