Wednesday, June 16, 2010

06.16.10 - Price Defies Internals

... however, the slope of those internals is as important as their relative levels. Meanwhile, the S&P's daily pivot took on clear significance during this morning's trade as we saw successive bouts of quick covering off that line on various upgrades, production numbers and the BP news. I don't have a strong feeling for the p.m. session given the internals disconnect, but am thinking wide range day for now while granting that the recent uptrend channel remains intact while pushing overbought on a daily bar basis.

Never Investment Advice

1 comment:

Daniel said...

Mr. Pietsch:

Your at times colleague and associate, Bill Luby, posted an interesting thought piece on Sideways-ness, which you, or others fond of this blog, might wish to check out. We here are aware of your stoutly Trinitarian thinking, with various permutations of long term range-bound limitation always existing, in your models, as a third independent investment state. UP trend; DOWN trend; sideways no clear trend. Gas, liquid, solid.

Were one able to post a comment on Mr. Luby's site, which is currently having a technical glitch, at least as of this time, one might say something like the following:

..my memory here is fuzzy, but at one point in time in Market History, some data service somewhere provided a stat that the Dow (or S&P) had been in a Sideways Mode for 23% of the time... on some really long scale.

The exact percentile is of no great significance, for then and now; the point is that a Science of LT-trend range-bound markets is worth studying, if indeed this third mode of broad markets is the prevailing, for 20% to 1/4 of the times.

Most of the modern scientific study of long range-bound markets evolved in the late 70s and early 80s. This was understandable, as that great secular bear ground to its end.

Stealth sector-bulls within broad sideways markets are a primary nuance of interest, to the investor timeframe. The great Small Cap rally (as the Dow lay like a sick cow) of 1978, I believe it was, serves as a classic example.

Also, such serious longtime students of Market behavior as Norm Fosback and Dr. Hussman have been doggedly maintaining for many many months now that their econometrics point to lackluster, extended-flat multi-year Total Return ranges on stocks.

They maintain that one's net result will entirely depend on one's entry point and buy date; buy near range tops, and that result will be mediocre, or worse.

Mr. Luby's observation was I believe pre-market, and long term in its outlook; however it IS an apropos discussion, even in daily time frames, since today the SPX closed flat for the day-- and the daily close was flat for the year. Stated flatly, a flat subject of analysis seems right therefore. Maybe parameter sets will need some tweaking along those lines.

Daniel