Jolly14 Jun 2014 16:48
Would not fully disagree, I'm new to this and would say I'm a glass half-full type of person. My naive and inexperienced view is there has to be peaks and troughs.....so once the FTSE100 holds above it's highest ever of 6,950, the odds are it will fall back, whether you can call this a "correction" or the natural order of things I don't know. Not a TA but since it's record high in late 1999, support seems to occur at about 3,500 with resistance at 6,900-7,000. Given the FTSE100 has only been in existence since 1984 (I think) then if markets are cyclical, peaks/troughs say every 5 to 7 years, then IMV there isn't a lot of previous history to establish with any certainty what is a correction or just the natural order of things. If there is still 18 months before a correction and this could just mean a 10% drop (from what I've read) of over valued Companies, then is this sufficient to pull out and sit on 100 % cash?. The FTSE100 historic peaks to troughs take about 3years, and there has only really been one trough to peak (c2003-2007), so again given its close to hitting resistance of 6,900 it would be fair to assume another correction is imminent...but will it just be a marginal 10% fall or a full blown decline to support levels?. The VIX "volatility Index" is at it's lowest since just before the financial crisis of 2007, but again this merely mirrors what the markets are doing - S&P500 & DJI hitting new highs, FTSE getting close to its highest. So the fear/volatility is at a low......peaks & troughs again.
Personally I'm going to see what happens in the next month (give me time to search for any under valued small caps and confirm my buy list) and then hopefully fully re-invest. Then when/if the full blown market correction (continued decline to support levels - about 40%-50% below resistance) appears to be happening then convert to 100% cash and wait.......the iffy part is knowing its a full blown correction!, hopefully will be more astute, skilled and less naive by then!.
Good luck and apologies for rambling....and apologies to fellow GDP'ers for going off topic.
DD
Ps tried pasting a FTSE 100 chart from 1984 to-date but not attained those skills yet!