Technically Speaking: Will The Next Decade Be As Good As The Last?

In this past weekend’s newsletter we stated:

“This short-term oversold condition, and holding of minor support, does set the market up for a bounce next week which could get the market back above the 200-dma. The challenge, at least in the short-term remains the resistance level building at 2800.

That bounce occurred on Monday which allowed us to add some trading positions to our portfolios.

Our job as portfolio managers is simple:

  1. Protect investment capital, and; (Long-term view)
  2. Take advantage of opportunity when it presents itself. (Short-term view)

The blending of the short and long-term views is the difficult part for readers to understand.

“If you have a long-term bearish view on future market returns, how can you be increasing equity exposure?”

Because, as rule #2 states, our job is to make money when we can while avoiding the long-term risk of capital destruction. As such, we must marry the long-term views with short-term opportunities which don’t necessarily always align.

For example, the media was full of commentary over the weekend discussing the market’s 10th anniversary.