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Why Stock Market Could Move Higher for Remainder of 2018

Although important technical and economic factors make us extremely cautious about the equity markets longer term, we’re looking at some shorter-term indicators that tell us the markets could experience profitable upward bounces during the rest of 2018. For one thing, as illustrated by the second chart below, most public companies can once again buy back their own stock after emerging from blackout periods that suspend buybacks before quarterly earnings announcements. Indeed, the fact they couldn’t buy during September and October may have exacerbated the recent sharp market declines.

Another positive is that the Ned Davis short-term sentiment indicator is at only 20% bullish, the lowest level of the year. That means there’s a huge amount of bearish sentiment out there. And that’s positive news from a contrarian point of view since historically investors are wrong about market direction.

More good news for the remainder of 2018 is that a lot of mutual funds and the like subject to the 1940 investment company are done with the tax selling of the last two months that helped depress the markets. So that adds even more liquidity for upward market momentum this year as these investment companies initiate buying programs to maximize annual returns after flat to downward performance for the first 10 months of the year.

Why Stock Market Could Move Higher for Remainder of 2018

Why Stock Market Could Move Higher for Remainder of 2018
Why Stock Market Could Move Higher for Remainder of 2018

 

 

 

 

 

 

 

 

 

 

 

 


Brad Lamensdorf

Brad Lamensdorf, the founder and portfolio manager of Active Alts, is a principal and co-manager of the AdvisorShares Ranger Equity Bear ETF. He previously managed a long-short investment partnership from 1998-2005 under the name Tarpon Capital Management. Earlier in his career Mr. Lamensdorf was an equity trader/market strategist for the Bass Brothers’ trading arm. He managed a short only portfolio in addition to co-managing a $1bil hedging program. He also served as in-house market strategist for the entire internal and external network of Bass Brothers money managers.

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