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Post by uncleharley on Feb 8, 2023 14:06:17 GMT
The daily and weekly charts for the S&P 500 will show the proverbial Golden Cross after the market close this week. This will happen regardless of today's market activities because it is nearly impossible to change the trend of a 50 or 200 dma with one day of trading. Most technicians will tell you that when the 50 dma crosses above the 200 dma a new rally has been confirmed and a bull market in stocks is in progress. Apparently, the landing for domestic stocks was so soft that no one noticed. Since there is always the possibility of a false signal and the fact that the stock market tends to lead the economy, this golden cross does not mean the economy has bottomed, but it probably will in the next 6 months or so. Does anyone else believe the stock market has bottomed and has begun a new bull ride?
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Post by Karen on Feb 8, 2023 15:09:45 GMT
Thank you for all of your expertise that you freely share here. Some other articles on golden crosses are below-linked. Given, per the last linked article, that S&P golden crosses only produce positive returns about 65% of the time, and given the extreme headwinds we face this time around, my answer to your question is we may have bottomed, but we will see a substantial move lower before a substantial move higher. My question though to you is, in relation to the quote I posted below from the first linked site, what "other signals and indicators confirm" the bullish trend? Basics www.investopedia.com/terms/g/goldencross.asp"Limitations of Using the Golden Cross" "All indicators are “lagging,” and no indicator can truly predict the future. Many times, an observed golden cross produces a false signal. Despite its apparent predictive power in forecasting prior large bull markets, golden crosses also do regularly fail to manifest. Therefore, a golden cross should always be confirmed with other signals and indicators before putting on a trade." Current seekingalpha.com/article/4575048-the-implications-of-a-golden-cross-for-the-s-and-p-500Current www.thenationalnews.com/business/markets/2023/02/05/how-the-golden-cross-pattern-is-bringing-optimism-to-wall-streets-stock-market-bulls/#:~:text=Since%201950%2C%20the%20S%26P%20500,technical%20strategist%20at%20LPL%20Research. From Sept 2021 www.tradingsim.com/day-trading/golden-cross#Is_a_golden_cross_a_sign_that_investors_should_buyGeneral about stock market analysis: www.businessinsider.com/wall-street-scaremonger-economists-stock-market-analysts-cost-investors-money-2023-2
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Post by Chahta on Feb 8, 2023 15:29:28 GMT
So the 50 DMA has crossed above the 200 DMA on Feb 4 it appears. Do you consider this a continuation of the secular bull? Have we started a bear (secular) and this is a bull within a bear? I am not sure where we are currently.
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Post by mozart522 on Feb 8, 2023 16:28:33 GMT
Chahta, I believe no one knows. Way too many variables. However, a lasting bull market during a recession would be unusual to say the least. And if You believe the FED, a recession is very likely. I'm happy to take 4.75 to 5% MM return for the next year until something breaks.
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Post by steelpony10 on Feb 8, 2023 16:38:27 GMT
uncleharley , It might be interesting to post a poll about questions like that. There’s a poster I ran across maybe on here that posts some interesting ones. You vote and comment if you like. This still doesn’t look like an earnings recession just a slowdown to me. There’s not much wrong with the whole American economy but some of our trading partners are worse off. So a bottom to what? I plead Sgt. Shultz.
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Post by bobfl on Feb 8, 2023 17:19:40 GMT
Does anyone else believe the stock market has bottomed .....? Will it go below 3583? A 13% drop. Since I am not betting any money, I will bet... yes. Actually, NO. It will hit right above 3583. Say 3585. Well, actually I changed my mind...Yes. Seriously, one thing could cause that. The need to get to two percent.
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Post by uncleharley on Feb 8, 2023 17:50:47 GMT
I wrote the O P in a hurry and consequently left out some important info. I should have said that Golden Cross confirms that the bottom is in for domestic stocks. The actual bottom for the broader stock was marked in mid October at 3491 on the S&P 500. Yes we will see corrections from here, but the indications are that we are in a bull market for domestic stocks. Enough indicators have turned bullish for me to project a new all time high for the S&P of 4819 or more by the end of this year. Those indicators are the current trens in price of the S&P, the slope of that trend, a variety of momentum indicators, increased trading volume since the 1st of the yr, and the golden cross. Yes, no one knows the future with certainty, but anyone can make a credible projection by using factual data and a bit of thought. stockcharts.com/h-sc/ui?s=$SPX&p=W&b=3&g=0&id=p93931188158&a=524485138&listNum=86
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Post by bobfl on Feb 8, 2023 18:01:41 GMT
"The actual bottom for the broader stock was marked in mid October at 3491 on the S&P 500." and "Yes, no one knows the future with certainty, but anyone can make a credible projection by using factual data and a bit of thought." The bit of thought I would use is: What caused the low at "mid October at 3491"? Was it fact, like a strong decline in earnings or emotion like "what, no pivot?". Will emotion surface again if the Fed says they have to go higher?
