Market Timing Brief for the 8-21-2015 Close: Stocks Slump to Deeper Support. Gold Rallies on Increasing Volume. Rates Fall.

A Market Timing Report based on the 8-21-2015 Close, published Sunday August 23rd, 2015

I deliver focused comments on the markets.  These are supplemented with “Tweets/StockTwits” (see links below).

1. The SP500 Index is falling in the futures markets tonight. Support has been broken yet again.  The 1821 October 2014 low is a potential target, although the market is already very oversold and a bounce could happen sooner than that.  The Fed may make some sort of definitive comment about holding off with rate increases due to the slowing world economic data.  The implied open per CNBC is at a nasty 1932 (it’s even lower as I am finishing this post…but once a market is oversold it becomes hypersensitive to good news, so this is not where you start shorting a market).

sp500-market-timing-chart-2015-08-21-close

Falling, oversold, looking for support and a bounce.

(See my messages on Twitter® Follow Me on Twitter®.   Follow Me on StockTwits®).

2. Small caps are down about 2% in the futures markets late Sunday evening per CNBC bringing the open to about 1134.  Things could change by tomorrow morning, but this market appears to want to extract more blood prior to rallying.

Russell 2000 U.S. Small Cap Index (RUT, IWM; click to enlarge):

rut-small-cap-index-market-timing-chart-2015-08-21-close

Falling and looking for support.

3. Gold has reversed a major break on increasing volume. Owning something that is working while stocks are not working is what diversification is all about.  Gold is benefiting from the dollar weakness I predicted along with falling yields (see prior post on when gold shines if you haven’t read it).

Gold ETF (GLD):

gld-etf-market-timing-chart-2015-08-21-close

Gold reverses a prior break.

4. Treasury yields 

U.S. 10 Year Treasury Note (TNX,TYX,TLT,TBF): The 10 year Treasury has been a good hedge against falling stocks.  I took off some exposure, perhaps a bit early as stocks appeared oversold.  We’ll look to add back exposure on a stock market bounce, but if we cannot, we’ll have our core position and some extra cash as well.

tnx-10-year-treasury-note-market-timing-chart-2015-08-21-close

Rates falling as investors flee stocks.

Be sure to visit the website at: Sun and Storm Investing™

Standard Disclaimer: It’s your money and your decision as to how to invest it.

Note that the newsletter is now CLOSED to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the October 4th issue.  If you join and don’t read the newsletter, you will be deleted.  Why?  I don’t publish to non-readers as other newsletters do.  I surround myself with committed people who value what we are doing.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

I thank Worden Brothers for the charting system I use to post these charts.  If you want to know more about the charting system I use every day, go to my “Other Resources” page here:  Other Resources   It makes it much easier to follow along with me if you can see the charts and manipulate them on your own computer.  It’s a great investment to have an excellent charting system.  Check it out with a free trial at the link above.

Copyright © 2015 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, gold, investment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief for the 8-07-2015 Close: UPDATED 8-17-2015-SP500 with Six Failures and Sinking. Small Caps Send Warning. Gold Stuck. U.S. Treasuries Win.

A Market Timing Report based on the 8-07-2015 Close, published Sunday August 9, 2015

UPDATE 8-17-2015 SP500 Testing Immediate Support

2064-2068 is next support. Then 2044ish.

sp500-index-market-timing-chart-2014-08-17-close

Retest!

I deliver focused comments on the markets.  These are supplemented with “Tweets/StockTwits” (see links below).

1. The SP500 Index hesitated before last week’s report, and fell after I pointed out the weakness.  Thanks for playing along with the storyline, Mr. Market.  The market does not always respond to my cues.  ; )  Let’s look at where we are now and then I’d like to take a lower power view:

sp500-market-timing-chart-2015-08-07-close

SP500 drops to next support level.

The above chart screams of failure and note that green line with the green arrow on it, and then look below to the graphic detail on the next chart:

sp500-market-timing-chart-four-failures-2015-08-07-close

Four failures at an important high.

