Technically Speaking: Your Brain Is Killing Your Returns
by Lance Roberts
With the markets closed on Monday, there really isn’t much to update you on “technically” from this past weekend’s missive. The important point, if you haven’t read it, was:
“The stampede into U.S. equity ETFs since the election has been nothing short of breathtaking,” said David Santschi, chief executive officer at TrimTabs. ‘The inflow since Election Day is equal to one and a half times the inflow of $61.5 billion in all of the last year. One has to wonder who’s left to buy.’”
You can see this exuberance in the deviation of the S&P 500 from its long-term moving averages as compared to the collapse in the volatility index. There is simply “NO FEAR” of a correction in the markets currently which has always been a precedent for a correction in the past.
The chart below is a MONTHLY chart of the S&P 500 which removes the daily price volatility to reveal some longer-term market dynamics. With the markets currently trading 3-standard deviations above their intermediate-term moving average, and with longer-term sell signals still weighing on the market, some caution is advisable.
While this analysis does NOT suggest an imminent “crash,” it DOES SUGGEST a corrective action is more likely than not. The only question, as always, is timing.
However, this brings me to something I have addressed in the past but thought would be a good reminder as we head into the New Year.
“The most dangerous element to our success as investors…is ourselves.”
The 5-Most Dangerous Biases
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TLB recommends other pertinent financial articles at Real Investment Advise
About the writer: Lance Roberts is a Chief Portfolio Strategist/Economist for Clarity Financial. He is also the host of “The Lance Roberts Show” and Chief Editor of the “Real Investment Advice” website and author of “Real Investment Daily” blog and “Real Investment Report“. Follow Lance on Facebook, Twitter and Linked-In