Never pick a top. Ever! But it is hard not to get the feeling that the SP500 trend is very long in the tooth, and new money to work here is picking up dimes in front of a very large bulldozer.
Previous post: SP500 cycle working well
There are cycles in the market, for the simple reason that humans are still involved in the stock market. Stock markets do not move in straight lines, trends are punctuated with pullbacks ranging from 3% to 20%. The news of the day is the catalyst for the pullbacks and you can not help but get the feeling that the news to come in the months ahead will be a satisfactory for a decent double digit pullback.
Consider these news items:
1) German elections, if Angela Merkel loses power and Europe is once again high risk
2) USA interest rates rise greater than two times annual GDP ( ie 4.00%)
3) The fear that the new US Federal Reserve Chairman will rocking the US Treasury bond boat.
4) US Earnings falters.
5) US Economic growth falters.
Just to name a few. Our pick is (3), nothing ever good happens when the FED chairman changes.
Investing Quote...
"The Tape Reader's profits should develop naturally. He should buy or sell because it is the thing to do - not because he wants to make a profit or fears to make a loss." ~ Richard D. Wyckoff
"The financial markets generally are unpredictable. So that one has to have different scenarios... The idea that you can actually predict what's going to happen contradicts my way of looking at the market." ~ George Soros
