Wednesday, October 19, 2016

Chop Chop

They say that the market spends 80% of the time going sideways.  They must be talking about this market.  There is no defined trend over the past several weeks.  It has been a short term fader's paradise.  Except I haven't been playing that game for a while now, so I have been missing out on the fading opportunities.  It is not something that I have any regrets about, just because the reward isn't that great, even if the risk isn't either.  Of course, these choppy markets can go sideways until they dull your senses and make you complacent, and then wham!  August 2015 happens.

I haven't bent down to pickup the dimes all over the place in front of the really slow bulldozer, I don't want to be the one picking up dimes when the bulldozer driver hits the gas.

I do believe we will resolve this chop by going higher, much like you had a slight uptrend in the first half of 2015, but that goes against my longer term view that this market is overvalued and set up for a 20% correction within the next couple of years.

The trend of fewer buybacks and lack of new money coming into the equity market makes the upside limited, much like 2015.  At the same time, I don't see any kind of topping action or overbullishness among the investment community.  There are a lot of reluctant bulls out there.

As for other markets, the crude oil downtrend is probably over and we are in for a period of sideways action there, and bonds look bad over the next 6 months, with central banks hinting less accommodative policy over and over again.  And I am usually a bond bull.  So not a great time for any long term bulls out there in any financial asset classes at the moment.

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