SP 500's blog

S&P 500 Rallies and Still Loses in November 2011

Be very cautious now when you want to invest in S&P 500 fundsThe S&P 500 gained 7.6% during the last 3 days of November. Great news you may think. However, you need to see it in perspective. Even after these last 3 days, the S&P 500 still lost 3% during November.

During periods like now, when markets fluctuate multiple percentages per day, it is easy to lose the overview of the real direction that the market is moving.

 

S&P 500 lost over 12% in 2 Months

Despite some of the best days every, the S&P 500 has lost more than 12% during the last 2 months.

The 3 months before that, it had lost already 5% since its peak end of April.

This situation is a good example that trend signals are not capable to tell you if the market is at its top.

But long-term trend signals can tell you when the long-term trend has turned down.

Nobody knew in May orJune that April was the peak.

You Need More than the S&P 500 to See the US Market Trend

After a hectic month, with

  • a US debt default discussion,
  • a rescue package for Greece and
  • signs of slower than expected economic growth

The long-term trend signals for the S&P 500 are all unchanged compared to last month.

They are all pointing up.

But this is a time that shows clearly that looking at the long-term trend signals for one market index like the S&P 500 is not enough.

To see where the trend is going for the overall market, you better follow a number of different market indices.

At this moment we get for example the first warnings from the NASDAQ and NYSE indices for the start of a potential downturn.

Long-term trend signals for many emerging markets are pointing down. And Europe starts coloring red as well.

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