Gluskin Sheff`s market strategist thinks the market looks toppy, displaying many characteristics of the 2007 market highs:
“The S&P 500 has basically been hovering around the 1,100 threshold since October 15, getting as low as 1,042 and as high as 1,150 in what can only be described as a tight 10% band. (As an aside, the 13 week rate of change for the S&P 500 has swung to negative territory.) It has split the time above and below the line almost perfectly evenly as well (52% above, 48% below). We can understand the emotions involved in such a prolonged sideways band — a down move to 1,080 triggers calls for a correction, while moves up back to 1,120 prompts calls for a new high coming around the corner.”
Rosenberg adds that a prolonged sideways price consolidation is bearish on a secular bear market:
“In a secular bull market, a six-month trading range can be viewed as a pause that refreshes. But in a secular bear market, it more than likely reflects a classic topping formation, as was the case in the spring and summer of 2007 when the S&P 500 also flirted with the 1,500 mark for as long a period as it has hovered around the 1,100 threshold since last fall. Keep in mind that similar to 2007, we are starting to see some fraying around the edges in the latest set of economic data releases — jobless claims, housing starts and sales, core goods orders and shipments, construction, ISM and consumer confidence.”
David Rosenberg is Gluskin Sheff`s Chief Economist & Strategist with a focus on providing a top-down perspective to the Firm’s investment process and Asset Mix Committee. Mr. Rosenberg received both a Bachelor of Arts and Masters of Arts degree in Economics from the University of Toronto. Prior to joining Gluskin Sheff in 2009, Mr. Rosenberg was Chief North American Economist at Bank of America-Merrill Lynch in New York and prior thereto, he was a Senior Economist at BMO Nesbitt Burns and Bank of Nova Scotia. Mr. Rosenberg has ranked first in economics in the Brendan Wood International Survey for Canada for the past seven years.
Related ETF`s: SPDR SP 500 (ETF) (SPY), ProShares UltraShort SP500 (ETF) (SDS)
No comments:
Post a Comment