U.S. stock market – long-term indicators could go either way
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.
More on this topic (What's this?)
S&P 500 Breaks 2,000: One Signal That Suggests It Is A Top (The Market Financial, 8/25/14)
The Only Thing that Matters as the S&P Nears All-Time Highs (Gold Stocks Today, 8/25/14)
Private Equity Goes on PR Campaign to Change Image (Value Investing, 4/25/12)
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