Note that there are fully SIX failures to make a new high and keep it after the first high occurred  on Feb. 25th.  There were four failed breakouts but also two addtional lower highs on the daily chart.  Could the market still find support here and bounce?  Yes, of course; however, it’s very hard to make a prediction when we’re in the middle of a trading range (the recent range goes to 2044).  I’d say that it’s a coin flip whether we rally from here a bit, but I believe we will test lower regardless of such a bounce.  Then I would favor a drop to 2044 as a minimum downside target. It’s a very obvious number, so don’t count on it holding.  That’s why it’s best to stay in touch via social media during the week using these links:

(See my messages on Twitter® Follow Me on Twitter®.   Follow Me on StockTwits®).

2. Small caps found support prior to last week’s report, but they broke lower than the SP500 this week after forming a second lower high.  Not good for them and not a good sign for the overall stock market.  Have some cash on hand for purchases at lower prices.  You may want to switch out of some higher beta small caps (trade some of them for large caps and leave some cash) during this decline and re-buy them lower.  The stated beta of IWM for the past 3 years is only 1.1 per Yahoo Finance but some of your  small caps may have much higher beta values (volatility vs. SPX with SPX beta defined as 1.0).  Small caps are in a serious decline, again, not good for the market as a whole.  Look at the next step down for small caps (1151-1153ish) on the chart:

Russell 2000 U.S. Small Cap Index (RUT, IWM; click to enlarge):

rut-small-cap-index-market-timing-chart-2015-08-07-close

Small caps do worse than large this week.

3. Gold’s Bullish engulfing day from two weeks ago has done nothing for gold for another week.  Yet the stock markets are lower, so there’s relative outperformance of gold.

Gold ETF (GLD):

gld-etf-market-timing-chart-2015-08-07-close

Gold is still stuck though outperforming in relative terms.

4. Treasury yields 

U.S. 10 Year Treasury Note (TNX,TYX,TLT,TBF): The 10 year Treasury has fallen below the 2nd yellow line from the top of the chart below:

tnx-10-year-treasury-note-market-timing-chart-2015-08-07-close

U.S. Treasuries Beat U.S. Stocks

Treasuries have been outperforming stocks, despite the back-test this prior week, for a period of 19 market days.  Rates will fall lower.  Corporate bonds did not get you that return by the way.  LQD (corporate bonds) did not bounce much.  TLT is up 7.48% since 7-13-2015 and LQD is only up 0.93%.  They had recent dividends of 0.2674 and 0.3295, respectively, or 0.23% and 0.29% (vs. 7-13 lows).  As you see, TLT wins by a huge margin.  This means investors see more risk in high grade corporate bonds than in Treasuries.  That’s not a great sign either for the stock market. 

Unless the Federal Reserve stimulates a rally by stating something publically that a Sept. rate hike is off the table (they’ve been stating the opposite), fastening your seat belts for a deeper correction would make sense.   My favorite saying is “Buy fear, sell greed.”  In the current context that means: Sell higher on rallies, re-buy lower on the correction.  But a second guideline is not to spend all your cash at once.

Be sure to visit the website at: Sun and Storm Investing™

Standard Disclaimer: It’s your money and your decision as to how to invest it.

Note that the newsletter is now CLOSED to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the October 4th issue.  If you join and don’t read the newsletter, you will be deleted.  Why?  I don’t publish to non-readers as other newsletters do.  I surround myself with committed people who value what we are doing.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

I thank Worden Brothers for the charting system I use to post these charts.  If you want to know more about the charting system I use every day, go to my “Other Resources” page here:  Other Resources   It makes it much easier to follow along with me if you can see the charts and manipulate them on your own computer.  It’s a great investment to have an excellent charting system.  Check it out with a free trial at the link above.

Copyright © 2015 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, gold, investment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , | Leave a comment

Market Timing Brief for the 7-31-2015 Close: Stocks Bouncing with Hesitation. Gold Found a Level, but no Bounce Yet. Treasuries Rally Further.

A Market Timing Report based on the 7-31-2015 Close, published Saturday August 1, 2015

I deliver focused comments on the markets.  These are supplemented with “Tweets/StockTwits” (see links below).

1. The SP500 Index hesitated after the Fed FOMC statement that referred to “solid job gains” saying specifically, ” The labor market continued to improve, with solid job gains and declining unemployment. On balance, a range of labor market indicators suggests that underutilization of labor resources has diminished since early this year.”  This makes an earlier Fed move possible with a big “BUT.”  The “but” is that the worldwide economy is slowing in the face of deflation.  Added to that was the Employment Cost Index coming in at a very weak 0.2% month/month.  The lack of wage growth has been a likely drag on consumer confidence of late and could restrain retail sales.

sp500-market-timing-chart-vs-world-2015-07-31-close

Market pausing after the Fed and disappointing employment cost index.

