Market Timing Brief for the 1-23-2015 Close: SP500 Makes Progress. Gold Ramps. Rates Flat.

A Market Timing Report based on the 1-23-2015 Close, published Monday January 24th, 2015

UPDATE 1-27-2015 11:34 am: SPX bounce is happening at this 15 min chart support line shown in this chart of SPY.  See Twitter/StockTwits for more.  I think we can easily break this line barring extreme Fed dovishness tomorrow and test 1988-2015:

sp500-index-market-timing-chart-15 min-2014-01-27-1134am

Bouncing from 15 min support.

And now for the report from Sunday night and the updated charts:

The S&P 500 Index (SPX, SPY) continued its bounce this week with the ECB leak and final announcement of ECB QE 1.  The ECB will buy sovereign and corporate debt in the amount of 60 Billion Euros per month out to Sept. 2016.  This was enough to inspire a further rally off the double bottom pointed out last week.  We will stay with this trend.  What has worked is staying with the up trend, and until that changes, it’s the place to be.

SP500 Index (SPX, SPY; click the chart to enlarge it):

sp500-index-market-timing-chart-2014-01-23-close

SP500 Makes More Progress to Upside

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

As for U.S. small caps, they are stalled below prior resistance, but back above the 50 day moving average. 

Russell 2000 U.S. Small Cap Chart (click the chart to enlarge it):

rut-small-cap-russell-2000-index-market-timing-chart-2015-01-23-close

In the middle of the recent range.

Gold 

Gold had another good week based on the ECB’s Euro printing plans unveiled this week.

The Gold ETF Chart (GLD; click to enlarge the chart):

gld-gold-etf-market-timing-chart-2015-01-23-close

Gold breaks out.

The 10 Year Treasury interest rate (TNX, tracked by TLT if Bullish; TBT if Bearish): Rates appeared to be moving up a bit but the rally failed.  Evidently, the Treasury market sees further deflation coming.

Please Click the TNX Chart to enlarge it:

tnx-10-year-treasury-note-market-timing-chart-2015-01-23-close

Rates fail to break out to upside.

The fall in WTI oil prices is feeding the deflationary trend and there is no oil rally in sight.  Just a consolidation at a lower level (WTI Crude Oil, OIL):

xoil-wti-crude-oil-2015-01-23-close

Light sweet crude with no rally at this new low.

I cover foreign markets on social media (see links above) and in my newsletter.  Note that the newsletter is now closed again to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the April. 4th issue.  If you join and don’t read the newsletter, you will be deleted.  I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

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.

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, oil prices, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief for the 1-16-2015 Close: SP500 Forms Higher Low. Gold Breaks Out to Top of Channel. Rates Keep Falling.

A Market Timing Report based on the 1-16-2015 Close, published Monday January 19th, 2015

The S&P 500 Index (SPX, SPY) has bounced from a higher double bottom, but the bounce is just barely above (< 1 pt) a prior resistance level.  The close was also below the high of the prior day, which is a sign of weakness in a bounce.  The encouraging volatility picture is the formation of a lower double top in the VIX, and there is plenty of room to the downside (which means upside for SPX).  The buying point this week was 1992 at the double bottom.  Where are we now?  Basically in the middle of a range, which is not such a great buying point unless you have no exposure.

SP500 Index (SPX, SPY; click the chart to enlarge it):

sp500-index-market-timing-chart-2014-01-16-close

Higher double bottom low formed is one step forward, but at resistance.

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

As for U.S. small caps, they looked much worse in 2014 for most of the year, but the index is still below the 50 day moving average, clearly not the best buying point.

The U.S. Small Caps (RUT, IWM):  Russell 2000 U.S. Small Cap Chart (click the chart to enlarge it):

rut-small-cap-russell-2000-index-market-timing-chart-2015-01-16-close

Friday’s gains did not overcome Thursday’s losses.

Gold is at the top of the prior channel on increased volume.  The volume is good, but it will need to keep moving up within a day or two and then we could see more serious gains.  Otherwise, it’s back down for another retest.  I think the concerted destruction of currencies around the globe in the face of deflation is making gold look good in comparison.  The strength of the U.S. dollar is the key problem for GLD, but not if gold is being used as a safe haven trade by the rest of the world.  Heavy gold buying abroad CAN overwhelm the weakness of gold in U.S. dollar terms due to dollar strength.  Buyers may be stepping up their buying in the U.S. too based on the belief that the Fed will have to come back with more easing of policy that will involve a higher risk of inflation.

