If we can finally get the Fed to quit shouting "free money" or QE3 every time the market looks like its going to finally correct, then the top may very well be forming.
I've published this chart before. It's a monthly chart of the SP500 and it allows us to be rather conservative in choosing our entry and exit points. It also does not allow for catching every squiggle the market takes but does provide for good trend following for the average investor.
In the upper window of the chart we have the index which has been grinding higher on rumors and releases of Apple gadgets.
The important item to look at here is the red indicator in the middle window. As price has continued to rise, the indicator is diverging lower. A sign momentum is waning. Lower window indicator is still neutral at the moment.
Here's another chart I have pieced together from numerous other sources. It's my attempt at trying to forecast the future for at least the first half of the year. I'll up date it for a few months to see how close we get. If its not worthwhile it'll go to the useless chart file.
Using the Bradley Model for 2012 and several other forecasts that have been combined in a separate guesstimate, we have the two curves as shown on the right. The red is the combined and the green is the Bradley. Both models are calling for a change in trend between April and May. The Bradley model does not attempt to determine the size of the move only timing, while the combined is our crude attempt at forecasting magnitude as well. Nothing ventured noting gained ....... lets see how it goes. By now you should have recognized a significant move lower is coming, so at least get prepared.
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| Chart from dshort.com |
Here's a chart of the effects of the Fed's interference with the markets. Trying to predict what will happen in the future has everything to do with whether or not the Fed is finished with its easing - "QE". It's current version is known as "Operation Twist" which is due to end in June of this year. The liquidity junkies in the market have been addicted to these intrusions and are certain that it will continue and QE3 will be on the way soon. Ask yourself if this a safe place to invest when the only thing keeping the markets moving higher is another fix.