(See my messages on Twitter® Follow Me on Twitter®.   Follow Me on StockTwits®).

2. Small caps found support and as the second chart shows below, have been outperforming the large caps since the October low.  In fact, if you bought small caps at every large cap low, you would have done very well.  Perfect market timing is impossible to achieve, but reducing risk at highs and increasing it at lows (selling and then buying back higher beta) works.

Russell 2000 U.S. Small Cap Index (RUT, IWM; click to enlarge):

rut-small-cap-index-market-timing-chart-2015-07-31-close

Small Caps Bounce from Nearby Support

3. Gold’s Bullish engulfing day from last week did not lead to a rally, at least not yet.  

Gold ETF (GLD):

gld-etf-market-timing-chart-2015-07-31-close

Gold has found a level, but no rally so far.

4. Treasury yields 

U.S. 10 Year Treasury Note (TNX,TYX,TLT,TBF): The 10 year Treasury has reached a support level, but with the economy cooling, yields have further to fall as the Fed steps back and reassesses their prior view on raising rates as early as September.

tnx-10-year-treasury-note-market-timing-chart-2015-07-31-close

Yields continue to fall. Bonds winning.

Be sure to visit the website at: Sun and Storm Investing™

Standard Disclaimer: It’s your money and your decision as to how to invest it.

Note that the newsletter is now CLOSED to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the October 4th issue.  If you join and don’t read the newsletter, you will be deleted.  Why?  I don’t publish to non-readers as other newsletters do.  I surround myself with committed people who value what we are doing.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

I thank Worden Brothers for the charting system I use to post these charts.  If you want to know more about the charting system I use every day, go to my “Other Resources” page here:  Other Resources   It makes it much easier to follow along with me if you can see the charts and manipulate them on your own computer.  It’s a great investment to have an excellent charting system.  Check it out with a free trial at the link above.

Copyright © 2015 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, gold, investment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief for the 7-24-2015 Close: Stocks Reach First Support. Gold Has A Good Day After a Bad Break. Rates Fall.

A Market Timing Report based on the 7-24-2015 Close, published Sunday July 26th, 2015

I deliver focused comments on the markets.  These are supplemented with “Tweets/StockTwits” (see links below).

1. The Current SP500 Index Chart (SPX, SPX; click to enlarge): The market fell and on Friday stopped where I said it would.  It doesn’t always work out quite so well, but we diligently look for hints for when the market is topping vs. when it’s bottoming, so we can buy and sell appropriately.  They key is: “Buy lower, sell higher.”  Sounds simple?  Well, most investors buy high on greed and sell low in a panic.

Who knows whether we are at the ultimate low in this swing lower?  No one.  But my belief is that we are notably still in a pause, and not in a long term Bear market, that is, until and unless more damage is done.  We want to be buyers lower and sellers higher until the overall game changes from Bull to Bear.  We also want to keep our exposure up fairly high until that game changes.  Some of you will trade the swings more aggressively and if it works, good, but in a Bull market, there’s a risk of being left behind too.   If you sell everything right here for example, what do you do if the market rallies back to the prior high?  Do you and will you buy it all back?  Most individual investors won’t, and delay their buying, feeling they were right and then under-perform the market.

And you may decide to use market timing simply to add old or new cash at smarter spots in the inevitable market swings.

There are a few stocks that are having outsized reactions to earnings, such as Google and more recently, Amazon, but the fact that the market is falling at the same time is of great concern.  Bad breadth it is called.  Investors cling to fewer and fewer stocks near tops.

sp500-market-timing-chart-vs-world-2015-07-24-close

SP500 Index falls from a key resistance line and is searching for support.

Where are we now?  The SP500 would appear to have farther to slip, but there is a support line shown in yellow in the chart below, which could provide a bounce, at least temporarily.  2068 and 2044 are the next levels of support.  Be willing and able to add at lower levels if you can.  (You can check my current exposure level including US/Non-US percentages on Twitter®/StockTwits®.) Remember that what I do, is what I do, and you need to determine your own plan, one that fits you.

