Stock market – long-term indicators could go either way

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During times of great uncertainty I also often focus on long-term indicators to provide some guidance.

Let’s by means of example consider the S&P 500 Index. A simple 12-month rate of change, or ROC, indicator seem to pick up the major turning points quite well. Let me say straightaway that monthly indicators are of little help when it comes to market timing, but they do come in handy for defining the primary trend. However, the ROC line below zero depicted bear trends quite clearly, as in 1990, 1994, 2000 to 2003, and from 2007 to March 2009. Right now, the ROC line is on a knife’s edge and is perched right on the zero line. I will, needless to say, be watching this space quite closely.


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