The question of the day remains largely the same as it has been for the past four trading sessions: Will a modest breakout to new all-time highs mean that the rally that began on February 4 continue or become just another maddening “breakout fakeout?”
To be honest, only time will tell. However, the business of investing is about staying on the right side of the really big, important move. So, while we can’t know what the future will hold – especially in this day and age when the algos can push the S&P 500 up or down 1 percent just for the heck of it – we CAN try to make sure the odds are in our favor before we make a commitment.
So, this morning, we will attempt to do just that by running down our list of important market models to see where they stand in the hopes that perhaps a theme will emerge.
Putting The Odds of Success In Your Favor
To be sure, there are no perfect indicators. There is no holy grail that will get an investor in the market at the bottom every time and out at the top. Not gonna happen. No way, no how. Doesn’t matter how many PhD’s you put on the project or how much computing power you have. Ms. Market’s game simply cannot be mastered with a magic indicator.
However, one CAN attempt to put the odds of being on the right side of the market in their favor by developing a series of unemotional, mathematically-based, market models.
To clarify, we are NOT talking about creating a black box which spits out magical buy and sell signals. No, we are talking about ways to quantify the market’s historical drivers and tendencies.
David Moenning is the founder and chief investment strategist for StateoftheMarkets.com, a website dedicated to investor education and portfolio analysis. Mr. Moenning is also President of Heritage Capital Management, a privately owned, investment management firm. Founded in 1989, Heritage is focuses on risk management and an “own the best and ignore the rest” equity selection strategy.
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Positions in stocks mentioned: none
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.