I think the probability that the downphase of the four year cycle is now underway is getting higher. Been looking over various of the usual charts this evening. I was looking for another up wave in the NASDAQ 100 Index. But the NASDAQ Composite and S&P 500 have reached new 5 year highs and it looks hard for them to push higher. The Australian All Ordinaries is at an all time high and a model I have developed is now sending a strong sell signal on that index. There are some countervailing indicators - as always the picture is not totally clear. The US Dollar is looking also very weak on the charts... this is surprising. I thought this wouldn't happen till the Fed stopped raising interest rates. The Australian Dollar has rallied since I bought a few days back.
My portfolio is now net short when taking into account the correlation of the various assets with the general market (beta). In fact for a 1% fall in the market I should see an approximately 0.2% rise in my portfolio, everything else held constant.
2 comments:
I'm with you, I am not one to go short and you may be early on this. I would look to dig deeper and look at inflows to equities, we are exploding on the upside. New dollars in to the equities markets. Don't fight the tape. People want to buy for the sake of buying... Personally, I am backing off substantially but can't risk being wrong as stupid money flows in.... Remeber as in 99 2000 and even 2001 idiots move markets. Just try not to be the last idiot standing...
Yes there have been inflows to equity mutual funds... but it is struggling to support the indices and only part of the total supply and demand picture. In the end the chart shows the equilibrium between supply and demand. Each rise on the major indices is smaller than the one before....
We will see.
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