Veteran technical analysis expert Martin Pring says that the US stock market is appearing to be a bit overstretched right now. However, there is little cause for concern, as the longer term appears to be very positive, he adds. “If you worry about correction in a bull market, you’re going to get sold out. So you have to bear with it, if there’s a correction,” Martin Pring said. Interestingly, the headline indices S&P 500, Nasdaq 100 and DJIA (Dow Jones Industrial Average) are trading near all-time high levels. In the year so far, the S&P 500 has gained more than 25% to 3,140.98, amid aggressive monetary policy rate cuts and optimism around US-Chinese trade talks. In Pring’s own assessment, the global economy is likely to bottom out going forward, and the leading indices could move up further. Sushruth Sunder of Financial Express Online recently interviewed Martin Pring, founder of Pring Research, who shares his outlook on the Indian stock market, US economy and his investment approach. Martin Pring is the author of widely-read titles such as ‘Technical Analysis Explained’, ‘Introduction to Technical Analysis’, ‘Martin Pring on Price Patterns’, and other books of immense value to technical analysts. Here are edited excerpts-
The Nifty has hit an all-time high. Do you believe that this rally is likely to sustain? Which sectors are looking attractive in your assessment?
I think the Nifty is going to take out a new all-time high. I look at the Indian indices occasionally. In my view, the Nifty Auto index looks like it is nearing bottom. Closely linked to the global commodities cycle is the metals space. These will be the areas to focus on, as the global economy is bottoming out. The reversal of commodity cycle is typically a sign that economic slowdown is going to end. We are starting to see these signs play out.
What’s your view of the US stock markets?
In the immediate future, the index is a bit overstretched. But, I don’t worry about that because long-term is very positive. If you worry about correction in a bull market, you’re going to get sold out. So you have to bear with it, if there’s a correction.
Could you share your investment approach. How do you marry the technical indicators with the economic indicators?
I look at the technical indicators, and see if they conform with the economic indicators. They work as a team. You want both to be moving in the same direction. If the economy is bottoming out, you would like to see the same thing in the long-term momentum indicator in the stock market. I follow the economy, but not the fundamentals. I don’t follow Price/ Earnings ratio and that kind of thing. I marry the economic with the technical indicators. I don’t marry fundamental with the technical.