(see my messages on Twitter® Follow Me on Twitter®.   Follow Me on StockTwits®).

I do believe the Federal Reserve will navigate us out of the current spot, but the sooner they indicate their hand is off the rate raising button, the better, and the better the market will respond.  Is that “right”?  Not at all.  Quantitative easing represents one of the greatest market manipulating feats that has EVER been attempted by the sheer numerical value of QE.

sp500-market-timing-chart-vs-world-2015-07-24-close-support line

Note the yellow support line (see text).

2. I said last week that small caps not participating in the prior rally was an issue for the overall market.  It is a sign that market participants are starting to doubt less liquid stocks, because the big players cannot get out of them when liquidity dries up.  You can see that there is room to fall one more notch at least before this pullback ends, but there is no guarantee.

Russell 2000 U.S. Small Cap Index (RUT, IWM; click to enlarge):

rut-small-cap-index-market-timing-chart-2015-07-24-close

Failed to make a new high.

3. Gold has been falling like a rock, golden or otherwise.  You can see the major support that was just violated.  At times, a market will bounce back to such a line and then lose momentum, again falling to new lows.  The fuel for a bounce?  On Friday, GLD finally had what is called a Bullish engulfing day, with a lower low and a higher high than the prior day, followed by a close at a new high.

Gold ETF (GLD):

gld-etf-market-timing-chart-2015-07-24-close

Gold finally has a technically positive day.

4. Bond and Treasury yields are falling again.  You see below that we’ve reached a first support level, so it is theoretically possible that the current price will hold, but there is also plenty of room below.  The Fed is going to have to wait to raise rates much longer than is currently expected by market participants.  I believe that is starting to dawn on them, but opinions change gradually.  If the Fed raises rates too soon, which certainly would be any time before the end of the year if not much longer, the U.S. dollar will skyrocket, and U.S. business profits will decline further at a time when the dollar has already rallied and the worldwide economy has already slowed.  The stock market would react negatively to that development.  What we want to see then, is rates staying confined in the range shown on the chart, preferably falling further from here.

U.S. 10 Year Treasury Note (TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2015-07-24-close

Yields are falling again, which means assets are going back into U.S. Treasuries.

Be sure to visit the website at: Sun and Storm Investing™

Standard Disclaimer: It’s your money and your decision as to how to invest it.

Note that the newsletter is now CLOSED to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the October 4th issue.  If you join and don’t read the newsletter, you will be deleted.  Why?  I don’t publish to non-readers as other newsletters do.  I surround myself with committed people who value what we are doing.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

I thank Worden Brothers for the charting system I use to post these charts.  If you want to know more about the charting system I use every day, go to my “Other Resources” page here:  Other Resources   It makes it much easier to follow along with me if you can see the charts and manipulate them on your own computer.  It’s a great investment to have an excellent charting system.  Check it out with a free trial at the link above.

Copyright © 2015 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, gold, investment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief for the 7-17-2015 Close: It’s the Same This Time. Small Caps Hesitate with Large Caps On the Line. Gold Breaks. Rates Fall.

A Market Timing Report based on the 7-17-2015 Close, published Sunday July 19th, 2015

I deliver focused comments on the markets.  These are supplemented with “Tweets/StockTwits” (see links below).

1. The SP500 Index has rallied from the recent low on very low volume after Greece was “saved” from itself and the rest of the Eurozone came up with the money to fund the bankrupt nation.  It’s not a convincing rally though!  There is immediate resistance at the high of 2129.87 and then resistance at the prior high.  The NASDAQ is at all time highs, yes, even above the highs of the massive 2000 internet driven bubble.  To celebrate, Google (GOOGL) was up a whopping 16.26% on Friday.  How analysts could be so far off is remarkable with a company of that size.

It’s the same this time. Facebook and other companies like it that have been bid up to astronomical levels based on hype, not earnings will meet Mr. Market’s “reversion to the mean” law one day.  Facebook is now trading at a multiple of Enterprise Value (EV) to EBITDA of 37.33 vs. the 10.16  value for Apple.  A value of approximately 10 is considered “a deal.”  (EV is the amount of money it would cost to buy the company outright [all shares, plus debt, minus cash] and EBITDA, which eliminates accounting adjustments to earnings, is earnings before adjustments of interest, taxes, depreciation and amortization).  By another measure, price to sales, FB is trading at 18.89 X sales, which Apple trades at 3.49 X sales.  All this data can be found on Yahoo! Finance for FB and for APPL (click the links to view).