The risk of owning gold here?  If the world economy starts to pick back up, gold will be less in demand.

The Gold ETF Chart (GLD; click to enlarge the chart):

gld-gold-etf-market-timing-chart-2015-01-16-close

Gold is at the top of the channel.

The 10 Year Treasury interest rate (TNX, tracked by TLT if Bullish; TBT if Bearish): Rates fell to a key support level, but there is clearly still room for a further decline in yields.

Please Click the TNX Chart to enlarge it:

tnx-10-year-treasury-note-market-timing-chart-2015-01-16-close

Rates caught one level of support, but there is still room for lower yields.

Finally, a note on China.  The Chinese market local “A shares” had a very bad day on Monday, down about 7.7%.  The Hong Kong listed stocks likely held up better than funds holding A shares like ASHR, and Chinese stocks are up about 1.85% in Tuesday’s market based on a report of 7.4% growth for 2014, slightly below that of 7.7% for 2013, so we’ll have to see where FXI (Hong Kong listed Chinese shares) lands by morning.  I think the fear about less stock buying on margin will pass and the economy will get the stimulus needed from the government, but it’s something we’ll have to monitor closely.

I cover foreign markets on social media (see links above) and in my newsletter.  Note that the newsletter is now closed again to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the April. 4th issue.  If you join and don’t read the newsletter, you will be deleted.  I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

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.

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 1-09-2015 Close: Stocks Bounce and Falter. Gold Holding Up. Rates Crash Again.

A Market Timing Report based on the 1-09-2015 Close, published Saturday January 10th, 2015

The S&P 500 Index (SPX, SPY) bounced from a higher low on the Fed Governor Evans’ comment that it would be a “catastrophe” to raise rates with the rest of the world stuck in either low growth, near recession, or recession.  The pullback on Friday was within the bounds of the prior day, which was itself volatile to the upside.  That is called an “inside day.”  Interestingly, the SPY tested slightly below the range of the prior day, though it climbed back within the range by the close.  So far, that counts as a consolidation, so there is both upside and downside risk at this point.

What does this mean on a practical level?  It means that if you are Bullish, you can still buy, but if you are not sure that our economy won’t slow with the rest of the world, you would likely wait for lower prices to move more money into the market.  A slower economy means lower earnings, which in the end WOULD drag the market down.

SP500 Index (SPX, SPY; click the chart to enlarge it):

sp500-index-market-timing-chart-2014-01-09-close

SP500 bounces and consolidates. Not a great place to buy unless you are undoubtedly Bullish.

The economy produced 252,000 jobs last month, which is not bad at all, yet there are many who are predicting a slowing of U.S. GDP to perhaps 2% for the year, and that this job momentum is yesterday’s story unfolding.  If so, this could put a damper on returns.  The big wild card in the deflation scenario is that the fall of energy prices can spur economic growth, especially consumption.  On that basis, the theory is that XLP, or the sector representing representing the consumer staples companies of the SP500, does well given the current scenario economic slowing with deflation.

So let’s see if that hypothesis is what the MARKET thinks:  Yes, it is, as the chart shows. XLV and XLP are the winners this year.  XLV (healthcare including drug companies) does well when the economy is slow and Obamacare ensures that even more drugs will be dispensed.  XLU is behind them, but doing OK because low rates make utility yields look good:

sp500-relative-2015-performance-XLB-XLE-XLF-XLI-XLK-XLP-XLU-XLV-XLY-2015-01-10-close

XLV and XLP are the clear winners since 12-31-2014.

The worst performing sectors are XLF and XLE.  Banks (XLF) do poorly with lower rates because the spreads they charge get smaller.  We all know about the impact of lower energy prices on the companies producing energy, so down goes XLE.  And that drop is not yet over, in case you get itchy fingers.  Wait for a bottoming formation or at least a real rally in oil. I warned investors NOT to bite on XLE when oil was going up a bit, but still within a consolidation.  And down it went, wiping out the early bird profits.  The “too” early bird gets whacked in investing.