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Post by marpro on Feb 8, 2023 18:08:50 GMT
I wrote the O P in a hurry and consequently left out some important info. I should have said that Golden Cross confirms that the bottom is in for domestic stocks. The actual bottom for the broader stock was marked in mid-October at, 3491 on the S&P 500. Yes we will see corrections from here, but the indications are that we are in a bull market for domestic stocks. Enough indicators have turned bullish for me to project a new all-time high for the S&P of 4819 or more by the end of this year. Those indicators are the current trend in price of the S&P, the slope of that trend, a variety of momentum indicators, increased trading volume since the 1st of the yr, and the golden cross. Yes, no one knows the future with certainty, but anyone can make a credible projection by using factual data and a bit of thought. stockcharts.com/h-sc/ui?s=$SPX&p=W&b=3&g=0&id=p93931188158&a=524485138&listNum=86So, I can start wetting my feet some more. So far, I have not reduced my income focus yet. Now, I can start moving some from PDI towards the broader market. You can make more money by increasing the income also, not necessarily through CG, and without going through all those gyrations in your graph. I think about it in the next few days.
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Post by steadyeddy on Feb 8, 2023 18:09:50 GMT
uncleharley, I tend to agree that a bull may start... but the pessimism is high at the moment. But, the speculative fervor is also high. So, contradictory signals to me.
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Post by uncleharley on Feb 8, 2023 19:03:23 GMT
uncleharley , I tend to agree that a bull may start... but the pessimism is high at the moment. But, the speculative fervor is also high. So, contradictory signals to me. That is one reason why I like charts and data.
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Post by uncleharley on Feb 8, 2023 19:06:26 GMT
"The actual bottom for the broader stock was marked in mid October at 3491 on the S&P 500." and "Yes, no one knows the future with certainty, but anyone can make a credible projection by using factual data and a bit of thought." The bit of thought I would use is: What caused the low at "mid October at 3491"? Was it fact, like a strong decline in earnings or emotion like "what, no pivot?". Will emotion surface again if the Fed says they have to go higher? The Fed is saying the rates will go higher. So far the trend in stock prices remains intact.
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Post by rhythmmethod on Feb 8, 2023 19:18:36 GMT
This is the reason I like predictable INCOME. I already know my outgo, which takes much pressure off speculating. Predicting growth is way beyond my capabilities. But I am voting with my book to increase risk - s l o w l y - Good luck out there!
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Post by marpro on Feb 8, 2023 19:47:41 GMT
I calculated the year-end gain for S&P 500, which is about 16-17%. I will take the 14% (personal) yield from PDI and 16% yield from ECC than going through all these gyrations of the market. If I move, then I have to pay taxes on the CG also. I am going to pass for a while.
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Post by uncleharley on Feb 8, 2023 20:11:48 GMT
This is the reason I like predictable INCOME. I already know my outgo, which takes much pressure off speculating. Predicting growth is way beyond my capabilities. But I am voting with my book to increase risk - s l o w l y - Good luck out there! I am not suggesting anyone should buy or sell anything. Everyone should follow their plan. I am only trying to express my amazement that nearly no one is recognizing that a Bull market has begun.
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Post by bobfl on Feb 8, 2023 21:04:55 GMT
The bit of thought I would use is: What caused the low at "mid October at 3491"? Was it fact, like a strong decline in earnings or emotion like "what, no pivot?". Will emotion surface again if the Fed says they have to go higher? The Fed is saying the rates will go higher. So far the trend in stock prices remains intact. I mean higher than the terminal rate that the Fed has in its dot plot. If they cannot get down to their target 2% inflation, they will elevate the dots and the market will drop AGAIN. When they are currently saying (after the recent news) that they could "continue raising rates", they are now meaning beyond the terminal rate expected by the market. It's not even about a bull market; to me, it is about bear market rallies that trick people. When they say they are finished raising rates, the rally will start, UNLESS they stop because of a clear recession. Just one opinion. Except for dividends coming in, I am fully invested, so don't care what happens.
