Outlook for SPX next Week (3/22/2010 to 3/26/2010)

On Friday, my market surveilance saw 26 bullish engulfing patterns to 354 bearish engulfing patterns, suggesting a little market pullback on Monday or Tuesday. The VIX to SPX charts are way out of sync, with VIX at new lows and SPX at new highs -- further reinforcing a pullback of some sorts. Also adding reinforcement to a pullback are the NYSE and McClellan Oscillators, both of which have crossed or are near crossing the magical 0 line.

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Chart Patterns and Market Surveillance for 3/15/2010

Being primarily a chart and candlestick pattern stock picker, I am always looking for certain patterns as a proxy indicator of overall market health. For example, I would expect to see more morning star patterns after a market sell off, as was the case in early February. This might suggest a possible market reversal, as was the case during mid February 2010 to present.

I would expect to see more high and tight flags during a period of market euphoria, suggesting a market peak, as was the case for me last October 2009.

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A Morningstar Swing Trade Strategy that Performs Well in all Markets

As an active trader, I manage risk largely through position sizing. In other words, my "casino money" comprises 10 % or less of my total portfolio. The remainder of my portfolio is very conservatively managed.

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A perspective on US Bond yields, inflation, and various asset classes

During the days when dollar was king and the world was on more stable footing, relationships between asset classes were clearly defined. The inverse relationship between gold and the US dollar was pretty much a given, as was the relationship between the dollar, the S&P, and commodities.

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“There's No Such Thing As A Free Lunch”

“There's no such thing as a free lunch”

A trite saying, first popularized in modern times by the great economist, Milton Friedman during the 70’s, though I wouldn’t be surprised if the idea didn’t originate somewhere way back in the time of Socrates.

It’s simple and obvious – the implications are that every action and transaction we conduct in society, including inaction or idleness, has a price, costs, and valuation.

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It Just Keeps Getting Uglier and Uglier

The McClellan Oscillator is a breadth indicator calculated from the number of advancing issues less the number of declining issues on the New York Stock Exchange Composite Index. The Oscillator (second window, first chart) is calculated by subtracting the 39-day exponential moving average from the 19-day to give you a good idea of trend in market breadth over time.

The second chart, a point and figure chart of the NYSE Composite Index, is really useful in pinpointing key support and resistance levels independent of time.

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Blowing Bubbles

I have to confess, I'm a tad neurotic, constantly assimilating tons of information in order to form what I believe are wise investment decisions. Over time, I have come to realize that there is an information highway today that hands you whatever your natural biases permit you to filter and believe. I'm trying to make sense of all the turmoil in the world, everywhere I turn I'm reading "BUBBLE" -- US Stock Market Bubble, Emerging Markets Bubble, China Bubble, Gold Bubble, US Bond Bubble, Emerging Markets Bond Bubble, International Trade Accounts Bubble.

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