Come what may, all bad fortune is to be conquered by endurance.
Summertime -- July 4th to Labor Day -- is typically the most bizarre time of the year for the markets; low volume, uncanny swings, no apparent underlying rhyme or reason to its action. This year is no different, if not even worse considering the political mayhem, China slowdown concerns and the remnants of EU issues. Actually, since the July 29 EU recapitalization announcement the majority of news coming from the European PIIGS nations has become more of a non-catalyst pushing the tape. Regardless of reasons, during these uncertain times it’s important to ascertain the terrain and define the investment roadmap.
Click to enlarge
When evaluating the above “roadmap” (S&P 500 Index
(SPX)), investors can see the shift in counter-cyclical trends in Dec-Jan and mid-May. These secondary trends dictate the shorter term moves – one to 12 months – within the larger cyclical trends – one to five years. As of the May break of the secondary bull trend, the market has entered a neutral zone where clarity of a defined bull or bearish stance is not 100%. Nevertheless, the technical pattern has formed a two-month bear flag riding up the backside of the previous trend; again providing no true clarity as of yet. It is only when this flag is broken, up or down, to where some clarity will arise and the risk/reward measurement can be more accurately calculated.
As for now, it’s a game of patience and endurance. This is a good time to evaluate the potential moves when the flag breaks and not to guess the pending direction.
Editor's Note: Read more at Tesseract Asset Management.
No positions in stocks mentioned.
The information on this website solely=
reflects the analysis of or opinion about the performance of securities an=
d financial markets by the writers whose articles appear on the site. The v=
iews expressed by the writers are not necessarily the views of Minyanville =
Media, Inc. or members of its management. Nothing contained on the website =
is intended to constitute a recommendation or advice addressed to an indivi=
dual investor or category of investors to purchase, sell or hold any securi=
ty, or to take any action with respect to the prospective movement of the s=
ecurities markets or to solicit the purchase or sale of any security. Any i=
nvestment decisions must be made by the reader either individually or in co=
nsultation with his or her investment professional. Minyanville writers and=
staff may trade or hold positions in securities that are discussed in arti=
cles appearing on the website. Writers of articles are required to disclose=
whether they have a position in any stock or fund discussed in an article,=
but are not permitted to disclose the size or direction of the position. N=
othing on this website is intended to solicit business of any kind for a wr=
iter's business or fund. Minyanville management and staff as well as co=
ntributing writers will not respond to emails or other communications reque=
sting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.=