My friend Aaron Task at Tech Ticker interviewed Bob Prechter of Elliott Wave International yesterday.
We are not Elliott Wavers at our firm. We are always nervous that pattern recognition can get a little subjective at times. But it is interesting that from our trend analysis work we reach some similar conclusions to Prechter about the present secular cycle and the price risk at this point in risk assets around the world. I wish I could feel as confident as Prechter seems to be in saying how far the next correction will fall. Certainty would make this work so much easier.
That said, Prechter's comments are well reasoned and I agree in general with his big picture premise. I think it fair to say that only fools and the reckless would be blindly piled into risk assets here. Or sadly, retail investors and their advisors who don't know any better perhaps. And then there are all those pension funds with pre-historic investment plans that are long always…ouch.
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Hi Danielle, what are some good alternative investments to cash/cash equivalents, if one wants to take a defensive stance. Or is cash really the only investment choice if the market corrects significantly?
Your insights are greatly appreciated!
EF
Donald Dony wrote in the recent “Canadian MoneySaver” magazine that the 65 week moving average is the best way to time the market. Looking at the charts over the past few years it seems to work very well for long investing. The XIU is now hovering around this average (16.45). Danielle, can such a simple system as this work in a complicated market?
Since more and more commentators predict a huge correction in the coming weeks, I feel less and less pessimism about the September-October time frame.
Remember folks, the market does whatever it takes to fool you……
Cash means liquid and the most safe; so cash, GIC's,
Bank paper and government tbills under 1 year,
also bank money market funds.
Attila,
I'm not sure where you find all the pessimism in the market. The vast majority of advisors are saying the coast is clear and the markets will be back at their 2008 highs in short order. This leads me to believe that world markets are in for a sharp fall. I am personally looking for a 10% or so uptrend to continue in markets and then look out below.
Daryl,
I don't see pessimism in the market, only in myself approaching September- October, since those two months historically are the worst in the entire year.This seasonality pattern works year after year with few exception.
I see the coming correction for three reasons: Seasonality, bulls running currently at 51% and the notion about the double dip of the economy. Actually the third one is out of question in this year, according to my very reliable sources, but the first two are very real.
300mmm, Any medium term trend method will help a lot if
You set objective rules and stick to them. If you use short
trend work you will flip flop a lot, trade a lot and
maybe get ahead. When you use multi-week trend
lines you will trade less and have to be more patient to wait
for good prices. There are a couple of good articles
on trend methods in the articles tab on our firm web site at
venablepark.com.