I have been expecting a decline to start for the last couple of weeks and have been wrong. This is a very abnormal year in many ways thus far. I have commented on this in my blog as it relates to seasonal tendencies that have repeated over and over. Yesterday for example the 7th trading day of September has produced short profits in 24 of the last 25 years until yesterday recorded it’s second loss.
In years where we are not following the seasonal pattern at all, I do not expect what typically occurs to happen. We need to measure how well we are following a seasonal pattern at the time to determine how likely it is to conform to it going forward. Since we have completely diverged at 2 key times this year, I would say that it is invalid for the balance of the year.
The trend is solidly up at this point so shorting this rally is a tough call. I am still in cash waiting to see if we get a fall dip setting up the rally I have been talking about all year in this blog. The previous post about most of these election years have launched out of declines, but not all of them is correct. These election year tendencies are followed by big money, so they “front ran” the fall it appears.
The big rally in bonds has in all likelihood been behind this. I would advise to take partial profits, and tighten up the stops. I am not of the mind set that this monster recession is upon us as I have stated in here many times. However, I would not be surprised if in the second half of next year we slow down a good bit.
My plan is still to wait for Oct/Nov time frame and watch the commercials and bonds to see what they are doing. If they are in proper position, it will be pedal to the medal for me. It does not appear at the moment that a big drop will happen, but maybe we will get lucky.
I am not sure if that is of any help, you caught this upmove and I did not in my long term accounts. Historically buying when this low was made has not been wise, but this year it worked. I have gotten alot of the rally in my short term trades fortunately.
Roubini apparently is a smart guy but I do not know his track record for picking market swings or if he has made any money doing it. I do not pay any attention to economists.
