*just a note on the market close..most stock market watchers that I follow will tell you that the rally in the last five minutes of the week were just program trading machines. The volume didn't even beat the previous days high and we had more selling over a five day period, but it looks like the month of May for the mutual fund managers has paid off. Now they can send out statements to reflect whether they are in those stocks or not. Clients complain, "why didn't you buy stocks for me in this rally?" What investors fail to understand is that it's their own fault. You don't want the asset manager to buy when everyone else is selling (which is when you are suppose to be buying) but rather after everyone has already left except YOU. And now he buys long after everyone has gone and you are stuck holding the bag because you think (incorrectly) that we are in a bull market because Cramer and Krudlow said so on CNBC, so it must be true...NOT. It's your money people, start educating yourself and go to the shopping malls. Are there less cars in the parking lots? And not on a sale day, but on a regular day. How many store fronts are vacant? How many houses are for sale in your neighborhood? How many empty office buildings are there at that new office park? How many of your friends and neighbors are now unemployed? Bottom line is that the stock market tends to be a lagging indicator of how good or bad things are. And when you have the government now in the business of being a marker maker too, then everything is SURREALISTIC and NOT as it seems. So buyer of stocks beware. Go to CASH while you still have time.
Bear Turns to Bull?
May 29, 2009 updated each market day
The S&P 500 closed the month 35.9% above the March 9th low. Are we in a new bull market, or is this a bear market rally?
S&P 500 Moving Averages: Current Update May 29, 2009 Valid until market close on June 30, 2009
Despite the 5.3% gain over the April close and a 35.9% rally above the March 9th low, our S&P 500 moving-average strategies continue to signal cash.
Background on Moving Averages
Buying and selling based on a moving average of monthly closes can be an effective strategy for managing the risk of severe loss from major bear markets. In essence, when the monthly close of the index is above the moving average value, you hold the index. When the index closes below, you move to cash. The disadvantage is that it never gets you out at the precise top or back in at the very bottom. Also, it can produce the occasional whipsaw (short-term buy or sell signal).
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