hardincap Posted March 19, 2012 Share Posted March 19, 2012 http://hussmanfunds.com/wmc/wmc120319.htm As of Friday, the S&P 500 was within 1% of its upper Bollinger band at virtually every horizon, including daily, weekly and monthly bands. The last time the S&P 500 reached a similar extreme was Friday April 29, 2011, when I titled the following Monday's comment Extreme Conditions and Typical Outcomes . I observed when the market has previously been overbought to extent, coupled with more general features of an "overvalued, overbought, overbullish, rising yields syndrome", the average outcome has been particularly hostile: "Examining this set of instances, it's clear that overvalued, overbought, overbullish, rising-yields syndromes as extreme as we observe today are even more important for their extended implications than they are for market prospects over say, 3-6 months. Though there is a tendency toward abrupt market plunges, the initial market losses in 1972 and 2007 were recovered over a period of several months before second signal emerged, followed by a major market decline. Despite the variability in short-term outcomes, and even the tendency for the market to advance by several percent after the syndrome emerges, the overall implications are clearly negative on the basis of average return/risk outcomes." As it happened, April 29, 2011 turned out to mark the exact high of the S&P 500 for the year, and was followed by a steep intermediate market plunge. My impression is that despite the recent run of speculation the market has enjoyed - largely reflecting a reprieve in European debt concerns and what appears to be a drawing-forward of jobs into the first quarter due to unseasonably favorable weather - the extended implications of present market conditions remain decidedly negative. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 19, 2012 Share Posted March 19, 2012 Is he sticking with his "Sell BAC immediately at the open" directive? EDIT: Oops, that was Gundlach Link to comment Share on other sites More sharing options...
hardincap Posted March 19, 2012 Author Share Posted March 19, 2012 Is he sticking with his "Sell BAC immediately at the open" directive? I think you're thinking gundlach of double line ? Link to comment Share on other sites More sharing options...
Rabbitisrich Posted March 19, 2012 Share Posted March 19, 2012 Did Hussman ever write an editorial explaining his use of technicals? I've also heard Gundlach referring to chart patternss when discussing commodities. Link to comment Share on other sites More sharing options...
Parsad Posted March 19, 2012 Share Posted March 19, 2012 I thought a "Bollinger band" was what Al Roker had surgically implanted so he could lose weight! ;D By the way, we have plenty of cash and I did not use technicals to figure it out. Cheers! Link to comment Share on other sites More sharing options...
hardincap Posted March 19, 2012 Author Share Posted March 19, 2012 Did Hussman ever write an editorial explaining his use of technicals? I've also heard Gundlach referring to chart patternss when discussing commodities. technicals is just a small part of his analysis. Link to comment Share on other sites More sharing options...
Uccmal Posted March 19, 2012 Share Posted March 19, 2012 Good one Sanj, lol. The problem with using the S&p at the moment is that it is not a case of a rising tide raising all boats. It is a case of Apple, IBM, and MSFT raising the index, with a little help from the general market. Using the S&P for past analysis is also replete with problems. The biggest companies in the index have grown market cap based on worldwide increases in business over the last 20 years. To compare it to US GDP is not the same comparison as 20 years ago. Link to comment Share on other sites More sharing options...
bmichaud Posted March 19, 2012 Share Posted March 19, 2012 I can't even believe I'm saying this (perhaps a contrarian indicator in and of itself), but given Adam Hamilton's unbelievable call on the market since the bottom last year and his current bullish stance, I have to take the opposite side of Hussman on this one and go with Hamilton and Moore. Basically the wall of worry is alive and well (unfortunately I was part of the worry for awhile). See here: http://zealllc.com/2012/eustrec.htm Ned Davis also remains quite bullish at the moment. Adam Hamilton and Ned Davis were both cautious on the market last year when Hussman "called the top". Given Hussman's atrocious anaylsis, timing, trading (whatever you want to call it), i gotta side with the proven track records on this one. Link to comment Share on other sites More sharing options...
mpauls Posted March 19, 2012 Share Posted March 19, 2012 "As of Friday, the S&P 500 was within 1% of its upper Bollinger band at virtually every horizon, including daily, weekly and monthly bands." hahaha. Good one. Thanks, I needed that. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 19, 2012 Share Posted March 19, 2012 Using the S&P for past analysis is also replete with problems. The biggest companies in the index have grown market cap based on worldwide increases in business over the last 20 years. To compare it to US GDP is not the same comparison as 20 years ago. Yes, it's a shame that the earnings of KO, JNJ, KFT, GE, MSFT, AAPL, IBM, PFE, PG, and ... cannot grow faster than US GDP. Link to comment Share on other sites More sharing options...
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