December 9, 2024

Preview from my weekly report*

Our clients are avoiding losses and preserving their capital, while we analyze and weigh the evidence every day, carefully calculating probable reward relative to probable risk. We offer complete transparency, anytime access to your funds, and low fees. You keep control over your money. See: ColbyAssetManagement.com

New price highs confirm a strong uptrend.

The S&P 500 stock price index (symbol: $SPX, 6,090.27) rose 0.96% to a new high last week. A new price high always confirms a strong uptrend. RSI and MACD momentum are rising bullishly, supporting the strong price uptrend. On-Balance Volume (OBV) confirmed a higher high. The price trend remains systematically bullish--with price above the 50-day Simple Moving Average (SMA), price above the 200-day SMA, and the 50-day SMA above the 200-day SMA.

Next Wednesday and Thursday, fresh reports on the CPI and PPI could be potential market movers if they deviate significantly from expectations. They are generally expected to show little change.

The case for further bull market stock price gains

• The uptrend has been confirmed by a large majority of technical market indicators.
• Momentum favors the bulls. 
• Seasonal tendencies for the stock market are bullish.
• The Dow Theory has confirmed a bullish major trend for the stock market.
• Inflation has come down.
• Financial Stress is declining.
• The Federal Reserve Board has begun to lower short-term interest rates.
• Longer-term interest rates also turned down.
• The consumer and the economy have remained remarkably resilient. The latest data show that consumer confidence is rising.
• Corporations are buying back their own stocks.
• The incoming Trump administration is expected to promote business-friendly, pro-growth economic policies, with lower corporate taxes, looser regulations, and reduced red tape.
• Artificial intelligence could usher in a new era of productivity and profits.
• Sentiment indicators (which generally follow the price trend) mostly indicate only moderate bullish complacency. They do not signal dangerous levels of extreme greed. 

The case for a cautious stock market strategy

• Last week, indicators of the broader stock market lagged somewhat, showing minor divergence that probably is not very significant. More stocks crossed below their 50-day SMAs (simple moving averages), thereby turning systematically neutral.
• Stocks remain overbought and overvalued by all historical standards, such as Price/Earnings, Price/Dividends, Price/Book Value—but the market has consistently ignored it for many months.
• The Buffett Indicator (total market capitalization of the US stock market divided by gross domestic product) suggests that stocks are overpriced. Warren Buffet continues to sell stocks and move money into defensive, safe-haven investments.
• Mike Wilson, chief US equity strategist for Morgan Stanley, recently warned that the S&P 500 is "extremely expensive" and stocks could be vulnerable to negative economic surprises or a deterioration in corporate profitability—but stocks shrugged it off.
• Geopolitics has threatened to be the biggest tail risk to markets for many months, with potentially disruptive, escalating wars in Russia/Ukraine and the Middle East, as well as increasing signs of China aggression—but the market has ignored war risk so far.
• Longer term, inflation may remain stubbornly high due to tight labor markets reflecting an aging work force with fewer working-age adults, climate change costs, more expensive green energy, the cost of delayed replacement of aging infrastructure, geopolitical risks to supply chains, trade restrictions, and out-of-control government deficit spending.
• Heavy supplies of new bond offerings and rising inflation could mean higher than hoped-for interest rates at some point ahead—but that doesn’t seem to be a current concern.
• The speculative enthusiasm for artificial intelligence might be overblown, and the hoped-for benefits might not pan out. Only time will tell.

Every day, we use technical, fundamental, and quantitative analysis to judge the Reward/Risk probabilities of trend continuation or reversal. We control risks to make sure that all of our clients are safe and protected from major losses. If you want to earn reasonable returns while avoiding large losses, move your wealth to our professional fiduciary asset management. We always put our clients’ best interests first, and we are always here to help you in times of stress.

11-Year Outperformance by the
Top 10 Exchange Traded Funds
Weekly Rankings of Major Trend Relative Strength
My weekly Top 10 ETFs ranked by the Major Trend Relative Strength outperformed the S&P 500 by over an 11-year period of real-time weekly tests. Click here for a graph of simulated performance.
Please note that my ETF rankings are available by subscription--NOW WITH A NO-RISK FREE TRIAL.
See The Colby Global Markets Report (click here).

My latest book was named one of the top investment books by Stock Trader's Almanac 2005. This book also received an excellent review in the November 2003 issue of Futures.

My ETF Rankings are not investment advice. Rather, they are an objective ongoing research study.

Analysis of market forces may offer a sense of probabilities. But the many variables that can impact market prices are notoriously difficult to predict. And, market analysis is something less than an exact science. So, sound trading tactics are always recommended. See my Money Management Rules.

