Hi Don,
Notice the <g> after my 'new era' comment. I also am a believer in Ying-Yang, equilibrium, and actions that are met with equal and opposite reactions.
I view this current market as our attempt to forestall, through extraordinary artificial interventive means (printing currency, excessive lowering of interest rates, coupon passes, etc.) the natural process of free markets reaching their equilibriums. I believe this distortion is what's referred to as 'the new era' <g>
Although these short term interventions have caused significant and continuing asset appreciation, we're already seeing the law of diminishing returns taking effect, just look at the yields in the bond market. I think this market's going to reach equilibrium, we're just artificially stalling the process.
That being said, a trend is a trend, and I agree that attempting to time the reversal can be costly until the next trend is established.
This particular upleg on the market has been perplexing to me in that the markets have held well above their 200 day moving averages for an extraordinary length of time, even when they've crossed down over their 50 DMA's which has been a sure sign of a reversal in 9 month intervals for 5 years running now, most noticably in the NASDAQ. Maybe the extended drop below the 200 DMA during last fall's correction distorted this moving average. |
