Monday, August 10, 2009

REITs and vacations

Just to be clear, today's column takes a longer-term view. Buying them now after the past one week of rocket ship to the moon gains is not a good idea.

My point was that I like them a whole lot better now than the last time they rallied (April-May). Note, I did not say I liked them at these prices! It is just that the technical aura they now exude is more confident and certainly they are much farther down the road in terms of basing and recovery.

As for my first day off in eight years, thanks for the well wishing last week. There is nothing like sitting on a rock on a plateau above the tree line looking up at the summit with literally no people around for hundreds of yards. The silence was refreshing and recharging.

Why not revel in the actual summit? They say that Mt. Washington, where I was, has the worst weather in the country. They are not kidding. Not a half hour after my blissful rest stop it started to sleet and rain and the wind kicked up to 50 mph at the summit (70 mph gusts). Welcome to summer!

Sometimes the decision not to do something, as in brave the summit or chase a stock, is the best decision.


paulocuana said...

It looks like a 50/200 day EMA crossover is inevitable (both around 943 on the SPX).
Is there any significance here?

Paul O'Cuana

Amalan said...

Strictly speaking, the SP500 50-day crossed over the 200-day EMA on Aug 7, but soon crossed back down the next trading day (Aug 10). In the grand scheme of things, I suppose this can be viewed as close but not significant enough for further gains. On the other hand, in the grand scheme of things, most technicals point to continued bullishness - MACD, RSI, much greater strength in XLK than XLP or XLV, and even sentiment - quite a few pundits (at least on the NBR public channel) claim it's time for a pullback, I almost feel that we need folks to say we can get to 1100 for SP500 as part of this rally (read M Santoli's piece in Barron's quoting Ned Davis research - at least it's a start) before a turnaround for the lower can take place.

Quick Takes Pro said...

According to eSignal the crossover happens today, Aug 11. Now, we can argue which software vendor has the right formula. Don't assume everyone has the same one.

As for the wall of worry and the slope of hope, I think none of our precious sayings and assumptions hold water these days.

I highly recommend a new skinny book - The Stock Market Philosopher written by a hedge fund manager. He likens (or lichens, for you naturalists) the stock market to the jungle and evolution. Adapt or die. Last year dumped the big meteor on the dinosaurs.

I like that and will make it the next blog post.