ETF/No Load Fund Tracker StatSheet
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Friday, November 30, 2012
MAJOR INDEXES END THE WEEK FLAT AND JUST ABOUT EVEN FOR THE MONTH; NASDAQ BUCKS THE TREND
The focus on the fiscal cliff continues to be the main concern on Wall Street, as the major indexes vacillated around the unchanged line but did not make much headway today or for the week.
It’s been simply choppy trading over the past 2 weeks as Wall Street hung on to every statement from the fiscal cliff negotiators hoping that some type of solution would be still forthcoming. Nevertheless, the S&P 500 recovered from its mid-November sell off, which took it down by some 6% from the high of the month to its low.
It’s amazing to me that the indexes have been this resilient and trading higher in the face of the on and off negotiations, along with declarations of stalemate, that are now featured headline news on an hourly basis.
It makes me wonder for how long the markets will be this patient before the bears gain the upper hand. After all, sooner or later we all want an answer to the lingering question “where is the beef?”
Other economic data are simply ignored by the market as the fiscal cliff reigns supreme. Consumer spending fell in October (first time in 5 months) and income growth stalled supporting my view that the 4th quarter growth numbers may come in weaker than expected. Since the consumer is responsible for 2/3 of GDP growth, these numbers are not exactly encouraging.
It’s still wide open as to what will happen with the fiscal cliff negotiations. Opinions range from a last minute deal, to no deal, a slide off the cliff or a cowardly non-decision by extending some benefits into next year.
It’s uncertainty at its finest. One analyst opined that the markets will behave similarly like during the hope rally leading up to the announcement of QEternity by the Fed a few weeks ago, after which the indexes sold off.
My suggestion is simply that it’s best to play it as conservatively as possible. Should the rally continue, you might miss a little of the upside, but that’s better than being stuck in a severe downdraft.
It reminds me of an old saying, which I have posted before, but it bears repeating: “I’d rather be out wishing I was in than being in wishing I was out.”
Our Trend Tracking Indexes (TTIs) headed further away from their respective trend lines and ended the week as follows:
Domestic TTI: +2.13% (last week +1.53%)
International TTI: +4.71% (last week +3.93%)
Have a great week.
READER Q & A FOR THE WEEK
All Reader Q & A’s are listed at our web site!
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A note from reader Lou:
Q: Ulli: What is the significance of the 200 day M/A moving over the 50 day M/A?
A: Lou: You probably meant it the other way around; when the 50 day M/A crosses the 200 day M/A…
That is an old trend following signal that some investors use. If the crossing is to the upside, it is referred to as the ‘Golden Cross;’ if it’s to the downside, it is called the ‘Death Cross.’
Since both indicators are moving averages, the signals happen with quite some delay within a major trend. It’s considered the final confirmation that a bull market is in full force (Golden Cross) or that a bear market is upon us (Death Cross).
Personally, I think these signals get you in the market too late and out of them also only after a severe market retreat, which is why I don’t use them.
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