TREND IS YOUR FRIEND > US Market > high risk of profit taking in early April before the bounce in late April
Comparing US market performance to 40 year historical trends > high risk of profit taking in early April before the bounce in late April. US S&P 500 has delivered just short of 7% in March (i.e. so far) while delivering just short of 1% in rolling 3mths and mainly flat in rolling 12mths. We looked at the historical performance on S&P 500 over the last 40 years and looked for similar trend. March performance in the US market is the only time in the last 40 years where the index ran over 5% in a month while delivering between -3% to +3% over 3mth and 12mth rolling returns. The closest return we can match in the last 40 years to the Mar 2016 was in Oct 2015 when the market ran over 8.30% while delivering -1.16% over 3mth rolling and 3.04% over 12mth rolling. As seen from the chart below, S&P 500 is in a very similar position as far as premium to moving averages while RSI and VIX are showing similar stretched positions similar to Oct 2015.
Over 25 years’ experience in the finance/tech industry. Mathan has worked extensively in all parts of the finance sector (i.e. County NatWest, Citi, LIM, Southern Cross, Bell Potter, Baillieu Holst and Blue Ocean Equities). Currently Founder and...