We are switching from slightly bearish to neutral in our market model though from a trading perspective I myself have been less than fully invested for a while now. Though I think stocks are oversold and could fly on more pump-u-lous from the feds, I am not intrigued enough with equities to be a long term investor in most stocks at these levels. That said, I am also concerned with paper currencies, so investing right here seems pretty difficult (hence the 1.7% return on the 10 year)… As for me, I am chopping wood up in the hills but pop out occassionally to observe the stock market (the stuff market aka commodities have been getting bludgeoned) and to check the tape and the technicals.
Currently, the stock market is at an interesting junction. The valuations and fundamentals look pretty weak from a cheapness perspective relative to other assets like farmland or private middle market businesses. That said, we have to maintain a “cash is trash” perspective because of high unemployment and the following central bank response of more and more stimuli.
From a purely technical perspective, however, the market looks short term promising for those willing to take some speculative risk on here (maybe buy some front month DIA or SPY slighly in the money call options????) as the RSI is around 20 and very oversold while the MACD and Slow Stochastics are starting to signal a buying opportunity.
All in all, stocks look a little oversold, the dollar looks a little overbought, and the market will do what 99% of traders don’t expect. While I have to admit I am a bearish/conservative/skeptical investor by nature, the tape is what moves stocks in the short run.
NOTE: RSI oversold (BULLISH) MACD crossing over, Slow Stochastics oversold… Looks like it’s an OK time to try to bottom fish here for a trade (1% of your overall portfolio is placed in SPY call options sounds ok if you are 100% in cash — I would at least hedge some of my bearish exposure for a few weeks)…
We are still over the 200 day moving average as well… Remember, stocks are actually going to rise on a nominal basis over time because the Fed is printing money.
