This Week: Mixed Signals
The Well-Timed Strategy for Week Ending June 25, 2010
by Peter Navarro, Ph.D.
June 21, 2010
Stock market trend: Nascent Bullish Uptrend
This is another tough week for me. On the one hand, two of my favorite sources for handicapping the market trend -- Market Edge and Investors Business Daily -- support the existence of a new bullish uptrend in the market based primarily on technical indicators.
On the other hand, one of my favorite sources for forecasting the economy -- and thereby easing fundamentals to handicap the market trend -- is flashing increasingly bearish signals. This is the ECRI Weekly Leading Index which is in a clear decline.
When I put these two disparate pieces of information together, one likely scenario is a very short run bullish move -- followed promptly by a bearish downtrend once the economic data kicks in fully. To put this another way, there may be a green light now to engage in some short-term trading with the uptrend. However, it will be risky business if the ECRI index is correct and the slowdown is coming.
In light of these mixed signals, I have begun engaging in some very short-term trading on both the long and the short side.