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Just when you think the market is overpriced



  • edited June 2020
    Hi @Junkster, I hope you are well and things are rolling good for you with your new endeavor.

    Can you tell us more about this endeavor? From what you have written, thus far, it sounds interesting.

    On the barometer ...

    One of the three main feeds found in the barometer is an earnings feed for the S&P 500 Index. From a report that I follow, generated by S&P, ttm earnings for the Index are forecast to fall over the next four months, or so, from May at about the $107 range down to September to about the $94.00 range. Looks like a recession? But, generally the stock market leads! Let's hope that it continues upward and that it does not follow earnings in another swift downdraft.

    Another reason that the barometer reflected an overbought nearterm condition is that 97% of the stocks within the Index were recently trading above their 50 day moving average. Where is there much nearterm upside left? Perhaps, there is as only 60% of the stocks in the Index are above their 200 day moving average. Let's hope the upward momentum continues.

    And, so it goes ...

    The barometer reflected information that I used to increase my allocation to equities weeks ago. Now, it is suggesting that I lighten up. Which I am in the process of doing. And, with this, I plan to sell down (not completely out) my equity allocation into this upward stock market movement.

    Indeed, it is interesting about the Zweig Indicator you have referenced that many traders have used in the past with good success. I'm not knocking it. However, for me, I'm a long term investor (more so than a trader) that tweaks their equity allocation from time-to-time around my barometer readings. When the barometer reading is high indicating an oversold condition is present I buy equities and when the barometer reading is low indicating an overbought reading is present I sell equities. Pretty simple ... but, effective.

    Thus far, I've never had anybody equate my system to the Zweig Thrust Indicator. Perhaps, I don't understand the Zweig Thrust Indicator or perhaps ... even more so ... you don't fully understand my system.

    Please know, I wish you the very best and your continued success.

  • Oops, looks like she just started warming up her voice.
  • edited June 2020
    We all have some sort of “barometer”: Internal guidance, hunches, an index we watch, technicals, a plan written down, prior experience or maybe a “guru” we follow. @Junkster, who I’ve enjoyed following a long time, seems to rely heavily on some technical indicators. Currently under discussion is the Zweig Indicator. I’m “late to school” when it comes to technicals. Even today I view them with a bit of skepticism, telling myself they’re probably better indicators of market psychology than anything else. Given that, in this era of investing, psychology - if not the name of the game - is very important however you cut it.

    I enjoy Ol’Skeet’s comprehensive write-ups very much. All of us can take a cue from his meticulous planning and devotion to his value metrics. Is he always right? Don’t know. My recollection says “no.” So I went back and looked at what he wrote on March 20. That had to be very close to the recent bottom. Remember it because I made a small purchase of DODGX that day.

    “The barometer as of market close Thursday maintains its reading of 180 indicating that the S&P 500 Index is extremely oversold. I am also detecting that a bottom is forming as three of the data feeds and influences that the barometer use are green lighting.” (March 20, 2020)

    So good call back than Ol’Skeet.
  • Junkster said:

    Old_Skeet said:

    By Old_Skeet's mythology the S&P 500 Index is gextremely overbought. I'm now leaning towards trimming my equity allocation now that I'm pretty close to getting back towards even.

    Can stocks go hgher? Absoutely. And, I hope they do!

    Looks like the @Old_Skeet’s overbought/oversold methodology is trumping the “infallible” “undefeated record” of the Zweig breath thrust indicator
    Hi Junkster,

    Great to see you posting! I do hope you continue.

    I understand that FD1000 sold everything the other day. Of course, he knew what today was going to bring;-)

  • Uncanny isn't s/he.
  • edited June 2020
    Hi guys: I'll post more on the barometer tomorrow but with market close today and thus far this week I have the S&P 500 Index down -7.1% from Monday's close of 3232 to today's close of 3002. Even with this decline the barometer based upon it's metrics scores the Index as extremely overbought with a reading of 133. Summer is here and generally stocks go soft during the summer months. Plus earnings are looking soft as well. But, there is the Fed buying assets.
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