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

What about U.S. small caps?  They have significantly faltered and present a greater risk (see the failure on the chart), but the pullback Friday could be a retest of the prior breakout.  That means the trend could continue up on Monday, but it must do so promptly.  I’d use a stop below that red line if I held small caps (not too close, because markets like to fool investors who set tight stops).

The U.S. Small Caps (RUT, IWM):  Russell 2000 U.S. Small Cap Chart (click the chart to enlarge it):

rut-small-cap-russell-2000-index-market-timing-chart-2015-01-02-close

Small cap rally halted at prior high. We are still above the lower highs which offers some support.

Gold did respond to the further fall in rates to some extent, but I believe that the worries about deflation over inflation will keep gold in a range at best.  It could reach the upper yellow channel line in the chart and simply turn back down.  Remember that I am talking in U.S. dollar terms here, not Euros or yen or other currencies that are going to Hades in a handbasket.

The Gold ETF Chart (GLD; click to enlarge the chart):

gld-gold-etf-market-timing-chart-2015-01-09-close

Gold is not falling apart but not rallying strongly either. Too much of a deflation threat for that in my opinion.

The 10 Year Treasury interest rate (TNX, tracked by TLT if Bullish; TBT if Bearish): The bond market is more clear than the stock market about what it expects.  It absolutely expects deflationary pressure to continue.  The 10 Year Treasury yield fell toward the prior low as the chart shows.  This area could provide support IF signs emerge that the world economy is doing better.  But maybe it won’t.  If deflation is not interrupted, the 10 Year could reach the 2011 yield low again.  That means more gains ahead for TLT investors.  Munis should also do well, and I’ve increased my position.  Taxes and low rates make munis attractive going into 2015.

Please Click the TNX Chart to enlarge it:

tnx-10-year-treasury-note-market-timing-chart-2015-01-09-close

Rates plummet to prior low.

Summary: The U.S. stock markets are faltering, but this is neither a great place to buy or sell.  Friday was a consolidation.  Buying the highs in fear (lows in the markets) will be our strategy this year.  Trimming a bit near the tops is not a bad idea, but timing is a tricky thing to do.  Most of you will sell in the wrong place.  Why do I know this?  I’ve been there and done that too.  It’s too easy to sell.  It’s much harder to stay with a Bull market.  I believe there is too much stimulus and too patient a U.S. Fed to warrant leaving the party yet.

Gold will likely hold its gains and as worldwide currency destruction continues will gain some strength.  If the economy improves again worldwide, assets will seek a better return than gold, and it could fall significantly. 

Rates are nearing the prior low, but if the world does not get its act together soon, deflation will rule and rates could reach the 2011 low that was retested in 2013.

In my counsel to those who receive my private newsletter (free, but you have to be a loyal reader to keep getting it as noted below), I am recommending just two markets, China and the U.S. for this year (check Twitter).  I believe they both could continue to outperform the rest of the world that is looking for growth.  Japan may have a shot with all their crazy direct market intervention (read that asset buying).  Europe doesn’t seem to have the political will to do what Dr. Bernanke did for the U.S. due to the German influence on policy.  The Germans don’t like to debase their currency. So Dr. Draghi of the ECB drags his feet while Rome burns (well, Italy is in recession!).  Stick with the stock markets of the stronger economies for 2015!

I cover foreign markets on social media (see links above) and in my newsletter.  Note that the newsletter is now closed again to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the April. 4th issue.  If you join and don’t read the newsletter, you will be deleted.  I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

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.

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 1-02-2015 Close: Stocks Reverse Lower. Gold Falters. Rates Fall Again.

A Market Timing Report based on the 1-02-2015 Close, published Sunday January 4, 2015

The S&P 500 Index failed a breakout and turned lower.  I believe it is just a pullback in a Bull trend.  Sentiment got a bit high with the Bull minus Bear spread % rising above 30 again, so the market was due a pullback.  For now it is more likely a dip vs. a more significant correction like the one we had in October.  You can see how the market has pulled back to the magenta line, which is a line that marks the up trend line connecting the 2001 and August lows.  Never bet the farm on any one entry point though.

SP500 Index (SPX, SPY; click the chart to enlarge it):

sp500-index-market-timing-chart-2014-01-02-close

Reversal.