The Current SP500 Index Chart (SPX, SPX; click to enlarge): Barely above the bright green trend line with small caps much weaker.

sp500-market-timing-chart-vs-world-2015-07-17-close

Large Caps just barely above a resistance line.

2. Small caps did not participate as vigorously as their larger brethren on this bounce.  That is a strike against this rally.

Russell 2000 U.S. Small Cap Index (RUT, IWM; click to enlarge):

rut-small-cap-index-market-timing-chart-2015-07-17-close

Small caps lag.

3. Gold looks miserable. Gold stocks, seen HERE, are even worse.

Gold ETF (GLD): We hold GLD as currency insurance only, and it won’t help that we have until the dollar weakens on Fed dovishness.  Right now, the U.S. Fed policy is more hawkish than that of other important central banks.  For this reason, we have no trade on for GLD at the moment.

gld-etf-market-timing-chart-2015-07-17-close

Gold is broken and has one last trend line support level shown in yellow.

4. Bond and Treasury yields are finally falling a bit back into the range shown on the chart below.

U.S. 10 Year Treasury Note (TNX,TYX,TLT,TBF): The yield on the 10 Year must break 2.198% to reverse the current trend of higher highs and higher lows.

tnx-10-year-treasury-note-market-timing-chart-2015-07-17-close

Rates falling again.

(see my messages on Twitter® Follow Me on Twitter®.   Follow Me on StockTwits®).

Be sure to visit the website at: Sun and Storm Investing™

Standard Disclaimer: It’s your money and your decision as to how to invest it.

Note that the newsletter is now CLOSED to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the October 4th issue.  If you join and don’t read the newsletter, you will be deleted.  Why?  I don’t publish to non-readers as other newsletters do.  I surround myself with committed people who value what we are doing.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

I thank Worden Brothers for the charting system I use to post these charts.  If you want to know more about the charting system I use every day, go to my “Other Resources” page here:  Other Resources   It makes it much easier to follow along with me if you can see the charts and manipulate them on your own computer.  It’s a great investment to have an excellent charting system.  Check it out with a free trial at the link above.

Copyright © 2015 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, gold, investment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief for the 7-10-2015 Close: Stocks Slip And Face Earnings Reports. Gold Holds An Important Low. Rates Bounce Despite A Later Lift-off Date.

A Market Timing Report based on the 7-10-2015 Close, published Sunday July 12th, 2015

I deliver focused comments on the markets.  These are supplemented with “Tweets/StockTwits” (see links below).

1. The Greece “resolution” looks messy, meaning billions of dollars messy for Euroland.  The latest report @CNBC said that the Euro zone leaders are close to a compromise deal with Greece.  U.S. futures are down only a bit now (SPX -0.31% vs. fair value per CNBC.com at 11:05 pm ET).  We made a purchase on Thursday July 9th.  Do your best to buy lower, and sell higher in this period of higher volatility.  Do not chase!

2. U.S. corporate earnings are expected to be weak and continue this week in earnest.  Now we see if forward numbers weaken as well.   Those with weak guidance will suffer big moves down in this higher volatility market.

3. Gold came off its low on a successful test.  It is stuck in a range for reasons discussed in detail in the past few weeks.

4. Rates should be coming down (not bouncing UP)  a bit with a Fed now due to delay a rate increase to the “end of the year” per Dr. Yellen.  Per the futures market, it will be the first quarter of 2016.  Either way, the Treasury market seems to require further convincing that rates can stay below 2.5% for a significant period of time, as noted by the bounce in rates at the end of the week.

Now given that summary, view the charts below, and get ready for more volatility…

The Current SP500 Index Chart (SPX, SPX; click to enlarge): A wide consolidation range.

sp500-market-timing-chart-vs-world-2015-07-10-close

Stocks stuck on Greece and wondering about earnings.

Russell 2000 U.S. Small Cap Index (RUT, IWM; click to enlarge):  Note the stronger response of small cap stocks vs. large.  A higher low is forming.

rut-small-cap-index-market-timing-chart-2015-07-10-close

A better bounce than for large caps.

