Rally Looking Tired, Some Indicators Improving
Source: http://feedproxy.google.com/~r/qvmgroup/yrMF/~3/70Ix79F_sGA/4349Posted on Sunday, May 31st, 2009 | In China, Market Commentary
The S&P 500 rally is beginning to look a bit tired. The price action is more sideways than up and the volume is declining. That may just be the pause that refreshes, or it may be the pause before a retracement.
Some important indicators, such as the VIX, the rate spread between LIBOR and Treasuries, and the relative performance of high yield and investment grade corporate bonds are supportive of the positive S&P 500 direction.
On the other hand, the cyclic price action demonstrated in the past 15 years, which is well tracked by trend following methods, suggests that we are not yet in a bull phase.
Of course there is more upward movement somewhere in the future to get us to a bull phase, and we could be in that transitional period now. It’s just that we have a hard time looking past the the economic situation which really stinks once your strip away of the rosy predictions of US officials who are hardly objective.
Nobody can really say what the next 6 months or 2010 will look like. So many things have yet to work through the pipeline. It could be better. It could be worse.
World Bank President Robert Zoellick said “Right now, the international system appears to have a sufficient amount of stimulus … The danger is if you spend too much government money, you create a different problem.” He said the stimulus alone is “like a sugar high” unless the credit markets are functioning properly.
The World Bank forecast in March that the global economy will contract 1.7 percent in 2009 and increase 2.3 percent in 2010. Note that results in an average growth of 0.25% for 2009-2010.
The American Association of Individual Investors weekly poll shows more bears than bulls; more bears and fewer neutral investors than normally.
click images to enlarge
Price Curve Flattening & Volume Declining
VIX Down, S&P UP
LIBOR/Treasury Spread Lower, But Still High
Junk Rising More Than Investment Grade Corporates
Moving Averages Not Yet Converged
Richard Shaw
QVM Group LLC
Last 5 posts by Richard Shaw
- Quality Individual U.S. Companies - November 7th, 2009
- “China Up / U.S. Down” Theme Checkup - November 2nd, 2009
- Healthcare Co. Profits Sensitivity to Obamacare - October 29th, 2009
- Less Than Good News from Germany - October 25th, 2009
- U.S. Budget Debt History and Projections - October 24th, 2009
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 About Richard Shaw (http://www.QVMgroup.com)
Richard is a principal of QVM Group LLC, a fee-based investment advisor based in Connecticut with clients across the country. He provides investment coaching to "do-it-yourself" investors, and manages portfolios for those who prefer not to make their own decisions. His investment approach is based on value, asset allocation, benchmarking, expense control, risk management, customizing portfolios to each client's specific circumstances, and regular communication about strategy and performance. The QVM Group team also provides municipal refinance services, strategic business planning and financial analysis service for new ventures, private acquisition analysis, and custom investment research. Richard's extensive experience, includes serving on the Board of Directors of Aberdeen Asset Management PLC (London Stock Exchange: ADN), membership on the Board of Directors of Phoenix Investment Counsel (renamed Virtus Investment Advisors), a U.S. pension manager and investment advisor to the Phoenix Funds (renamed Virtus Funds), as well as serving as Managing Director of a series of offshore investment funds based in Luxembourg. He has led institutional asset management sales and had overall responsibility for management of a U.S. mutual funds broker-dealer. He was a charter investor and member of the Board of Directors of several internet companies, including Lending Tree prior to its IPO. He is a graduate of Dartmouth College. QVM Group LLC is a Registered Investment Advisor. Visit the QVM Group website http://www.qvmgroup.com/QVMinvest/ |
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