Last week I said: “This still holds: ‘I suspect that if oil does not maintain the current consolidation (see the charts I posted to Twitter®),  and falls, the stock market will pull back a bit.'”  Indeed, oil broke to new closing lows and the stock market eased.  Oil stocks have yet to break down again definitively however.

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

What about U.S. small caps?  They reversed from new all time highs.  The nearest support is provided by the prior lower highs (top red line for example).

The U.S. Small Caps (RUT, IWM):  Russell 2000 U.S. Small Cap Chart (click the chart to enlarge it):

rut-small-cap-russell-2000-index-market-timing-chart-2015-01-02-close

Small cap rally halted at prior high. We are still above the lower highs which offers some support.

Gold is faltering too with decreased volume kicks on up days for the past 4 weeks now.  It closed Friday back below the Dec. 2013 low of 114.46, which is negative.  Buyers need to come back in soon or Goldman will start looking smart.  The issue is that low rates are being interpreted as a sign of DEFLATION rather than a sign of impending INFLATION.  Lower rates do help gold on the margin, but not if deflation fears are rampant.

The Gold ETF Chart (GLD; click to enlarge the chart):

gld-gold-etf-market-timing-chart-2015-01-02-close

Gold volume is not there yet to sustain a rally.

The 10 Year Treasury interest rate (TNX, tracked by TLT if Bullish; TBT if Bearish): The 10 Year yield rose to my 2.3% target and pulled back.  The rally DID resume from there as predicted last week (falling yields). 

Please Click the TNX Chart to enlarge it:

tnx-10-year-treasury-note-market-timing-chart-2015-01-02-close

Rates falling again.

Summary: The U.S. stock markets have failed breakouts.  The pullback is not likely to be too great as the U.S. economy, although slowing a bit, still shows signs of strength.  The employment report on Friday will be important, because if the economy is healthy, jobs should continue to expand strongly.  If not, the Federal Reserve is on hold, which the market may ironically appreciate.  The issue is that a drop of earnings would raise valuations further and be a drag on further appreciation of stocks.  There is not enough volume yet in the gold market.  Rates are falling further and that may stimulate a real rally in gold with volume.

I cover foreign markets on social media (see links above) and in my newsletter.  Note that the newsletter is now closed again to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the April. 4th issue.  If you join and don’t read the newsletter, you will be deleted.  I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

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.

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 12-26-2014 Close: Stocks Reach New Highs. Gold Falters as Rates Rise, But Rates May Make a U-turn Here!

A Market Timing Report based on the 12-26-2014 Close, published Sunday December 28th, 2014

U.S. Markets reached new highs in both large and small cap markets in the U.S. as we may have entered a sweet spot where the Fed stays out of the way due to slowing of growth worldwide, and U.S. growth is still enough to keep the stock market happy with earnings growing slowly.  The U.S. economy is stronger than most economies around the world courtesy of aggressive Fed monetary policy resulting in an upward revision in GDP numbers this past week.  Here is the statement from the government:

Real gross domestic product -- the value of the production of
goods and services in the United States, adjusted for price 
changes -- increased at an annual rate of 5.0 percent in the 
third quarter of 2014, according to the "third" estimate 
released by the Bureau of Economic Analysis.  In the second
quarter, real GDP increased 4.6 percent.

Full Statement Here

SP500 Index (SPX, SPY; click the chart to enlarge it):  At new highs.  The yellow channel line is the next target unless oil tanks again Monday.  It was about to break on Friday but didn’t.  See Twitter for the recent charts I’ve published for WTI oil.

sp500-index-market-timing-chart-2014-12-26-close

Making new highs on the way to a channel test.

This still holds: “I suspect that if oil does not maintain the current consolidation (see the charts I posted to Twitter®),  and falls, the stock market will pull back a bit.”  The market responded positively when the Fed said it may or may not raise rates.  The 80% odds of a Santa Claus rally indeed came true, but now we’re on to 2015.

This also came true: “Reports on retail sales should be strong through Christmas, because Consumer Sentiment was extremely high in the last report (see Bloomberg data).”

Here is the report card from Mastercard per Reuters: U.S. retail sales rose 5.5 percent from the day after Thanksgiving through Christmas Eve as solid demand for women’s apparel, jewelry and casual dining offset surprisingly sluggish sales of electronics, MasterCard said in its holiday spending report.”

