Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Cyclical Exposure Risk Has Diminished, but There's a Longer Term Technical Caveat


Investors should be aware of the fact that the markets may soon be pushing against the top of the secular consolidation resistance of the last decade-plus.


Since last week's break north, my firm's CTI (Cyclical Trend Index) has once again returned to bullish, indicating cyclical exposure risk has diminished. (The CTI is a purely technical index which not only determines trend, but its associated risk.) This shift in stance has given us confidence to remove all hedging strategies and increase our long exposure. That's the good news... "Maybe." With that said, investors should realize another longer-term, technical caveat.

Click to enlarge

In evaluating the monthly (15-year) chart of the market, investors should be aware of the fact that the markets may soon be pushing against the top of the secular consolidation resistance ("SCR") of the last decade-plus (~ 1,500-1,560). Since the publication of my firm's 100 Year Market Theory (100 YMT) in 2003 we have been pontificating that the US equity markets are, and will continue to be, in a secular channel correlated in time to the last secular bull market; 16-18 years (1982-2000). Over the last few years, since the 2009 bottom – the largest cyclical bear market in history – we have also stated this bottom marked the mid-point of the larger secular channel. That's the bad news... "Maybe."

When analyzing trends within trends – secular to cyclical – it's only important, for now, to focus on the cyclical, as that is where 'stance' is determined until risk shows its ugly head again. It is only when the cyclical stance shifts that technicians should turn to the greater secular trend. For now the rain has stopped, the clouds have begun to dissipate, the fog has lifted, and Wall Street cowboys are 'Back in the Saddle Again.'

We hope this helps and finds you well.

Editor's Note: Read more at Tesseract Asset Management.

Twitter: @TAM_News
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.



Featured Videos