Given these concerns, if the markets continue to advance, it might be an ideal time to cull out poor-performing stocks or companies that face earnings challenges in a disappointing and decelerating domestic economy.
Now, let's move on to a technical observation.
A famous Woody Allen quote -- used by Warren Buffett previously in his annual report and letter to
(BRK.A - Get Report)
(BRK.B - Get Report)
shareholders -- has some bearing on our analysis of the markets: "Bisexuality immediately doubles your chances for a date on Saturday night."
In other words, embracing both fundamentals and technicals can have its benefits.
Earlier this year, I raised the issue that an unusually negative technical formation, "
Three Peaks and a Domed House
," might have indicated that an important market top was being made in March-April 2011.
This observation, which caught a number of technically inclined analysts by surprise, with the benefit of hindsight, might have been prescient.
Technical analyst George Lindsay coined this 23-step "Three Peaks and a Domed" technical pattern and gained celebrity because it pointed to a market peak in late 1968 -- and the largest stock market correction since World War II followed in the years after. (
are some historic examples of such a technical setup.)
Below is a chart of S&P 500 cash year-to-date.
Observe the similarity between the chart above and George Lindsay's "Three Peaks and the Domed House" technical configuration below (with points 3, 5, 7 and 9 corresponding to the S&P's March-April 2011 price action).
Err on the side of conservatism in these uncertain (and market volatile) times.
Doug Kass writes daily for
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