Gold ETF (GLD): Holding as currency insurance only.  No trade at the moment (see comment above).

gld-gold-etf-market-timing-chart-2015-07-10-close

Gold hold a slightly higher low.

U.S. 10 Year Treasury Note (TNX,TYX,TLT,TBF): Bouncing in what is likely a false belief in a hawkish Fed.

tnx-10-year-treasury-note-market-timing-chart-2015-07-10-close

Rates bounce yet again toward resistance.

(see my messages on Twitter®Follow Me on Twitter®.   Follow Me on StockTwits®).

Be sure to visit the website at: Sun and Storm Investing™

Standard Disclaimer: It’s your money and your decision as to how to invest it.

Note that the newsletter is now CLOSED to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the October 4th issue.  If you join and don’t read the newsletter, you will be deleted.  Why?  I don’t publish to non-readers as other newsletters do.  I surround myself with committed people who value what we are doing.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

I thank Worden Brothers for the charting system I use to post these charts.  If you want to know more about the charting system I use every day, go to my “Other Resources” page here:  Other Resources   It makes it much easier to follow along with me if you can see the charts and manipulate them on your own computer.  It’s a great investment to have an excellent charting system.  Check it out with a free trial at the link above.

Copyright © 2015 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, gold, investment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief for the 7-02-2015 Close: U.S. Stock Markets On Pause. Gold On Its Knees As Rates Peak.

A Market Timing Report based on the 7-02-2015 Close, published Sunday July 5th, 2015

I deliver focused comments on the markets.  These are supplemented with “Tweets/StockTwits” (see links below).

1. The Greek default (that already happened this week with the added current threat of a NO vote of the Eurozone offer in the referendum today) has our markets on edge, but what really has them on edge are the soft earnings to come in the next few weeks starting this Wednesday, July 8th.  Realize that Greece is just a distraction to the U.S., as even the European banks do not have most of the exposure to their debt default.  The big institutions have taken on the bad debt to insulate the banks at the expense of others.  This does not say that everything will be find and dandy if Greece goes fully belly up.

The U.S. large and small caps are at support levels, which may only hold for temporary relief bounces, followed by a deeper correction.  The employment figures were moderately strong and the consumer is still fairly happy, so the Bulls say the market has further to go to the upside this year.  (I am fully invested at the moment, but less leveraged to cash than previously, meaning I sell some higher as a practice, and deploy excess cash when the market pulls back to provide a discount – buy lower, sell higher.  You  cannot always catch the exact low, because guessing at that can be dangerous.  It’s also best not to chase markets on strong days; instead, buy them on pullbacks in the Bull move.  We are now getting such a pullback.  How deep it will go is unknown.  I suggest saving some cash for lower lows than the Thursday close.

2.   Gold did NOT respond to Greece and the potential trouble for the Euro, which is negative.  We are on the sidelines as far as a gold trade goes.  If you have no exposure to gold (we are using it as insurance against the U.S. dollar and our Fed’s demonstrated intention to debase our currency in support of “full employment” of course), the best set-up is to add GLD here and toward the deeper lows (109.67-109.77) and sell if there is a significant breach of that low.

3. Interest rates should remain range bound for a while longer given the slowing of Europe and China in recent numbers as well as in the slowing of U.S. profitability.  You could buy near this low in TLT for example, and sell it if it does not hold.  If our economy starts to pick up more strongly, stocks will resume their rally, rates will rise, and gold will be under pressure.

Now view the charts below…

The Current SP500 Index Chart (SPX, SPX; click to enlarge):

sp500-index-market-timing-chart-2015-07-02-close

Summer High In?

Russell 2000 U.S. Small Cap Index (RUT, IWM; click to enlarge):  Nope. They broke down along with the large caps that led the selling. On some support as you see below.

rut-small-cap-index-market-timing-chart-2015-07-02-close

Small caps do NOT maintain their breakout and fall with large caps.

Gold ETF (GLD): Holding as currency insurance only.  No trade at the moment (see comment above).

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Gold slumps as rates form a peak and oil eases from high.

U.S. 10 Year Treasury Note (TNX,TYX,TLT,TBF): A rate top COULD be in, so now we descend into the range of 1.65% to 2.5%.  What would change this?  A stronger economic recovery.  That could push us to 3% again.

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Have rates peaked? Will they now move back toward the lower end of the range?

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