Are You Laughing or Crying About the Markets?
There's no question about it, the markets can be very difficult at times. On the other hand, you can laugh all the way to the bank if you approach the markets in a systematic way.
I was looking once again at the S&P 500 and many people have said the market has gone up, not on the fundamentals, but on the perception that things are going to be better. Perception is one of the most powerful elements of the market. I would say that perception trumps both the fundamental and technical.
So what's going to happen to the S&P 500? Is it going to continue going higher for the rest of the year, or are we close to a turning point?
In my new short video, I outline several key areas that this market is fast approaching. These levels could be the Achilles heel for this market and potentially set the direction for the rest of the year.
As always, the videos are free to watch and there is no need to register. All that we ask in return is that you comment on our trader's blog.
Enjoy the video, all the best.
Adam Hewison
President, INO.com
Co-founder, MarketClub.com
whoah this blog is magnificent i love reading your articles. Keep up the great paintings! You recognize, a lot of people are hunting around for this information, you could help them greatly.
Sean,
Good insights.
Adam
Thanks for another interesting video.
I consider your warnings as quite well timed and hopefully readers here will take heed of them and take action accordingly.
Yes perception is a very significant driver but eventually perception is usually overtaken by reality as we have seen many times before. When reality is replaced by nothing more than "hope" and optimistic rhetoric, as we have now, then you really have to worry.
Nonetheless I won't be surprised to see overbought equity markets pushed even higher, with the usual cheer leading from the sidelines to suck in more of the unwary, before we see a painful correction.
It may be that a product like SPY appears to have a momentum of its own, but for clear thinking we really should remember that the INX is really a mathematical "sum" or "average" of about 500 individual stocks. The movements of SPY (or INX) are secondary to the movements of what most investors (and funds) are buying: the individual stocks.
Yes, when SPY finally starts to descend, then probably 70-75% of the underlying stocks will descend also. Duh. That is a tautology (a good word to know). Of course those stocks will be moving downward, and THAT is why SPY is moving. Not the reverse.
So, yes, we can invest/follow/play SPY, and Adam recommends it in the Perfect Portfolio. Its volume is large, it is liquid, it is diversified, and its long-term trends have usually been remarkably long-term and pretty stable (except when it is not, like last winter). I play it too. Nobody manipulates SPY and I really like that. Great. Our buys/sells of SPY have virtually no influence on its value. SPY does not have a life of its own.
SPY will turn down or not, based on the large buys/sells or the underlying stocks, by large institutional investors (funds mostly). They will be looking at sectors and individual stocks, and earnings, and projections, and fairly fundamental things. Those large investors are not looking at the Fibonacci retracements of SPY to make their decisions about which individual stocks to buy or sell.
So I obviously think SPY, the SP500 average, is quite unpredictable. It follows the markets, it does not lead them. Different sectors could be fluctuating wildly, independently, and SPY could be quite still.
Hi Adam, quick question, your trade +100 Strong uptrend SCORE is in place and this market will likely remain in long-term Positive UP direction. This statement is a cut & paste from your site however many are cautious as you’ve stated however your trade triangle score for long/intermediate/short trade signal points all is a GO with no caution warnings?? Hence my question is your personal feedback is somewhat in line with many however your triangles are on the opposite end. Why is this the case, I assume your system is picking up on specifics that we are not including ignoring emotion? However the trend line is hit 3 times and also hitting the FIB line so not sure why your system didn’t pump out a warning signal +85 or +75
Any feedback would be appreciated
Thanks
Joseph
Joe,
Thanks for your feedback.
The Trade Triangle technology we use in MarketClub is a trend following tool that has done very well over the years. It cannot predict tops or bottoms in a market. What it can do very well is keep you in a move once it has started.
I have never seen anyone and I have been in this business for over three decades pick tops or bottoms with any degree of success.
All the best,
Adam
Thank you Adam. I have been trading for a long time but i always
pick up nuggets from your videos.
Hi Adam,
Great analysis as always.
I've been wondering, since gold, oil, and some metals are on a strong uptrend, how much the S&P may be buoyed up by the stocks in these sectors? When the S&P dropped to its lows in March, these commodities were dropping too. That's not the case now.
Good video and I suspect that your analysis is probably correct. However, I notice that there has been a divergence between the rise of the S&P and the MACD since April and not just the last few months. Presumably this strengthens your analysis or does it make it weaker?
Hi Adam,
I think it is a good analysis. Keeping it simple and looking at longer time frames has been very effective. I remember looking at the huge head and shoulders top in the SP500 and projecting a target of about 1000 and thinking Man! That would be a big move. Also I have been looking at the inverted head and shoulders in gold for months. I'm hoping market club will give me the confidence and technique to effectively take advantage of these moves because I think that there is more in the pipeline. I think your perfect non-leveraged portfolio is a good one.