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Post by Fearchar on Feb 8, 2023 21:35:17 GMT
There is more to the market than price and volume and that is why there are still reasonable skepticism.
The growth rate in earnings is falling, and has been falling for months and that does not appear to be priced in. The market does appear to be anticipating lower interest rates reasonably well, but not much more.
This is my impression, but I understand shared by experienced professionals at Morgan Stanley and Blackrock too.
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Post by archer on Feb 8, 2023 22:23:42 GMT
This is the reason I like predictable INCOME. I already know my outgo, which takes much pressure off speculating. Predicting growth is way beyond my capabilities. But I am voting with my book to increase risk - s l o w l y - Good luck out there! I am not suggesting anyone should buy or sell anything. Everyone should follow their plan. I am only trying to express my amazement that nearly no one is recognizing that a Bull market has begun. I do believe the secular bull is in tact (interesting choice of words now that I noticed it), and the cyclical bear is behind us. At the same time, I'm not as excited about it as I would be if market conditions were better. The greater the volatility the less meaning I see in the uptrends, and from a TA perspective, we have several levels of resistance to overcome to make new all time highs which will likely make for a choppy market with everything else going on. I like a bull market that looks more conducive to leveraged ETFs that need minimal watching. Amatures like me need easy markets.
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Post by marpro on Feb 8, 2023 23:34:18 GMT
Fed is likely to screw up this market. Here is the latest.
- “There’s not much evidence in my view that the rate hikes we’ve done so far are having much of an effect on the job market,” Minneapolis Fed President Neel Kashkari said in a town hall at the Boston Economic Club. “So that means we need to do more. How much more, I’m not sure.”
There were two more FED presidents who made similar comments. Read the link.
Hang in there. I am not going to change anything except that I am trying to be careful on my marginal tax rate and taxes. Keep my taxable income under check and increase the ROTH income more.
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Post by steadyeddy on Feb 9, 2023 0:08:18 GMT
This is the reason I like predictable INCOME. I already know my outgo, which takes much pressure off speculating. Predicting growth is way beyond my capabilities. But I am voting with my book to increase risk - s l o w l y - Good luck out there! I am not suggesting anyone should buy or sell anything. Everyone should follow their plan. I am only trying to express my amazement that nearly no one is recognizing that a Bull market has begun. uncleharley, good message. I am sticking to my plan and I still have plenty of dry powder that is earning 4% in MM funds. My gut tells me (which is often wrong) that we will see the October 2022 lows again pretty soon, and any sustainable market recovery is a 3Q/4Q thing. I am selling some tradable stock ETFs into rallies and making a few bucks for my donuts/coffee.
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Post by marpro on Feb 9, 2023 0:34:18 GMT
The greed and fear. It is greed driving the market now. I was greedy too once, until Oct. 10, 2022. No more. Now, "show me the money."
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Post by Chahta on Feb 9, 2023 1:22:15 GMT
This is the reason I like predictable INCOME. I already know my outgo, which takes much pressure off speculating. Predicting growth is way beyond my capabilities. But I am voting with my book to increase risk - s l o w l y - Good luck out there! I am not suggesting anyone should buy or sell anything. Everyone should follow their plan. I am only trying to express my amazement that nearly no one is recognizing that a Bull market has begun. I am not amazed if this is a new bull market. There is plenty of contradicting information both ways. The way the world has been the last few years has certainly added uncertainty. But it is hard to fight the tape YTD. Bear markets start at high CAPE ratios like we have now. However I am all in.
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Post by Fearchar on Feb 9, 2023 2:42:30 GMT
Recent thoughts from Morgan Stanley:
Morgan Stanley’s Global Investment Committee, however, believes recent equity gains are merely another bear market bounce—not the beginning of a sustainable bull market. As noted last week, the current rally seems to be based not on improving economic fundamentals but on easing financial conditions, which we believe are likely to reverse later this year.
What’s more, even as stocks trade higher, recent market action for other asset classes paints a starkly different picture. There are three that merit particular attention:
U.S. government bonds: Treasury yield curves remain deeply inverted, a time-tested signal that an economic downturn is on the horizon. With yields on shorter-dated debt higher than on longer-dated debt—indicating that investors collectively see more risk in the near future than down the road—the important 2-year/10-year Treasury yield curve is inverted by more than 70 basis points, the most in decades.
