Malcolm Graham
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Stock market is telling investors ‘good buy’

Technical analyst is ‘aggressively long’ on equity investments

Adam Grimes, chief investment officer at Waverly Advisors, said that despite recent troubles and increased volatility, investors are being given a good opportunity to buy U.S. large-cap stocks.

Appearing on “MoneyLife with Chuck Jaffe,” Grimes noted that the increased volatility has been “non-directional” — meaning that the stock market hasn’t had a downtrend so much as sharp volatile spikes and equally sharp reversals.

“For years, I have been saying, ‘Be long stocks,’ but the reality is that’s what the market has said and I’m just passing that message along,” said Grimes, the author of “The Art and Science of Technical Analysis.” “That’s still what the market is saying.”

Grimes said he is concerned about investor complacency in the market, noting that there is not much dissent or nervousness, even as volatility has increased. He noted that the current market danger would be a severe drop or shakeout, though he said that kind of crunch and more people turning bearish would only fuel the fire of a rally.

Grimes noted that investors seeing the increase in volatility need to avoid being scared out of stocks by what he described as “silly technical,” measures that show market activity, but don’t reflect an edge when it comes to delivering market insight.

“In terms of potential, it’s hard to handicap this market. How much further could it go?” Grimes said. “Another three years, another five years, another 100 percent? It’s absolutely possible. … Everything we look at with a quantitative statistical edge says this is an intact uptrend, and our job is to be aggressively long equities.”

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