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

What about U.S. small caps?  They reached a brand new all time high, but follow through is needed.  This is positive in one sense and not so great in another, because they are still overvalued as shown here: Wall Street Journal® StatsThe trailing 12 month PE for the Russell 2000 small caps has declined from 87.23 to 61.63, but the latter is still quite high.  A Bull could argue that if the market was dumb enough to pay 87 times TTM earnings, it can do it again, so raise your glass of champagne to high valuation if you wish, but I’ll stick with the SP500 and other strong markets worldwide.  Don’t be a sucker and believe the forward earnings PE’s are real, as they do not include “adjustments” for one time accounting issues.  The TTM numbers cannot be fudged.

The U.S. Small Caps (RUT, IWM):  Russell 2000 U.S. Small Cap Chart (click the chart to enlarge it):

rut-small-cap-russell-2000-index-market-timing-chart-2014-12-26-close

New high so it’s on to the prior stratosphere?

Gold is now just above the level it was at by the close of the Fed FOMC statement day on the 17th, but the lack of volume is a problem and GLD is sitting just below the 50 day moving average where it could again fail.  If rates rise, the dollar will rally and pressure gold.  If rates continue lower (see 2nd chart below), gold should hold up and then rally however.  Gold has NOT fallen to the Goldman target of 1000 from earlier this year, although I did hear they revised their view after been proven wrong.  Targets are more useful in the short term than the long term in my experience.

The Gold ETF Chart (GLD; click to enlarge the chart):

gld-gold-etf-market-timing-chart-2014-12-26-close

Gold up but without volume.

The 10 Year Treasury interest rate (TNX, tracked by TLT if Bullish; TBT if Bearish): The 10 Year yield rose to my 2.3% target and pulled back.  The rally could resume from here (falling yields).  Stay tuned on Twitter®/StockTwits® for my Buys and Sells.

Please Click the TNX Chart to enlarge it:

tnx-10-year-treasury-note-market-timing-chart-2014-12-26-close

Summary: The U.S. stock markets have broken to new highs and there is room above to rally farther.  I still don’t like small cap valuations, but the market may tolerate higher PE’s.  Gold will do OK given all the loose currencies around the world and the Fed’s willingness to play along.  Over the short term, if rates fall, gold will rally.  I believe the market is skeptical of how low rates can go from here.  They can go lower as long as the rest of the world is doing worse than the U.S. and most of it is at this point with 5% U.S. GDP growth. 

I cover foreign markets on social media (see links above) and in my newsletter.  Note that the newsletter is open to new subscriptions this week only, so if you are interested, please join the wait list for Loyal Subscribers Only: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening for the Jan. 4th issue.  If you join and don’t read the newsletter, you will be deleted.  Sorry, but I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

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.

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 © 2014 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 12-19-2014 Close: Fed Santa Claus Stock Market Rally. Oil Stock Party Nearly Over? Gold Slipping. Rates Rising for A Bit.

A Market Timing Report based on the 12-19-2014 Close, published Sunday December 21, 2014

If you have not seen the update of last week’s post, you really should look at it before continuing (chart at top of last week’s post that was added later in the week).  Oil stocks have not yet caught up to the oil price on the decline on the chart, so one of two things will happen of course.  Oil stocks will fall further or oil will rally.  Without a breakout of WTI crude above 59 for the near month futures price (that is the price quoted by CNBC for WTI Oil), there will be no continued rally in the oil stocks.  They can’t go too much farther at any rate.

The Fed kept the “considerable time” phrase in the FOMC statement, but added enough wiggle room to suggest that rates could stay the same for a long time OR rise.  It’s data dependent, as they like to say.  Of note was the fact that in the press conference Dr. Yellen also said that 3 of the FOMC voting members objected to the conclusions of the meeting and at least one (Fisher) would like to see a rate increase by the 3rd Fed meeting (after a “couple of meanings” later clarified as 2 meetings, which brings us to the June meeting at the earliest for the first rate hike.  (the statement, which you can click on a link to below, explains why each member objected)

Some suggest that the hikes could come in 0.125% increments so as not to shock the markets as much.  Savers have been waiting forever for rates to rise, but they have not done so.  Given the slow growth around the world and the declining GDP growth of the U.S. as well, rates are likely to continue to fall after a brief counter-rally.  That means a bit more of a pullback in TLT before I’m willing to buy it again.  I did buy municipal bonds last week, because some of the closed end funds are at very good value.  If rates remain relatively low, which I believe they will despite the counter-rallies, owning munis should pay off as investors chase higher yields for another year or two.

