Friday, May 23, 2014

Transports and S&P 500, and a rant about anal-retentive pennyflipping

So the $SPX has been "going sideways", which means it's been consolidating:

And the only people whining about "sideways action" are the hedge funds, and only because they constantly position themselves the wrong way based on the garbage they read in right-wing rags like the WSJ.

Meanwhile the Dow Transports have done this:

That's a breakout to new highs. It's been going on for weeks now, so when are the bears just going to accept that they've been disastrously wrong yet again? Or would that threaten their vicious right-wing worldview?

So $TRAN has been rising and the $SPX hasn't followed. That means $TRAN has gotten ahead of $SPX, which means the ratio (in weeklies) is doing this:

And if you feel that $TRAN:$SPX should stay roughly horizontal (both ultimately being the same measure of the economic strength in the US, one based on profitable transport of goods and the other on profitable sale of goods) then you must think that the S&P is about to make a strong move up so it can catch up with transports.

What's the long-term S&P chart look like, by the way?

Frankly, the Feb-to-May horizontal portion of this chart is still at about the same slope as the spring-summer 2013 churn, or the Feb-Dec 2012 churn.

I.e. it's not disconcerting at all when you simply zoom out and fade the intraweek bullshit.

There really is no need for anal-retentive day-to-day analysis of these charts. There really is no need to draw support and resistance lines and make-believe trendlines and triangles and pennants. There really is no need to post ignorant opinions every day, vacillating from bullish to bearish and back again, inserting uninformed and incoherent blather about the evils of fractional-reserve banking and fiat currency and how it'll all end in tears because only gold is money (it isn't).

All you need to do is follow New Deal Demoncrat's weekly indicators, Bill McBride's US economic data, and maybe a few smarty-pantses like Liz Ann Sonders and Michael Shaoul. They'll let you know when things are starting to change.

And realize that as long as the weekly EMA(20) isn't violated, the market is still in an uptrend, and the chances are it'll stay in an uptrend for years.

Yes, buying an S&P500 passive index ETF and walking away for ten years is boring. But the only reason to try to be a pennyflipping jackass is if you've already proven you can beat the SPY return with active investing. If you haven't been beating SPY consistently for the past 2-3 years, then you're an idiot: put a leash on your massive ego, give up, buy SPY and go away for ten years.

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