When I first started trading some 20 years ago I was very lucky to be taken under the wing of a trader that had traded global markets for over 30 years. He always taught me that if it all looks so good in the major market indices then look harder at the detail, specifically the risky areas of each asset class. Experience had taught him that nine times out of ten the risky areas of each asset class turned down well before the likes of the Dow, FTSE, Dax or Nikkei.
On the face of it equity markets appear poised to move higher with the major market indices like the Dow and Nasdaq trading not far from their multi-week highs. However, beneath the scenes the situation appears even better. All the risky areas of each asset class are either trading at or very near multi-week highs. This suggests to us that there is more upside left in the FTSE, Dow, Nikkei, and DAX. There is something very powerful driving equity markets we don’t know exactly what “it” is but we are happy to ride the trend knowing that it is likely to be sometime before any bearish cracks show up.
We will continue to look hard to find bearish cracks, however, for now we can see no evidence that the bullish trend in equity markets is in trouble, so if it isn’t broke don’t fix it is perhaps more applicable right now than trying to be too pedantic.
Our global wealth accumulation portfolio (Earnslaw) which consists of just 12 ETFs and is the vehicle with which we manage our retirement funds is up 33% this year with less than half the volatility of the S&P 500
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