S&P 500 index closed Friday at 1295.22, falling on increasing volume
since dropping below 1340.
1340 is where the index had Support in February and early March – which is
why this level was considered a Support level. This tidbit was pointed out
frequently on CNBC and Bloomberg.
Buy and hold investors are now up about 1 1/2% YTD.
The S&P 200-day Simple Moving Average is currently at 1278.
This is in the neighborhood where the S&P was at the beginning of the year.
I expect the falling price will stall and possibly bounce near this level…
don’t have a clue if it will rise from there or fall some more.
We shouldn’t panic but it will be important for the mega traders where
the market closes at the end of this month.
“Sell in May” has again turned out to be a decent strategy.
NOT because it has anything to do with May this year, but like last year,
the market had surged and gotten “Overbought”… also frequently mentioned
on CNBC and Bloomberg.
Remember- the market gets Tall, then Stalls, then Falls.
How’s that for simple analysis?
To see this, look back at the market tops in 2000 and 2007 – these were
not in May. The Stall in 2000 began in April and the Fall didn’t start
until November. The 2007 Stall began in June and the Fall didn’t start
until 6 months later.
I know that a few of you will say, “But that didn’t happen in 1952 or 1968 or whatever year.
I don’t know how many times I’ve said this but this is not your father’s stock market.
You father wasn’t matched up against computerized trading that doesn’t give a rat’s ass
about fundamentals.
This means that you should evaluate the market conditions
as they are currently and forget about what the market was like
some 30, 40, and 50+ years ago. Hell, those were the days when you could still
change your own spark plugs.
Technology has changed so many things, including the stock market.
And if the 80% of market trading is not based upon fundamentals,
what is it based upon?
In the old days, I was a pretty good investor.
But I like to remember that no body cares how good we use to be.
I have to be good today (in today’s market conditions) if I want
my investing to pay off.
Comments
I still change the plugs on my '87 Toyota pickup, and it gets better gas mileage now, at 25 years old, than the equivalent current model fresh off the showroom floor. Great advances in tech sometimes aren't advances at all, especially considering how they're utilized.
Cheers, AJ
I don’t see how ETFs or other S&P related indices would have any
direct effect on the stocks within the S&P and therefore its price movement.
If I buy SPY it’s because I see the S&P moving up.
Or buy SH because I see the S&P moving down.
But these trades have no impact on the S&P index itself.
So, I just don’t worry about why the markets are more correlated.
And along those lines, I read a great deal from posters trying to analyze WHY this
or that may be happening. So what? Chances are that we may never know WHY.
So I don’t worry or try to analyze that which I am incapable of analyzing.
Some years ago, I had one of those over-powered cars. They had to lift it up and
drop the entire engine out in order to change plugs.
Yeah, those were expensive tuneups.