U.S. stock market – long-term indicators could go either way

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During times of great uncertainty regarding the outlook for stocks, I often focus on long-term indicators to provide some guidance.

Let’s by means of example consider the U.S. benchmark 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. The ROC line below zero depicted bear trends quite clearly, as in 1990 (not shown), 1994, 2000 to 2003, and from 2007 to March 2009. Right now, the ROC line is on a knife’s edge and is perched only 1.9% above the zero line.

I will, needless to say, be watching this space quite closely.

Source: StockCharts.com

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3 comments to U.S. stock market – long-term indicators could go either way

  • [...] post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail. U.S. stock market – long-term indicators could go either way was first posted on May 5, 2012 at 12:13 am.©2011 “Investment Postcards from Cape [...]

  • boatman

    definitely at the crossroads, Prieur, a common may theme, but this is an election year.

    EWave count says rally soon til election n then fall bigtime [barring spainish or iranian blow-up].

    which fits politics and FED move soon on poor employment #s[isn't it convenient to have a falling overall rate for obozo, but a bad 'new jobs added' number for Ben?]

  • Bradley

    The last 2 peaks had a reason to peak Dot com and housing.This peak is purely Bernanke bucks, government welfare program for the rich. Thanks but i dont need lines on charts to tell me that the smoke is clearing and mirrors broken and the rabbit in the hat died.

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