“I take my hat off that you are able to continue picking up pennies in front of a steamroller. Reading your newsletter, I scratch my head in amazement at your ability to increase your exposures in a market you admit is the most expensive ever.” – @mlevin999
That was a comment I got on Twitter following
a recent newsletter. where I discussed increasing our exposure concerning our short-term
“buy signals.” To wit:
“The uptick in money flows did allow us to add some exposure to portfolios in holdings we had taken profits in with the previous ‘sell’ signal.”
I can understand the confusion when this past week I discussed the issue of “
If that chart alone doesn’t get your
“Spidey senses” tingling, I am not sure what will. However, I have a few more charts to share with you.
Technical Deviations
In the short term, fundamentals don’t matter. Such is because over a few days, weeks, or even months, what drives prices higher or lower is the psychology of investors. As such, we can look at technical deviations to determine how exuberant or not the market currently is.
For moving averages to exist, prices must trade both above and below that average. As such, moving averages act like gravity on prices. When prices deviate too far from the moving average, eventually, prices will revert to, or beyond, that average.