The SP500 Index rallied extremely hard for three days after the Fed announcement and essentially re-topped, but as the chart shows there is room above, if the Bulls are there to buy.  That yellow channel line could be the next Bull target prior to a pullback IF oil hold the current level.

SP500 Index (SPX, SPY; click the chart to enlarge it):  Note that the big volume spike Friday is misleading as it always occurs with options expirations.

sp500-index-market-timing-chart-2014-12-19-close

SP500 Index Re-Topped and there is room above as long as oil does not collapse on Monday.

I suspect that if oil does not maintain the current consolidation (see the charts I posted to Twitter®),  and falls, the stock market will pull back a bit.  Just today the Saudis said they won’t step in to support prices yet: Saudis Just Say No.  Against that is the highly positive seasonality prior to holidays such as Christmas.  I believe the pullback should be bought, and others do as well apparently, and that is probably why the market rose so fast over the past few days. Better to buy low than high.  The market was catching up on the Santa Claus Rally, which has about 80% odds in favor of a gain in the last half of December.

Reports on retail sales should be strong through Christmas, because Consumer Sentiment was extremely high in the last report (see Bloomberg data).  There is all that gas and oil money to spend on “stuff”!

The 3rd Revision of Q3 GDP comes out Tuesday.  The market expects 4.5% vs. 3.9% prior.

GDP Q3 3rd Revision

Gross Domestic Product, 3rd quarter 2014 (third estimate); Corporate Profits, 3rd quarter 2014 (revised estimate) December 23 8:30 am

I prefer this for checking the economic calendar:

Bloomberg’s data pages/calendar.

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

What about small caps?  They reached a new high above the prior lower wide range they were in for months.  That means they will likely re-top, which gives the SP500 room as well to rise higher.  If we see small caps REVERSE from here, the large cap rally may follow suit and at least test lower again.

The U.S. Small Caps (RUT, IWM):  Russell 2000 U.S. Small Cap Chart (click the chart to enlarge it):

rut-small-cap-russell-2000-index-market-timing-chart-2014-12-19-close

Small caps finally reach a new high and will likely run to the all time high.

Gold pulled back prior to the Fed FOMC statement release and is a bit lower now.   Fortunately, the pullbacks have not been on increasing volume.  Remember that declines don’t have to have much volume and can still be quite serious.  A lack of buyers can drive the commodity down if sellers show up relatively unopposed.  In a way, gold gave us the heads up that the Fed would overall be interpreted as being more HAWKISH on the margin vs. the more dovish stance some had expected.

The Fed in its history has often been stubborn about changing directions in policy once it gets started in a new direction.  Of course, they SAY they won’t rush to raise rates if the data don’t support it, but some say that right now, that the data definitely don’t support it, and some Fed members wanted to raise rates sooner than the others (10 voted this time and 12 are normally represented).  Here is the Fed Statement.

To keep this rally going in gold, we need a strong up day with a volume boost early in the week.  Watch for it, but really you have to place your bet that it will rally ahead of time if that is what you believe, because gold has given back some gains each time it has rallied lately.  You can see that GLD is sitting on critical support, which provides a guide for a stop below that.  A close below the 2nd red line from the bottom would not go well!

The Gold ETF Chart (GLD; click to enlarge the chart):

gld-gold-etf-market-timing-chart-2014-12-19-close

Gold “knew” that the Fed would sound marginally more hawkish on Weds.

The 10 Year Treasury interest rate (TNX, tracked by TLT if Bullish; TBT if Bearish): Rates did rise after the FOMC statement, as I told you they would based on a marginally more hawkish Fed.  They are likely to continue to rise a bit more to about 2.3% and then we will see if more can be sustained.  Stay tuned on Twitter®/StockTwits® for my Buys and Sells.

