Thursday, July 11, 2013

Investment Life In The Easy Money Vortex

Since hitting its intra day high on May 22 (1687.18) and its closing high the day before, on May 21 (1669.16), the S&P 500 has corrected 7.52% and 5.76% (intra day high to low and closing price, respectively), which was reached on June 24.

The current move puts the S&P 500 right around its highs, doing so in the one month of the third quarter with a good performance track record - July. In the process, however, the momentum of the current move has shown a marked deceleration from its previous foray into record territory at the same time other global markets are not following suit. And all this takes place ahead of the two of the worst performing months - August (10th worst) and September (the bottom of the barrel at #12) and its most volatile month, October.

It is, therefore, quite probable that a meaningful decline in the equity exposure will be recommended in this week's report, particularly if a new high in the S&P 500 is achieved without confirming moves in other key indices tracked.

As to the more significant issue of whether this is all taking place within a market topping process, that will take more time (but not as much as one might think) to be fully formed.

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