A Rickety Bridge

October 8, 2012
	Replace the "Grasshopper" with yourself and the "Master" with the standard buy and hold - asset allocate and diversify - advisor.  Obviously the old rickety bridge is the market at unsustainable highs. A few weeks ago I shared the view of cyclic analysis expert David Hickson (ST Outlook - 8 September 2012).  He is of the opinion market cycles will form short term highs leading to a drop into a long term trough.  He gave a detailed explanation and supported his premise with excellent data. Today I will share another robust leading indicator of future market activity - the PMI.  PMI measures the amount of manufacturing going on in the world.  If people of the world aren't buying as much (reflecting a poor economy) then world manufacturing decreases. Normally, since stock markets are a barometer of the economy, then manufacturing and stock markets tend to move together in the same direction.  If you squint while looking at the chart below this is very apparent.  But now look closer at the right side of the chart and you will see that as the stock market has climbed since June this year, manufacturing has been decreasing.  What does this tell us?  These indexes WILL travel together soon. Will the market turn down to follow declining manufacturing or will manufacturing turn up and follow the market higher? Whichever you choose to believe, WE believe the market is a rickety bridge over a deep chasm.  As I write this, the market is pulling back from our last selling point for Moderately Aggressive accounts. We will wait for major bridge repair to be done before we risk any moderate account assets.  If we are right and the market begins to correct, we may put a few Moderately Aggressive toes in along the way to take advantage of opportunities that occur.   Have a great day!! John Norquay CEO PivotPoint Advisors		In order to view the graphs and charts in our newsletter, please click the link at the top of your email to "always show images from PivotPoint Advisors" Resources Check out our Youtube Channel  Like our FaceBook FAN Page We manage money inside 401k plans. Know anyone who may want to use us? Click "Forward to a friend" (immediately below) to share this newsletter with friends you think may appreciate our services. Forward to a Friend Twitter Subscribe to the Weekly Briefing Report Unsubscribe Update Subscription Preferences View Email In Browser
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