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Annual Review: January 2009 Highlights at Trader’s Narrative

Annual Review: January 2009 Highlights

With just a few weeks left on the calendar, I thought it would be helpful to do a review of the trading year that was. So starting today I’ll look back at how I saw the markets in terms of sentiment, indicators and technical analysis. I’m curious to see just how my commentary and analysis fares in the harsh light of hindsight.

If you’re new to this blog, it may be the first time you’ll read these so I’d appreciate your comments and feedback. And if you’re already a loyal reader, here’s your chance to let me have it with your “I told you so’s“… :)

In any case, since I try to keep myself honest, it was time for me to look back at my previous calls. Let’s start at the beginning. The following are the highlights from January 2009:

  • The New Year’s Sentiment Cross Currents
    The year started off with much complacency and bullish sentiment. This was merely a continuation of the bullishness that we ended 2008 with. The options sentiment data was especially clear in highlighting a top.
  • McClellan Oscillator At Decade All Time Highs
    This popular market breadth indicator was off the charts! I argued that this was yet another sign that the market was top heavy. The S&P 500 quickly lost its footing within the first week and headed down into what we now know as the March bottom.
  • Gold Sentiment Too Optimistic For Continued Rally
    I argued that the various gold sentiment indicators had moved to extremely bullish levels, and that gold would be unable to continue rising as it had. Gold promptly corrected 10% but then snapped back and continued on its merry bull run.
  • Review Of The January Closed End Fund Strategy
    If you’d like more information, you can read this: my end of year strategy. I’ll be writing this year’s strategy very soon. Obviously, with correlation of assets at 1 and positive returns, there aren’t many losses to take advantage of but still this year’s not a wash. Stay tuned: My Year End Strategy for 2009.
  • Coppock Guide Update & Forecast For 2009
    Having already delved into this little known but powerful long term indicator, I projected how much the S&P 500 would have to move up in order to give us a buy signal. Since I was besieged by readers who wanted an update on the Coppock Curve, I showed just how slow this indicator moves and how it would take an incredibly powerful and hence, improbable rally in the short term, to nudge it higher. It would be 5 months later in May when the Coppock Curve told us this was a bull market.
  • Canadian REIT Review: Oversold Is Nothing
    I bemoaned the fact that this bear market had hurt Canadian REITs so unfairly, especially considering their incredible value and yield. While most REITs did retest their November 2008 lows in March, patient investors enjoyed a ferocious rally for the rest of the year as the sector index rose 65% (excluding the fat monthly dividends).
  • Financials Set For Another Dead Cat Bounce
    This bear market was unlike the previous one in that the banking sector was decimated. There was no doubt in my mind that the bear wasn’t finished with banks but we would still see a short lived bounce. Well, it was very short.
  • NAAIM Trend Survey Of Manager Sentiment
    I introduced a relatively new sentiment indicator from the National Association of Active Investment Managers (NAAIM) with limited historical data but a promising pattern of contrarianism.
  • Historical Chart of IPOs
    We looked at a 36 year chart of IPOs and how they correspond to the ebb and flow of bear and bull markets. I wondered if the frozen US markets signaled a long term buy opportunity and if they would thaw in February. The jury is arguable still out on the former but the latter did come about.
  • January Barometer’s Prediction For The Rest Of 2009
    The January Barometer is supposed to predict the rest of the year’s performance by its performance in the first month. According to this year’s prediction we should have had a down year. Notch another year against its record.

February - March - April - May - June - July - Aug - Sept - October - November - December

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2 Responses to “Annual Review: January 2009 Highlights”  

  1. 1 W. Peary

    Thanks for your insightful comments. The big question facing everyone is this, is this the ’same old, same old’ normal cyclical bull market and business cycle or are we, as suggested by Elliott Wave International and a few others, in a secular deflationary contraction. The ‘buy, hope, and pray’ investment strategies touted by everyone on Wall St. is an act of faith, like a religious belief. For anyone to follow that with the risk of a long-term deflationary contraction at hand is like Dirty Harry asking you, “Do you feel lucky? Well, punk, do you?” I, for one, am with the secular bear market deflationist camp. The McClellan Summation Index is now showing significant breadth deterioration at a place of significant resistance in all the major indexes on declining volume, commercials are highly net short as you’ve pointed out, and other sentiment measures showing a lot of bullishness and complacency. I’m betting on the bear. If anyone out there can see the future let me know.

  2. 2 Sam

    Hi Babak,

    thx for your interesting and insightful posts over the years. I’ve always enjoyed reading them, though am not always in agreement with your analysis. Those that don’t certainly provide me with me with an alternative view of the market and I believe it’s good for me as a trader.

    I wish you all the best in the coming year and I look forward to another year of shrewd and astute posts from you.


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