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Who is Mary Ann Bartels? Bartels ranked second among technical analysts in Institutional Investor magazine's 2009 survey.
Bartels is a "technical analyst," which means that she uses price charts to forecast resistance levels, or ceilings that are restricting further price increases, and support levels, or floors limiting declines. A drop below support is a harbinger of losses.
One tool that Bartels uses is the 50 day moving average. On December 4, the US dollar index rose above its 50 day moving average to 75.911. When this happened it turned the dynamic of the market upward. Bartels is now saying that the dollar is bottoming.
The dollar index fell 15% from a three year high reached in March on speculation the Federal Reserve would be slow to raise rates. The S & P index has surged 63% to 1,103.25 from its 12 year low on March 9.
The biggest US stocks have beaten the smaller ones. The S&P 100 has risen 4.9% compared with only a .1% gain for the S&P Small Cap 600 index.
If Bartels is correct in her prediction, it could reverse the trend in the stock market, with the S & P falling back to its 50 day moving average, which was 1,079.16
Bartels says: "There's a tug of war between the bulls and bears, and the dollar could be key as to which direction the market breaks."
When reading this, keep in mind that technical analysis is only one tool for making investment decisions. One should always look at the underlying fundamental underpinnings of the market. There are times when fundamentals overtake technicals, with investors caught on the wrong side of the market. For example, the technicals were a disaster back on March 9, yet the market staged one of the greatest comebacks in history.
So, be careful out there. Use common sense along with technical analysis.
Do you rely on technical analysis when making investment decisions?
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Reader Comments (Page 1 of 1)
12-08-2009 @ 6:44PM
william lindblad said...
Better to rely on a macro type approach.
I said top at 1200 troy.
I say nay to the dollar bottoming.
Common sense approach - a lot of problems remain and conditions will remain volatile.
We are not the only ones with deficit problems.
12-08-2009 @ 9:16PM
Peter Van Schaik said...
Technical analysis of markets? I think psychological analysis is more appropriate and beneficial. Less than a week ago Connie Madon was telling us "...the sky is the limit on the upside. We also have some gold producers that used the futures markets to hedge their physical gold. Hedgers traditionally sell futures contracts against their physical holdings. Right now they are taking a big hit. Some producers have decided to cover their short positions. This further adds to price appreciation." That alone was enough to make any contrarian nervous.
Swine flu is not the only reason to avoid crowds. Markets are composed of people and people are driven by fears: Fear of losing what they already have and fear of not gaining as much as the other investors. Mob psychology rules out rational markets. http://jpetervanschaik.googlepages.com