Looking at the chart of the broad measure of the US equity markets, the S&P 500 Index, the positives are:
- The index seems to have breached the major downtrend line established by the huge downturn following the 2007-2008 Financial Earthquake.
- The Stochastics signal has hooked up(blue circle), perhaps suggesting that the rally might resume after a three-week hiatus caused by worries over the Greek debt drama
The negatives, however, are:
- The MACD, in my opinion a stronger indicator than the Stochastics, seems to have hooked down, issuing a sell signal on the weekly chart.
-the current rebound that started in early February seems to be on much lower volume than the nascent upturn last year, and this indicates a lack of conviction on the part of the bulls.
Looking at the monthly chart above, the circles highlight the similarities with past indicator patterns that I can see from a charting perspective, which may indicate that this recovery could turn out to be similar the the recovery off the end-2002 to 2003 low, which will make equity bulls happy, I'm sure!
My overall prognosis is that there's a roughly 60-40 risk-reward ratio currently.
Thus, I'd merely be waiting for my current equity positions to turn profitable rather than commit new money to the markets.
I was only confident to take ONE long position(Mitrajaya Holdings Bhd) since the end of the CNY vacation, and fortunately, it's turning out quite well!
