Replies

I was following technical analysis on IBD last year, but backed away from it this year.

Personally, I think that technical analysis is more of a gauge of investor psychology than anything else. My problem last year was that I didn't trust the government to either:

Accurately report monthly numbers
Prop up the metrics somehow through unusual policy

I think #1 is borne out by the trend of downward revisions that follow in the months after headlines that cause spikes in the market.

I think #2 is borne out by the rise in government jobs over private sector jobs.

I've been more of a leading indicator trend analyzer. I don't want to buy the dips of whipsaws, I want to find the deep recession and then get in at the bottom and get out at the top. I fully expected the bear-market recession to hit last year, so I was out of the equity market and into money markets for the whole of 2023.

I gave up the exuberant gains of 2023 for the security of MM returns (plus bond ETFs), expecting a market crash as inflation peaked, banks began to fail, and people couldn't afford new homes. As a recent retiree, my focus was on capital preservation going into the Biden administration.

In August of 2023, my leading indicator model was approaching bear-market recession triggers, but then retreated. It is now turning back towards the trigger level.

Now we are entering 2024 and the heart of the election cycle when the current administration will do everything it can to either prop up the markets even more or poison pill the economy for Donald Trump. I still don't want to re-enter the equity market at this time, as I believe the bear-market crash is finally looming. The next few months of leading indicators will show me more.

-PJ