Do you have any thoughts on this simplified Carlucci system?
As per the system , the market is now "untradable" . Even if the Indext itself is at 87, 2 out 3 supporting indicators are negative ( the Stoch and MACD). Now what does this mean ? does it mean you should sell all your positions ? not really . However, it will be wise to place stop or trailing stop loss on those position. Please refer to the attached chart for the latest update. I made some modification to the MACD study.
" According to this system the market is tradable. Not rational, tradable.
The "Printing Press Bull Market" continues. It could be seriously argued that since 2009, Fed intervention in its various forms has for all practical purposes simply camouflaged a second full blown Great Depression. Realistically however, Fed Chair Bernanke can only feed the economy so many cans of QE Red Bull before it eventually crashes. Consider the following realities:
- After 4 1/2 years and trillions of stimulus dollars GDP remains feeble. The stock market balloon is becoming increasingly untethered from the stagnant wealth of the nation - the classic asset bubble
- according to the U.S. Census Bureau, median household income fell 1.5% to $50,054 in 2012, the fourth consecutive annual decline after adjusting for inflation. The typical household now takes in less cash than it did in 1996 when adjusting for inflation. In contrast, income for the top 5% of households rose 5.3% last year, with income gains greatest among the top 1%. The two are definitely related: falling wages have increased corporate profits, stock prices and disproportionately benefitted wealthy individuals whose income derives largely from dividends and capital gains. On the public policy side, the bottom line is that 4 ½ years of multi-trillion dollar effort by the Fed and Washington to bolster Wall Street has just further inflated the wealth of those fortunate enough to be substantive equity holders while those who are not have dropped into lower real income brackets.
- how fragile is the economic picture? Here's one indication: Atty. General Eric Holder (for Pres. Obama) recently stated that he would not criminally pursue the mega-thieves at Bank of America, HSBC and other too-big-to-jail banks because it would just be too "unsettling" for the economy. The Attorney General is afraid to prosecute the most dangerous financial criminals in American history. In essence, the U.S. Government has not just offered the banks the courtesy of underwriting their moral hazard, it's eliminated the obstacle of law for them as well. At this point, Federal policy reeks of desperation. That's how fragile the economy is.
The force driving the S&P to new highs is not actual economic recovery but mass delusion. The idea that no matter what – hell, high water, incompetence or criminality – the U.S. Government will do whatever it takes to keep the systemic banks afloat. That, and the assurance that the Fed will also go to any economically irrational extreme to keep Wall Street and those banks happy (since those banks ARE the Fed, that's no surprise). All in the slim hope that if the bogus appearance of recovery and prosperity can be maintained for long enough, actual recovery and prosperity will somehow materialize in time. But in the certainty that either way those who control Wall Street and the systemic banks will continue to make a fortune.
The recent bull market in the S&P is based on the same mass speculative self-delusion that has characterized every other financial bubble since the Tulip Mania of the 17th century. Will the market crash next week or next month? Probably not. But all the other bubbles eventually ended, and in the same way that this one eventually will."
The author hasn't post any comments in a while so it's great to see is view on this market.
Enjoy the rest of your weekend and see you Monday.