Daniel Frishberg Latest Tips on The Current Market
Dan "The Money Man" Frishberg's Views
Dan "The Money Man" Frishberg's Views
Strategic Analysis --- Short Term:
We are not doing any new buying at current levels, though it is tempting as prices persistently move up. We are picking up short term weakness, alongside the longer term strength, we have been reporting for many months.
Daniel Frishberg see no sign of a major long term end to the bull market, but wants to share a refreshing pause to provide a lower risk entry point.
In the short run, stock, prices are rising persistently, though beneath the surface, our Market X-Ray is picking up less strength. Technicians would call this a divergence that is the early suggestion of a pullback or profit taking episode.
For example, the number of stocks above their 10 day moving average was around 90% now it's at 75%. It is moving down, while the indices like the S&P 500 continue to move up. In other words, we see underlying weakness, still looking good on the surface.
I should mention that many analysts see some good reasons for persistent optimism among U.S. investors. Markets are made up of people, who are both individuals and part of a herd. Just because prices reach levels that have in the past indicated that a round of selling was imminent, doesn't mean there isn't something moving people to buy right now.
If the president is weakened and unable to put in more rules, like cap and trade, and more regulations, the markets would take that as a relief at least for a while. Americans deal with whatever the reality is, once they know what it is and what the rules are. If it looks like the changes to our society will stop and the situation will get stable, many people would just find roots and start developing again in the new situation.
The stock market does not accurately predict every little change in the world situation. But
Daniel Frishberg has noted in studying history that the stock market has been the only true indicator to show a major inflection point.
The stock market started to rally late in WW2, at a time when Germany and Japan appeared to be unbeatable, and just about everyone in Europe and Asia was resigned to the Axis powers being in control for the next hundred years. History demonstrates that the markets started to rally exactly at the turning point at which the U.S. led the Allied nations to victory.
I don't want to be so dramatic as to predict that the present rally signals a terrible loss for the President and the Democrats, but in my mind, at least, the gridlock that could follow the fall elections could be a great positive for the U.S. economy and its markets. Perhaps that is what markets are responding to, but as mentioned above, it does not explain why indicators of demand are becoming more selective, rather than broadening.
I have mentioned before that most analysis is done by seeing all market participants as one homogenous group. We have found that this invites error. Buyers and sellers are actually two different groups, operating under different sets of pressures.
Buyers are actually seeking an opportunity to assume more risk, because they see the odds as favorable. Sellers, on the other hand mostly want to reduce risk by removing their money from harm's way.
These are two entirely different psychological states to read more please visit
www.themoneyman.com
Daniel Frishberg Latest Tips on The Current Market
By: Dan Frishberg
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