Monday, December 7, 2015

Up, Up and Away?

Please be very mindful when adding capital to this market. This market could prove to be great for long-term dollar cost averaging.
This is the chart of the S&P 500 back to 1970. If you're like me, I wonder how much higher this uptrend can continue. Once the Fed starts raising interest rates, will money come trickling or pouring out of the bond market to push this market even higher? Will the yield curve flatten and will capital start exiting stocks hoping to find better appreciation/preservation potential in bonds?
And then we learned this from Michael Harris at the Price Action Blog. "It may be seen that other than the 29-day pattern that formed in the beginning of this year, similar patterns with duration of more than 23 days have formed only during downtrends and large corrections,” Harris wrote. He noticed how many days the S&P 500 has gone since it has posted back-to-back gains. His conclusion is that either we’re in the midst of a large correction, or — disclaimer — the dynamics have changed and this is an exception.