I am in favor of any investment methodology that uses some type of reasoning for getting into an investment and, more importantly, getting out of it to either take profits or to limit losses.
Any such approach is better than the mindless “Buy & Hope—things will somehow work out in the long-term” way of thinking. While I am admittedly biased towards tracking trends, others use technical analysis to arrive at some kind of conclusion as to when to be in the markets and when not.
The article “Time to take Profits on S + P 500” describes seasonal tendencies and what resistance levels to look for. For the S&P; that translates into 1,528, which is the old high made in 2000. While technical analysis deals with many other issues, such as overbought conditions, keep in mind that just because an index has reached that level, it can stay there for a long time and a sell off is not necessarily imminent.
I have used some of these indicators 25 years ago, but found them not to be as reliable as the use of a trailing sell stop or the crossing of a major trend line. However, while technical analysis has some great tools, nothing beats following actual market behavior via clearly defined exit points to determine when it’s time to take the chips off the table.