Please Click the TNX Chart to enlarge it:

tnx-10-year-treasury-note-market-timing-chart-2014-12-19-close

Rates are likely going to keep rising for a bit and then resume their decline.

Note that the newsletter is now closed to new subscriptions, but you can join the wait list for Loyal Subscribers Only: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening Just Before January 1, 2015 for a few days.  If you join and don’t read the newsletter, you will be deleted.  Sorry, but I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

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.

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 © 2014 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 12-12-2014 Close: Will the Market Dive Continue? Gold Rally Intact. Treasury Rally Solid.

A Market Timing Report based on the 12-12-2014 Close, published Saturday December 13, 2014

12-18-2014 UPDATE ON OIL STOCKS VS. OIL (XOI vs. XOIL [WTI OIL])

Note that oil is dropping much faster than the stocks.  That means one or the other must converge.  If you are buying oil stocks here, you need oil to rally very soon.

xoi-oil-stocks-vs-oil-catch-up-to-come-2014-12-18-close

Oil stocks OR oil will have to meet at some point again. My guess? Oil will decline some more and drag down oil stocks.

12-16-2014 UPDATE ON SMALL CAP CHART (RUT, IWM):

rut-small-cap-russell-2000-index-market-timing-chart-2014-12-16-close

Small caps seek support.

And now for this past week’s issue:

The SP500 Index will fall to about 1908-1950ish if this level of support does not hold.  Monday could bring one more “flush” lower followed by a bounce.  That final bit of selling dislodges those that see the 50 day “moving monkey average” as some disdainfully call it as a hugely important support level.  Markets almost always test at least a bit below important support and any attempt to set tight stops around them most often fails.  I was correct that the small cap weakness I saw and reported to you last week predicted the doom of the large cap rally.

SP500 Index (SPX, SPY; click the chart to enlarge it): 

sp500-index-market-timing-chart-2014-12-12-close

Where Will the Pullback Stop?

I am not showing the chart this week, but it turned out that the resistance level I plotted (see last week’s post) for the Chinese ETF FXI did hold back a further rally. 

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

What about small caps?  They failed at the same resistance level they tested  three times.  The only support below the yellow up trend line and 200 day moving average is the 50 day moving average.  If the small caps break support, watch for the SP500 Index to break as well.

The U.S. Small Caps (RUT, IWM):  Russell 2000 U.S. Small Cap Chart (click the chart to enlarge it):

rut-small-cap-russell-2000-index-market-timing-chart-2014-12-12-close

Small cap stocks fail where they were expected to fail.

Gold is still rallying.  What’s very encouraging is the increase in volume with each price increase.  Lower and lower rates are good for gold, because there is still some inflation and if rates head lower much faster than the world deflates, real interest rates can turn negative.  There is nothing better than that for gold and other precious metal pricing.

What’s the risk?  The opposite.  If rates move up because the U.S. Fed raises rates in March let’s say, that would help to ward off inflation while raising returns resulting in positive real interest rates, bad for gold.  Remember gold makes us nothing.  The other factor that could help would be having the dollar weaken and it has been doing so.  Still, it’s hard to see how the dollar could become that weak giving how moribund the Eurozone and Japanese economies are.

The Gold ETF Chart (GLD; click to enlarge the chart):

gld-gold-etf-market-timing-chart-2014-12-12-close

Gold Rally is Intact

The 10 Year Treasury interest rate (TNX, tracked by TLT if Bullish; TBT if Bearish): Rates are indeed plumbing the prior lows which was my original thesis.  Despite that, I exited prematurely it turns out, but I think there is risk now with the Fed statement coming out this next week on Wednesday followed by a live news conference.  Dr. Yellen has an opportunity to speak a lot, which could get her and the markets in trouble.  The world is slowing dramatically, which gives her cover though.  If she fails to take cover, however, rates will rise fast and TLT will sell off hard.

Please Click the TNX Chart to enlarge it:

tnx-10-year-treasury-note-market-timing-chart-2014-12-12-close

Rates fall, but will they re-bottom completely?

Note that the newsletter is now closed to new subscriptions, but you can join the wait list for Loyal Subscribers Only: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening Just Before January 1, 2015 for a few days.  If you join and don’t read the newsletter, you will be deleted.  Sorry, but I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

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.

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 © 2014 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