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Coolhand's Market Analysis

Holding Steady

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by
coolhand
, 12-02-2012 at 11:58 AM (1425 Views)
Not much change in allocations going into the new week. Here's the charts:

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The Top trimmed their stock exposure by 6.9% to a total allocation of 53.3%. Bond exposure fell by 11.9%.

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The Total Tracker saw stock allocations dip by only 2.36%. Total stock allocations for this group are conservative at 45.13%.

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There are several points of interest in this chart. The trend is up, but price is near that lower trend line. And Friday's action did not build on Thursday's closing price, but remained mostly flat. Friday's closing price also remains below the 50 dma and somewhat in the area of resistance (blue arrow). Note too, that the 50 dma is moving lower.

Sentiment wise, we are entering a seasonally positive time frame. But can seasonality stand up to the fiscal cliff issues, which are coming more into focus every day? The chart suggests it can, but I'd not be surprised to see some weakness in the short term.

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  1. JTH's Avatar
    Watching the Auto Tracker, have you figured out if there is a Top 50 stock allocation tipping point that tends to happen just before the markets pullback?
  2. coolhand's Avatar
    Quote Originally Posted by JTH
    Watching the Auto Tracker, have you figured out if there is a Top 50 stock allocation tipping point that tends to happen just before the markets pullback?
    Hello JTH. Here's some interesting stats for 2012:

    In 2012, the Top 50 had a bullish stock shift of more than 10% fourteen (14) times this year. Out of those fourteen times, they were correct 50% of the time. Of course that means they were wrong 50% of the time too.

    When they were correct, the market was up a collective 11.5% for those seven (7) weeks. When they were wrong on a bullish shift, the market was down -14.75% for the other seven (7) weeks.

    The bearish case is much different. The Top 50 had a bearish stock shift of more than 10% twelve (12) times this year. Out of those twelve times, they were correct only three (3) times. That means they were correct only 25% of the time when they got bearish more than 10%.

    Of the three times they were correct, the market dropped -2.78%. But (and this is a bit revealing) when they were wrong on a bearish shift of more than 10%, the market was up an impressive 16.5% over those nine (9) weeks.

    We are in a longer term bull market. Maybe that's why there's a much larger disparity when the Top 50 got overly bearish, but I can hardly say for sure. But I think that's something to keep in mind on those occasions when they're getting more than a bit bearish.
  3. JTH's Avatar
    Great points and thanks for the information. I find it's difficult to beat a bull market, perhaps the Top 50 will be much better at protecting us during a Bear market.

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