According to CFTC Rule 4.41, hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.

Trading and investing involve risk of significant loss. Your use of this site means that you have read, understood, and accepted my Disclaimer.            

Syndicate content on these pages

Email Colby about his Custom Research, Analysis, Trading Systems Development, and Investment Strategy
Consulting Services.

Subscribe to The Colby Global Markets Report

MetaStock® technical analysis software powers this technical analysis. 30-day free trial. Save 7%-9% by ordering here.

Preview Colby's Latest Book:
The Encyclopedia of Technical Market Indicators, Second Edition, 2003.

Dow Theory Analysis

Gann Angles Analysis

Update on EMA Crossover Signals

Money Management Rules

How To Become A Top Trader.

Ranking Indicator Performance to Maximize Profit by using
"Annual Relative Advantage".

Ranking Indicator Performance by the "Profit/Loss Index".

Robert W. Colby, CMT,
is a consultant to institutional and private investors and traders, providing regular analytical reports, custom research services, and trading systems tailored to clients' objectives. Clients include the most successful traders and investors in the world. Robert is the author of The Encyclopedia of Technical Market Indicators, Second Edition, McGraw-Hill, 2003, which has become the standard reference for indicator and trading systems design. Previously, at several large Wall Street firms, Robert worked as a proprietary trader, technical analyst, and fundamental analyst. He also was adjunct professor at New York University and New York Institute of Finance, where he developed new courses on technical analysis and market timing.

Robert W. Colby is a Chartered Market Technician (CMT), an accreditation granted to members by the CMT Association (https://cmtassociation.org/) after demonstrating professional competence and ethics over a period of many years. Robert has been a member since 1980, and he strongly supports the CMT Association's high standards. He also supports the The Technical Analysis Educational Foundation (https://www.taeducation.org/about/), which works to have technical analysis included in the curriculum of major business schools. "The CMT Association is the national organization of investment analysts, stock market analysis professionals, and certified market technicians in the United States."

Robert W. Colby is America's foremost authority on testing market indicators."
--Bill Meridian, top-ranked investment analyst and international fund manager, www.billmeridian.com

Privacy Policy: Your privacy is important to us. It is strictly against the policy of this website to employ spam, popups, ad ware, or spy ware.

Copyright © 2000-2024
by www.robertwcolby.com.
All rights reserved.
Except as permitted under the
United States Copyright act of 1976,
no part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without the prior written permission of the publisher.
However, quotations are permitted, provided that full attribution is given to: www.robertwcolby.com

Ranking ETFs
"Robert Colby has evolved a system that, while hardly foolproof, is pretty clever," wrote Daniel Fisher, "Surfin' ETFs", Forbes, Investment Guide, Special Issue, June 4, 2007.
Please click here to view this article.

INTERVIEW of Robert W. Colby in Technical Analysis of STOCKS & COMMODITIES magazine, December 2006 issue.
Please click here to view this article.

"Gold's next move: History, logic, and intermarket relationships. See if testing gold's relationship to different markets over a 32-year period provides possible trade signals for the yellow metal."
by Robert W. Colby, CMT.
Please click here to view this article.

"Which gold indicators are best? Divining gold's next move."
by Robert W. Colby, CMT.
Please click here to view this free article.

"Applying the Relative Strength strategy to ETFs."
by Robert W. Colby, CMT.
Please click here to view this free article..

"PUTTING CANDLES TO THE TEST, How Profitable Are They Really?" by Robert W. Colby, CMT. Published in SFO, STOCKS, FUTURES AND OPTIONS MAGAZINE, Volume 5. No. 8. August 2006, pages 91-94. Please click here to buy this article. (Scroll to bottom of linked page.)

TradingMarkets.com interviewed
Robert W. Colby, CMT.
View the entire interview online.

Active Trader magazine September 2004 interviewed Robert W. Colby. 4 pages. "Robert W. Colby: Technical collector. A discussion with Robert W. Colby about technical trading and his revised Encyclopedia of Technical Market Indicators, Second Edition. By Active Trader Staff."

For information about methods that would have performed substantially better than systematic trend-following in back-testing simulation dating back 32 years, email me by clicking on the following link:
Please click here to contact Colby directly.

Click here for a simulated performance graph of one of my trading systems applied to a stock price index.

MetaStock® PC Software for Technical Analysis is a powerful program for your personal computer. It offers more than 250 built-in indicators and line studies to enable you to explore a wide variety of methods. And it empowers you to build, back test, and optimize custom trading systems to suit your own particular requirements. Click this link to save 7%-9% on MetaStock® software. And you get a risk-free, thirty-day free trial.