Yesterday U.S.
markets made new all-time highs. SP500 flirted with this lofted level for
several weeks before breaking it. Although in mid-March we were very close to
make new all-time highs, the market situation did not favor a breakout per
Understand, Survive and Thrive. At the same time, financial media and
blogosphere were very enthusiastic about this breakout. Alas! It never came in
March.
Now since we have
just cleared these lofty levels, it is an appropriate time to analyze what
Financial Media was saying VS Understand, Survive & Thrive’s analysis around
March 15, 2013.
News Reports (March 14 - March 17)
- The economy Cheer up – The Economist (March 14)
- Altaira's Ralph Acampora is bullish on stocks' outlook – USA Today (March 17)
- Greenspan: No irrational exuberance, stocks undervalued – CNNMoney (March 15)
- Uh Oh: Mila Kunis Discovers Stocks – Daily Beast (March 15)
- Economy Rolls Along, Despite Cuts and Taxes - New York Times (March 15)
UST’s IPM Model’s Excerpts (March 15)
Following excerpts
are taken from the IPM Model update emailed to subscribers on March 15, 2013:
“After
2 weeks of sharp rally (SP500 rallied from 1485 to 1566 and DJIA registered multiple
all-time highs), we are now at a point where market is approaching an
intermediate top.”
- “This suggests that the market will soon top and then decline to mark a bottom by the end of March.”
- “According to EW analysis, market is completing a 5-wave rise. We are currently in the 5th wave, and the rally is approaching an intermediate-term top.”
- “Supporting markets like Emerging Markets, Euro and Copper are all diverging. This suggests that we are close to a top.”
- “Based on the above technical and fundamental arguments, markets are close to a top.”
- “In summary, Global and U.S. Markets are near an intermediate term top.”
What Really Happened!
- Fear came back into the market from March 17 – April 5: Cyprus, Unemployment data
- Optimism turned into pessimism: Individual investors, blogs, VIX
- Proprietary Buy signals were generated on April 3, 2013
- Market bottomed in the IPM Turn window – April 1, 2013 (+/- 4 days)
- Investors got worried of the upcoming earnings season, which was supposed to be a catalyst for the rally in early March.
Graphical Representation
Conclusion:
I would humbly like to thank God for a successful market prediction. And this is just one prediction in an array of multiple successful predictions.
Note: IPM Model has been a very informative tool for market timing.
OK. I missed calculated the top and lost half of my ytd gains by trying to short the markets. For the meantime, this event has tought me that shorting against a bull market and calling a top is too risky since they are 2 powerful forces you should not bet against when they are together. For now, I'm going to sit on the side and be patient and disciplined. I will wait for the next intermediate bottom and buy in increments as the markets decline. Buy the dips. I will then wait for the markets to rally and make lots of gains as I will be buying triple etf funds to ride the way up the hill in May. In the markets, the only way to make money is by making decisions with probabilities. And now I fully agree with the saying that the trend is your friend.
ReplyDeleteHey Joseph. Good comment. Trend is the only friend one should have in this market. Market tends to deceive the majority with its cunning ways. However, if you trade with the trend you are more likely to get bailed out on a wrong entry vs if you enter against the trend.
ReplyDeleteHowever, always keep in mind that any counter-trend move can turn into a new trend or new bear market, under the right circumstances. In other words, when majority of investors get confortable with a direction of trend, it reverses. Therefore, one should keep this possibility in mind.
I agree. But, it's a risk I'm willing to take. It is the probability of the us markets topping and bottoming at the intermediate term level. And with the probability that spx will reach 1650 or more by the end of this year.
ReplyDeleteTop was in guys! I should have kept my shorts :) Anyway, i'm buying the dips.
ReplyDeleteBe careful, buying the dips has become an old trade with minimal upside vs. large downside probability. I got in for the ride up to the head (we seem to be making a head and shoulders pattern, we are working on the right shoulder). I got out this last week and made minimal, but one of the rules is to limit the losses as mush as possible. I don't see a meaningful continuation of the rally, I do see a meaningful pullback before we can go up again. This pullback can last the summer months and probably volitile.
ReplyDeleteBe careful out there, and God Bless Boston! Brad
I'm buying the dips and will hold until the last rally in May. Then, i'll sell when we hit 1600. After that, we'll see a bigger decline and i'll buy again.
ReplyDelete