Friday, April 06, 2007

Large Cap Forecast

Once more the story is bullish. The weekly shows that the recent hard times are over and all that remains ahead are blue skies and ever ascending valuations. Actually I believe that - I have long held that the doom and gloom web sites are mostly written by people with an axe to grind or a book to sell and that they really don't know much about much at all.

Some people say, "but the debt is so large - it is of record proportions and blah blah blah." These same people can not explain that since we have been setting records in personal debt every single day for over 25 years why the market hasn't already crashed. But that won't stop them from proclaiming disaster from the rooftops.

You all know my feeling about the gold bugs - you'd be better off hoarding instant coffee - at least if there were a major economic crash you'd have something useful to trade. (Beans go stale - instant stays fresh for ... well ... probably lasts as long as the average gold bar and can be more easily consumed). As I have said - if gold were the solution it would already be over 2 grand an ounce and not where it is. The other precious metals are even more useless and take up far more space (except platinum - platinum doesn't take up much space but it is far more useless). But to put it in a more personal vein - I've got a 55 thousand dollar pacemaker in my chest - ask me how many ounces of gold I'd take for it. You don't have that much nor could you ever get that much. You see there is "mastercard priceless" and then there is really priceless and to each his own.

So whenever I get a bit depressed by all of the gloom and doom that sometimes seems overwhelming I look at a chart like this -

And seeing the market booming I feel a lot better.

Here is the SPY monthly - again a nice story -

Now these charts are not reflecting the business cycle - the business cycle is reflected in Marlyn's curve (actually approximated). Here is a coupling of Marlyn's curve with the pivot point model. And you will see something really neat in this - at least I think it's really neat.

So what's neat? Note that the upturns are all preceded by price - 100 before 95, 75 before 70, 36 before 32 and the down turns are all preceded by the change in momentum - 83 before 79, 59 before 47, and 14 before 6.

Also note that all of the macro-economic upturns as approximated by the curve are preceded by a dip in the pivot point model. Then note that we are currently coming out of a pivot point dip.

There now you have to feel better about things. Personally I'm saying that barring catastrophe we should have a good 20 weeks or so of a rising market ahead of us.

Now that doesn't mean every day is an up day - but the up days will carry the market. Of course a couple of bad earnings reports and all bets are off.

1 comment:

Bryan Matthews said...

Thanks Marlyn. I feel better already.