An interesting week for the markets

October 15, 20129 Comments

The S&P is at an interesting juncture right now. While facing a week of major earnings announcements (3 US banks, IBM, Coca Cola, Johnson & Johnson, AMEX, Pepsi, GE, McDonalds and others), its playing with prior resistance / new support near 1420 – see the green horizontal line on the chart. Meanwhile, near-termed momentum indicators are oversold – and close to hooking up (see bottom of the chart). Its also testing the 50 day MA and looks to want to hold. Seasonal buy points come in at the end of the month, so the timing is getting nearer from a seasonal perspective. My only concern is the break of the short termed uptrend that began last June. Perhaps we are ready for a near termed rally based on oversold conditions and the 50 day MA support. But I wonder if, as we approach my maximum upside target for the S&P at around 1500-1550, we may be setting up for a series of fits and starts over the winter. I am long the market, but have been focusing on lower-beta positions of late. I also have a bit of cash in the equity portfolios I manage with an eye on buying into any future weakness.

Watch Keith live at the World MoneyShow in the comfort of your home or office!

The MoneyShow, where I will be appearing next Thursday October 18th at 3:45pm at the Metro Toronto Convention Center, has launched a pretty cool feature this year. You can register ahead of time to watch the show on your computer.

 

Investors growing dissatisfied with their Advisors

According to J.D. Power and Associates’ latest survey of full-service investment firms released in late August, for the second year in a row investors across Canada are increasingly dissatisfied with their financial advisers. It is my opinion that one reason behind investor dissatisfaction is the lack of adaptation to current trading realities by the investment industry. Most investment industry players rely on “Modern Portfolio Theory” (MPT).  MPT involves selecting a collection of investment assets that has collectively lower risk than any individual asset. Beyond the usual asset allocation weighting of stocks & bonds, MPT suggests holding a variety of countries, sectors and market capitalizations, as well as commodities and other securities within a portfolio. Investment styles are also diversified through value, growth, alternative, and other disciplines. While MPT followers tend to rebalance assets periodically, the majority who follow the principals tend to be buy & hold investors. MPT was the spawning ground for selling investment products such as mutual funds, managed wrap accounts and other hybrids. Effectively, as the investment industry embraced MPT, it moved away from identifying and timing entry/ exit points on good opportunities in individual securities, and into the role of salespeople. I would suggest that, beyond the obvious disadvantages of the high fees behind investment products, one major disadvantage of these products has been the lack of connection between the retail Investment Advisor and the markets. Effectively, these investment products have removed investors and their advisors from the daily analytics and buy/sell decision making –leaving these decisions to a faceless manager who is him/herself limited by the sheer size of their portfolios when making trading decisions. It is this disconnect that limits the Advisors ability to understand the necessity of trading within a volatile market.

While I normally keep the “commercials” away from this blog, I would like to note that if you, or someone you know, are not getting the results you are looking for and would like a more active approach to your portfolio, why not give my firm, ValueTrend a call? We’re happy to show you how our conservative approach can help you achieve more predictable returns in today’s uncertain times. Here’s our website, if you would like more information about our approach: www.valuetrend.ca

9 Comments

  • Keith; As you know, the SMA50, SMA200 and Stocastics are my favorite indicators. WIth the addition of your horizontal line, you have made a strong technical case for an upward bounce.

    Reply
  • If you rotate your upward trendline that you drew downward to the tails of the candlesticks instead of the bodies you also have a support point that almost coincides exactly with the horizontal line you drew at about 1430. However, the S&P would now only touch this line only three times instead of the 4 on your original line.

    Reply
  • A good call as the S&P500 produced a textbook perfect buy signal yesterday has gone up all day today. A ‘smart bounce’ off the SMA50 🙂

    Reply
  • Hi Keith,
    I was wondering if you can request moneyshow to allow you to post your presentation & others on your website like BNN’s, hence, people like myself who can NOT make to the show can watch it later. Wish you Good Luck at the show & enjoy.
    Hopefully will join you next year

    Reply
    • Muntazir–I believe that they will be giving me a copy of the video, so I will post it if that is the case–it will go on this blog as soon as available.

      Reply
  • now we are at the underside of the above drawn trend line which could be resistance

    Reply
    • And just like magic the underside of that trend line did indeed provide resistance. Could technical analysis really be this easy?

      Reply
      • Sometimes it feels that way Dave–and then, you get your head handed to you on a platter one day after a false signal!

        Reply

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