Mon 21 Aug 2006
I’m sure we’ll all be watching the market closely to see how it responds to the “W” formation that Mauldin pointed out as a significant technical indicator of the overall market trend in the near-term.? We’re at the tail end peak of the “W” and thus at a tipping point, according to this technical analysis.? I’m wondering if the increased emphasis of 401K and retirement investments over the last 5 years isn’t creating a larger and more consistent influx of cash into the market that has historically been privy to, thus creating an environment where the market has a tendancy to drift slowly and steadily upward.? I was trying to interpret the Fed Z.1 cash-flow data this weekend with little initial success.? The data is clearly laid out and readable, but there’s just so much of it and so much out of context to something actionable and tradable that it was difficult to get my head around how to use this information to profit from it.? The general increase in consumer debt is worrisome, but less so if the typical consumer isn’t likely to invest in the market anyway, but who’s company is automatically investing for them and their debt is used to buy products and services that are driving the economy further into the black (double benefit).? This may just be the ramblings of a non-economist, but I have to think that positive cash flow into the markets will create a general rise in equity prices.