Heard in the Village: January 2010
Oscar was telling of changes possibly coming major events that could have major influences, good and bad, from a variety of places (this part was saved for in a speech in February). Both were less concerned about could happen than ways of having the market tell them that something could be coming. They believe the market prepares for what could be coming; It’s up to investors to listen. Both agreed there remained major risks to the market for years to come in spite of the opinions in Washington and Wall Street. for years and they were fine tuning their market alert systems.
They talked about short (using daily numbers), medium (using weekly numbers) and long (using monthly numbers) term indicators to show how big a change could be in advancing and declining issues and volume, new 52 week highs and lows indexes. Most changes would start out short term and they would do nothing or phase in or out small amounts out of the market. If the change continued to grow, they would put more in or take more out. They used 50 and 200 day and week moving averages (that can be found on Stockcharts.com). Currently the indexes remain below their 200 week moving averages which is a sign pf big problems. They use trend lines on day and week charts. They believed trend lines would over ride moving averages if they disagreed.
Both Oscar and Dempster agreed the markets are above declining trend lines which is a good sign but the markets have gone through their rising trend lines which that line a resistance line and limits considerably how much higher the markets can go. The one thing they both liked best was the Dow Industrial price/dividend indicator. With a 3 point and 1.5 point reversal, they tell how high the market could go and at what price levels trouble begins. We are getting near the declining trend line so we may near the top. The villagers were glad to hear Oscar and Dempster but happier to get to their New Year toasts.
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