This Market is Simple
- Posted by Greg Harmon
- on December 14th, 2012
Sometimes things get too complicated. Will going over the Fiscal Cliff cause this market to crash? Are rising tax rates setting up to take the market lower? What about impact on the economy, it is in the doldrums so we should be selling stocks right? Or will certainty provide a catalyst for spending? How do you position, take gains now. Postpone losses.
Do yourself a favor and turn off everything except this screen for 2 minutes and forget about everything. Just take a long look at the simple chart below. No moving averages, trendlines or triangles. No Fibonacci retracements or Harmonic patterns. No momentum oscillators or indicators. In fact if you have a laptop or are reading this on a phone, go outside with a cup of coffee, away from all distractions. What do you see?
A pleasant green area. A mountain maybe. A piece of art maybe. An icy blue background. Look closer. A peak on the left with a dip and a recovery with a lot more green on the right hand side. Growth, strength. No world crisis. No looming Fiscal Cliff. No Tax smack down on the economy. Just a green mountain. Now that you are relaxed I might point out a few things to you. That peak at the left is the closing price of the S&P SPDRs, $SPY, on election night at 142.96. And it is right back there now. Only a brief dip. Was it caused by booking capital gains and then buying back in? Perhaps. Or maybe the Fiscal Cliff is……come on you are relaxed. Just follow the area chart. Who cares why it happened the way it did. The point is that this chart is a reflection of all of it. And what has happened in this time period? Nothing. No crisis, no crash, no rush to unload. Just a pothole that was driven over. Cover the left quarter with you hand. A green growing mountain. Lots of green, not much blue sky. It brings a smile to your face doesn’t it. So are you a bit calmer now? Ready to go back inside? Finish your coffee first. And maybe consider just going home, as it is Friday. There will be plenty of madness come Monday.
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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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