My name in Andrew Abraham. I have been investing in commodities and managed futures since 1994. I adhere to the philosophy of trend following.
Trend following stresses a disciplined approach to commodity/ futures trading. Successful trend following and commodity futures investing requires patience, discipline and actively managing the risk. What sets me apart from other traders is that I am not only concerned about the return on investment but how much risk I will have to tolerate to achieve my goals.
Is The Stock Market Starting to Fail?
The proverbial question is we in a V shaped recovery or a Bear Market Rally. Without predicting (One word every true trend follower hates) there are signs becoming apparent the stock market rally from March might be coming to an end. There are technical indicators which are pointing to weakness as well as recent economic figures are beginning to disappoint investors hoping for a recovery. The stock market is down approx 5 percent from its 2009 peak of 1097.91 on Oct. 19. What more so troubling is that the SP 500 index is below its 50 day moving average. The 200 day moving average is currently at 981. A break below this number would be considered very negative. More so there have been distinct divergences between current price action and numerous momentum indicators.
Besides the technicalג€™s there are the fundamental issuesג€¦such as the Commerce Department figures released on Oct. 30 showed Americans cut spending in September, the first reduction in five months. Foreclosures are increasingג€¦unemployment has been increasing. Simple questionג€¦ how can companies be making moneyג€¦people are spending less… people are losing their homesג€¦ people are losing their jobs? It is pretty obvious to question this rally as so many have.
However Obama has come out with his recent radio address.. ג€We have made progressג€!
Maybe I am missing something but I do not understand what progressג€¦except as trying to convince people we are out of the woods.
Paul Tudor Jones has come out very loudly and stated that the rally since March has been a Bear Market rally. As well Christopher Wood, chief strategist at CLSA Ltd has told his readers after Fridayג€™s action to go short the US Stock Indices. Nouriel Roubini is sounding much more of the profit of doom again.
Trend followers do not make predictions. This is not my goal but the green shoots are looking very unhealthy and the ramifications can be very hard for stock market investors. When commodity trading and investing it is paramount to have a plan and have the discipline to stick with it. There are too many investors who bought this stock market rally without a plan. Trading without a plan can destroy a portfolio.
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Andrew Abraham
A.Abraham@AngusJackson.com
www.AJpartnersinc.com
www.myinvestorsplace.com
Futures trading involves risk. People can and do lose money
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