Friday, November 2, 2018

Bull Market Top

Here is a chart of the S&P 500 since the end of the great recession decline of 2008.  The price channel gives the range of possible values for what appears to be a developing market top and decline.  The formation in the circle shows two tries at higher prices and this is often followed by another try which would form a classic head and shoulder’s pattern. 

A rally from the current levels is certainly possible, even likely, but any significant negative events can drive stock prices down to the lower half of the price channel shown.

Keep in mind that stock market prices and trends look out ahead of current economic conditions which are still strong.

John R.Boyd, CFP

Saturday, October 15, 2016

The Long View of the Stock Market

The chart above tries to explain why over the last 25 years, investing in the US stock market has been so frustrating.  We have had the Tech Bubble and the Mortgage Bubble.  Both of the bubbles were popped with serious losses reflected in stocks.  The RED line reflects the core growth over the period without the bubbles and crashes (regression line from 1990 to date): about 10% with dividends.  The BLUE line shows the result of investing at the peak of the market in 2000 until today: about 5% with dividends.  Obviously, investing for any short period during the Last 25 years could result in exciting gains and terrifying losses.

John Boyd, CFP

Friday, July 29, 2016

Volatility Measure vs Stocks

When perceived risk (implied volatility in option prices) declines, the stock market can rise.

John Boyd, CFP

Does the Breakout have “Legs” ?

The recent corrections have probably been enough to provide a base for higher values.   The disturbing episodes of violence are not seen as a threat.  Risk as indicated by the volatility index is still declining.

John Boyd, CFP