Originally published by AxiTrader
There are growing, and vocal, cabal of experienced and influential global investors who believe US stock markets are frothy and at risk of collapse.
In his latest monthly investment letter, Janus Henderson's legendary bond investor Bill Gross has added his voice to the chorus of doomsayers.
"'Making money with money' is seriously threatened. How soon this takes place is, of course, the investor’s dilemma and the policymakers’ conundrum. But don’t be mesmerised by the blue skies created by central bank QE (Quantitative Easing) and near perpetually low interest rates. All markets are increasingly at risk," Gross wrote.
Just last week legendary investor Jim Rogers told Business Insider's Henry Blodget that there will be a market crash that would be the worst of Blodget's lifetime. In fact, Roger's said. "It’s going to be the biggest in my lifetime and I’m older than you. No, it’s going to be serious stuff".
That's just two of the many apocalyptic warnings out there at the moment. It's enough to scare you off you Weet-Bix.
I've written myself, many times, that there's a solid technical indication that the high for the S&P 500 is somewhere between 2,400 and 2,450 based on a 5 wave count of the monthly bars of the S&P 500 since the 2009 low around 666.
And while I recognise all the risks that Gross, Rogers, and others highlight I'm not shorting this market for one very good reason.
My JimmyR indicator.
Now it's not really an indicator at all. It's a set of moving averages I use on every single chart I look at, on every single timeframe I'm evaluating. It's just my 15 and 30 period EMAs.
But I call it my JimmyR in honour of market timer James Rohrback who, back in 2012, mentioned them to Michael Covel on his TrendFollowing podcast. Covel asked Rohrback if there was any kind of pointer he could give to new traders who wanted to get started - or words to that effect. Rohrback then said that if a trader simply overlays the 15 and 30 week moving averages on a weekly S&P 500 would be a good place to start.
I tried it and even though I felt like I was fighting the US stock market rally for years - in a rhetorical sense - I trusted my JimmyR to keep me from getting too bearish too soon.
Until 2015.
Fast forward to 2017 and the JimmyR is long and has been since 2,000 on the S&P 500.
As I noted above, I recognise the risks, but until this indicator turns I'm going to remain with the rally.
Here's the charts - arrows are signals since 2009.
Have a great day's trading.