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Market Climate and Weather Forecast

Market Climate and Weather Forecast. "It is not the strongest of the species that survives, nor the most intelligent, but the ones most adaptable to change." Charles Darwin. Presented by Herb Geissler, Managing Director of The St.Clair Group

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Market Climate and Weather Forecast

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  1. Market Climateand Weather Forecast "It is not the strongest of the species that survives, nor the most intelligent, but the ones most adaptable to change." Charles Darwin Presented by Herb Geissler, Managing Director of The St.Clair Group Rational Investing/VectorVest Special Interest Group of Pittsburgh AAII November, 2012

  2. Secular Bear Market RequiresDifferent Strategies Than During Bull Avoiding losses is more important than going after big gains Kuznets’ Infrastructure cycle averages 17.6 years for each bull or bear phase

  3. PE Likely To Halve Before Bear Ends 8 8

  4. Spending Problem is Severe

  5. Congress Must Bite the Bullet Sequestration on March 1 would trim 10% from 36%

  6. Ominous Triple Top Implies Halving of Market Value 1500

  7. Hirsch Foresees Six More Years of Pain Dow plunges from 14,000 to 8,000 Little Book of Market Cycles: Jeff Hirsch

  8. Bear Market Post-Election Years Are Barely Profitable 15 % drop

  9. Current Bull Rally is In-line With Past Pattern March peak 10% Fall Corection 15% Fall Correction in 2014 6 % drop To April Low

  10. February 2013Long-Term Strategic Conclusions At mid-point of Kuznets’ cycle, upside is limited; cautious selections and disciplined timing (in and out) are essential. Even bonds are risky now. Deleveraging heavy borrowings, after spending beyond our means, increases unemployment and will cause recessions during next several years. But benchwarmers can’t score points. Look for emerging trends early (eg: fracked natgas) and clearly (Ag commodities vs Industrial minerals) Disciplined timing to lock-in gains is a survival skill in this roller coaster market.

  11. Market Tracks GDP

  12. WLI Tracks GDP andEvidences Past Year of Recovery

  13. Positive and rising PMI’s support rising market Market rises when ISM is above 50, except right after 9/11/2001 Consumer Spending is supporting retail, wholesale, healthcare and services sectors

  14. Stalling CAPEX Raises Doubtsrecent “up-tick” was driven by tax-credits expiring

  15. Financials Often Are Harbingers of Market Recoveries

  16. Fed Stimulus Liquidity Has Been Real Driver of Bull Market

  17. February 2013Intermediate-Term Strategic Conclusions • Liquidity from Fed still flowing strongly, keeping interest rates low • U.S manufacturing sector becoming healthier, • Unemployment is stabilizing temporarily, • Europe is resolving its sovereign debt concerns, • Emerging Markets are regaining strength. All support bullish US stock market for next few months. But political uncertainties necessitate investing methods with great selectivity (eg: watch sector rotation) and also using caution in strategies and vehicles. Remember: we are still in the Kuznets Bear Phase

  18. Weather Forecastfor More Active Investors When the facts change, I change my position. What do you do, sir? - John Maynard Keynes

  19. 12-Month Moving Average Helps Avoid Major Collapses 7% above Bear-Zone

  20. IVY Invests Very Defensively

  21. IVY Invests Very Defensively

  22. MTI15 Signaled Exit Before Election,Confirmed Bull’s Return at Thanksgiving,But Now is Dangerously Close to 1.6

  23. Topping Flagged Last Week by % of S&P Stocks Above MA50

  24. Bull’s End Is Confirmed When Summation Index Crosses its MA20

  25. Traders Still Showing No Fear,Suggesting a Mild Correction

  26. 50/50/0 Rules Shows Rollover,But Not Yet Confirming Exit

  27. Investors Fleeing Bonds, Fueling Liquidity into Stocks

  28. And Gold Has Not YetRegained Its Luster

  29. High Quality Dividend Stocks Are Favored During Weak Bull Periods Revealing Weakness of Today’s Bullish Levels

  30. Contra ETFs Remain a Risky and Bad Bet

  31. February 2013Short-Term Strategic Conclusions • Hot market is now chilling out • Topping out and roll-over patterns reveal current risks • Tight stops and caution is prudent for stockpiling ammunition • Liquidity from QE and bond sell-off provides cushion • Pending correction likely to be a mild 5-10%, making it a buying opportunity rather than a sell-off trigger signal • Simple spreadsheets can signal when to sell and re-buy • Preferred Havens are Cash and/or strong and “safe” dividend equities • REITs, Production MLPs, Utilities, Food Makers considered to be attractive havens • Watch for Financials (XLF) to sustain break-out before leaving bunker Remember: we are still in the Kuznets Bear Phase

  32. Any QuestionsBefore re-grouping into discussion clusters?

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