Arik--a belated response to your posting
re >> Message 4054241
Would greatly appreciate your thoughts<<
>>I remember in July, when I called for a MAJOR top early Aug, you said 10-15% correction is due but no major bear, and were correct. What is your longer term feel of this market?<<
The key elements that I look at in evaluating the picture longer term, are the fundamentals--being valuations, flow of funds and interest rates and technically-- existence of divergences, momentum failures on weekly charts and sentiment indicators .
With the exception of valuation, everything else looks neutral to positive at this time. As far as valuation is concerned, the market is very over-valued, based on the usual measures, but then it has been for quite a while. Given this, I have to believe that any pull-back is likely to be just that -- whether it is 10% or 15% or similar percentage. After all, even as the market has gone thru its incredible climb, various sectors have experienced sharp corrections and bear markets.
There are major cycles due to top out later this year -- and that may coincide with deterioration in the technicals. But while I follow those in the know about cycles, I don't profess to be an expert by any means.
For the market to undergo a sharp sustained correction--bear market--, there will have to be an external shock of some sort. Perhaps Japan or Asia, may be impeachment hearings, a sharp uptick in rates caused by some factor/s impacting inflation -- something or the other--not sure what it is or what it will be.
Also, as you know--and we have disagreed on this in the past, I don't see the type of frothiness that I have seen in previous major market tops. The type of frothiness that causes what has happened to the internet sector to occur on a much wider scale.
Just one piece of anecdotal information, to the contrary--which you may find interesting. I am presently doing some estate planning and as part of this exercise, I have had insurance agents showing me various products -- and without exception, they are pushing variable products that are tied to the market--and according to them, these are the most popular products today, when it comes to estate plannning. Not a commission thing alone, because there are other products that would give them higher commissions. The thrust of what they have to say is that with the type of returns that one can get in the market, the variable route is THE way to go, for sure. Now one of the market tops in years gone by coincided with the variable product first came to the fore. Makes one wonder..........
One final thought--for anyone who has some decent profits, it may be an opportune time to liquidate some postions. As I have said to others ----and also I think posted----every year, even during this bull run, there have been a couple of times each year that stocks become available at almost firesale prices--at least relative to where they have been. It is a good postion to be in cash at a time like that to be able to take advantage of such an opportunity.
Hope the above has been helpful
Regards |
