Monday, March 19, 2012

bull signs

i am bullish on this market. i think we are about to see some shock and awe. here's why:

firstly, it is just the season for putting money to work in the markets. people are getting tax refunds and seeing good results as this quarter draws to a close. here's a seasonal projection of SPY:


the dark blue projection is a seven year seasonal average and is anchored 10 bars back. the purple and green projections are 5 year seasonal averages. the purple one is anchored on monday's close, while the green one is anchored 10 bars back. these 5 season projections are right on top of each other and trading above the 7 season projection. this tells me that the season is trending to higher values and we are on track for a repeat performance.

now the other signs that are figuring in my thinking are that utilities got whacked pretty hard last week. here's my favorite utility, ED, sucking wind:


there was a high-volume exodus from ED last week and the same pattern for utilities in general. utilities are where people hide out from the market in bad times because they are relatively stable and pay decent dividends (4.2% yield.)

furthermore, the treasuries took a drubbing last week too:

this all says to me that there is an exodus from the safe/defensive investments in these final weeks of the first quarter. i am placing my bet that this is a rotation into risk-assets. so hold onto your hats people.

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