I'm having a little fun making this chart, but perhaps I've spent too much time in front of the charts this week!
Either way, what you can see is that the market is rather balanced over the last year and here we are turning over from overbought. We are at the "Sell in May and GO AWAY" time frame that makes people think twice about lightening up on equities after this dramatic bull market we have had.
The rally has followed a pattern much like the 1987 bull market in the S&P500 and DJIA where there is a long rally, followed by a consolidation pattern and an equal rally out of that consolidation which then runs out of steam. Back in 1987 you certainly had very different reasons for a big meltdown and you can see all of those charts here at TradingView.
I would think that any rally from here will still setup a drop back to the "MODE" at the 116-117 area and based on how that decline unfolds, we could look for a test of the "start" around the 106 area. Time will tell.
The lack of fear is a bit incredible, probably due to the global central bank easing that is in place that makes people think the stock market will always go up. I think investors are lulled into thinking that stocks always go up when the Central Bank wants them to. The crowd is locked in and long the market, from what I can tell. We will see.
Make sure you know what you own and can live through a 20%-30% drawdown without losing any sleep about your "paper drawdown" in your account. If you can handle that drawdown, then you are properly invested.
Cheers,
Tim West 3:47PM EST 121.22 Last IWM
Either way, what you can see is that the market is rather balanced over the last year and here we are turning over from overbought. We are at the "Sell in May and GO AWAY" time frame that makes people think twice about lightening up on equities after this dramatic bull market we have had.
The rally has followed a pattern much like the 1987 bull market in the S&P500 and DJIA where there is a long rally, followed by a consolidation pattern and an equal rally out of that consolidation which then runs out of steam. Back in 1987 you certainly had very different reasons for a big meltdown and you can see all of those charts here at TradingView.
I would think that any rally from here will still setup a drop back to the "MODE" at the 116-117 area and based on how that decline unfolds, we could look for a test of the "start" around the 106 area. Time will tell.
The lack of fear is a bit incredible, probably due to the global central bank easing that is in place that makes people think the stock market will always go up. I think investors are lulled into thinking that stocks always go up when the Central Bank wants them to. The crowd is locked in and long the market, from what I can tell. We will see.
Make sure you know what you own and can live through a 20%-30% drawdown without losing any sleep about your "paper drawdown" in your account. If you can handle that drawdown, then you are properly invested.
Cheers,
Tim West 3:47PM EST 121.22 Last IWM
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