Gold: Since the October low for the S&P 500, gold continues to outperform both the S&P 500 and the Nasdaq. This is curious given that many investors view gold as a safe haven when turbulence looms. While the price of gold likely got a boost from rising risks around the U.S. debt ceiling, it likely would not be maintaining this level if economic growth were in fact stabilizing or rebounding, as stocks seem to indicate.
Oil: If equity investors are expecting a “soft landing” and potential rebound in economic growth later in 2023, oil prices do not reflect that. Crude oil futures, for example, are down 8.6% year-to-date and 18.7% from a year earlier. Consensus expectations for oil suggest that falling demand in the U.S. could offset any demand gains from a recovery in China.
We remain cautious about the direction of the equities market this year, as these other assets do not confirm the optimistic outlook implied by stocks’ performance. Equity investors are sending prices and valuation multiples higher, with little consideration for broader implications. The likely impacts of tightening monetary policy, corporate earnings vulnerability and uncertainty around the path of inflation are additional reasons for prudence.
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Post by Chahta on Feb 9, 2023 13:58:25 GMT
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Post by archer on Feb 9, 2023 15:45:15 GMT
I suppose the epitome of market timing is trading based on the time of day. Tom Bowley covered this in one of his vids a few months ago. In 2022 the $NDX was I believe the hardest hit exchange. However if bought every day in 2022 at a certain time, IIRC somewhere around the middle of the trading day and sold near the close, the YTD gain was positive in the dbl digits.
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Post by uncleharley on Feb 9, 2023 17:12:59 GMT
Yes, and there is that method of buying on monday and selling on friday. It works in a slow rising market. It doesn't work in a volatile or turning market.
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Post by uncleharley on Feb 10, 2023 2:55:36 GMT
The greed and fear. It is greed driving the market now. I was greedy too once, until Oct. 10, 2022. No more. Now, "show me the money."
The VIX rose 5% today. Complacency and, I think, greed have taken a hit.
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Post by archer on Feb 10, 2023 3:26:06 GMT
Another case to be made for the bull is recent leadership of XLY, XLK, and semis. The market isn't anticipating a recession when rotating into offensive sectors. The large financial institutions might be talking a bleak future but their money is saying otherwise. I think this past week has a healthy pause, and gap fill after Feb 2. Barring a new event, I don't think we not do worse than testing the 20.
The nice thing about not being a talking head on one of the major networks, If I'm wrong, who cares? :-)
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Post by Deleted on Feb 11, 2023 21:39:02 GMT
As we have gone beyond the OP and what the charts are saying, re: golden cross, I will comment on the other items being presented.
I am not certain that oil demand is actually dropping - "Jan 31 (Reuters) - Oil prices closed steady on Tuesday after recovering from a near three-week low, drawing support from a weakening dollar and on data showing that demand for U.S. crude and petroleum products rose in November." Nonetheless, lower demand implies lower prices and that always puts money in consumers pockets.
If one were to average out the last 6 months of CPI-U, and annualize it, the inflation rate would be 1.8%. If that changes, then the FED may go beyond their stated terminal rate. That is yet to be determined. The FEDs twin mandate of 2% inflation and a strong job market appear to be close at hand. The FED may have to accept wage growth as a phenomenon associated with labor shortages, and somewhat outside of their control.
I attribute the inverted yield curve to a real market (auctions) that is resisting the FEDs efforts to influence rates via ST pressure. Thus, I am uncertain that it is predictive of recession, just uninterested in short term hijinx.
The last two quarters of GDP were around 3%. If one is to accept the rule that a recession is indicated by two consecutive quarters of negative GDP growth, why not acknowledge that the U.S. economy dipped into recession the the first half of 2022 and it is behind us?
As Archer points out, the opposite of a rotation into defensive sectors is underway.
This seems like the classic "glass half-full" moment. A Rorschach test, where it reflects each persons nature, more than anything. Like Chahta, I see conflicting information, but I am all in, because in my view, the outlook is leaning positive.
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Post by uncleharley on Feb 11, 2023 22:01:46 GMT
Add in a weekly uptick in the VIX and it looks like a landing so soft that only a Butterfly would know it.
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