Patiently Waiting For The Golden Cross

Recently, we issued our market update as one of longer term weekly indicators issued a "buy signal" .    However, there is another indicator that is rapidly approaching the issuance of another buy signal which is known as the "Golden Cross".  This is when the 50 day moving average of the S&P 500 index (the average price of the index over the last 50 days) crosses above the 200 day moving average.  

As we have stated many times in the past - the secret to being a good investor is not to let emotional biases interfere with trading decisions.   There are some age-old axioms in investing that should never be broken and one of those is "the trend is your friend."

Regardless of the fact that we expect to see a resurgence of economic weakness sometime in the not too distant future the fact of the matter is that the momentum behind the market is currently positive for whatever reason.  With the economic worries in Europe the U.S. is a much more attractive place to invest capital at the current time.   Corporate balance sheets are in better shape than they were prior to 2008 and there is substantial amounts of investment dollars hiding in bond funds and cash which could drive a market rally higher than expected.

We have also said in the past several weekly newsletters that the trading range that had been compressing the market ever tighter since August was very likely going to ...