Market Timing Brief™ for the 1-13-2017 Close (1-17-2017 GLD Gold ETF Update): SP500 Index Back Testing the Top. Chinese Internet Exposure. Gold Reaches Important Pivot and Falls. Fall in Rates Pauses.

A Market Timing Report based on the 1-13-2017 Close, published Monday January 16, 2016. Happy Martin Luther King Day!

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

1.  SP500 Index: We’ll get to the U.S. market in a moment.  I sold my Facebook position too early (after making about 7% in 4 market days on it), but have redistributed the profits in the Chinese internet ETF, KWEB.  Here is the market timing chart:

kweb-chinese-internet-stock-market-timing-chart-2017-01-13-close

Moving up within a triangle.

I shared that with you on Twitter and StockTwits on Friday.

There are some doubts about the vibrancy of the Chinese economy.  The index (FXI) is still having some trouble making new highs.  We will have big trouble in the U.S. economy if the Chinese do poorly as I’ve said.  We are in this together.  The growth of our companies depends on growth throughout the world, not just in the U.S, which is perceived as guaranteed by Trump’s domestic spending plans.  Although I cut back my more generic Chinese exposure a bit, I’m now back up to an 88% China exposure level using the above ETF (that is as a percentage of “usual maximum exposure”; adjust it to your own taste/risk parameters).  I believe Trump will have to work things out constructively with China.

The value of the internet in China is going to compound rapidly, and their companies are going to venture out into the world.  I believe Alibaba CEO Jack Ma’s comments to President Elect Trump the other day that he planned on creating over 1 million jobs in the U.S. over the next 5 years tells you that “the Chinese are Coming!”  And it will be via the internet not off a submarine as in the case of the 1966 movie, “The Russians Are Coming.”  I believe this will force the resolution of the huge market timing triangle that you see in the KWEB chart above to be resolved to the upside.

If you do choose to invest in KWEB, please note that the number of shares traded daily is not tiny, but is somewhat limited, so refuse to pay too big of a spread between the net asset value and the trading price!  Otherwise you are just handing money over to the market makers.  Check the premium being paid HERE (or go to Morningstar and look up the symbol).  As an ETF the fund will create more shares each day to accommodate interest, so the price will readjust toward the net asset value as demand increases and decreases.  The risks obviously include Trump Twitter and press comments about high tariffs being applied to Chinese imports.

Trump’s news conference this week was troubling for the markets, and for market timing practitioners with their fingers on their trading buttons.  I agree with them.  He spent precious time answering completely false “fake news” charges.  He claimed he would not have done what the “fake news” claimed, because “I’m a huge germophobe.”  You don’t answer stupid claims like that.  That’s exactly what the opposition wants. Once they create that picture in people’s heads, it’s stuck there despite claims to the contrary.  It’s the “don’t think of an elephant” routine.  The mind thinks in pictures.

Trump should have been answering key questions about the economy and tax reform etc.  He didn’t.

He also attacked the drug industry out of the gate in his first few words, saying that the drug companies “are getting away with murder.”  There are issues to be dealt with there, and it’s imperative that the pharmaceutical industry gets its act together and sits down with him and strikes a balance between the profits required to finance drugs at huge costs vs. the risks of those ventures failing.

We should all want our President to succeed at making our country better.  I do want that, but the sort of inexperience and ineptness that we saw this week is not something the markets want to see in a leader of the largest economy in the world.  If the trajectory of growth from tangible Trump policy changes becomes fuzzy, the markets will correct.  That’s the biggest risk to this rally.

That said, the market still has the opportunity to have a market timing breakout to new highs.  If it happens after an “Inaugural Pullback,” a further rally will still occur in my view.  Have some cash handy in case there is some sort of “Sell the Trump Inauguration” move in the markets.  I remain highly invested however and my exposure levels are given at the social media links below…

You can see exactly what I did this week at either of these two links:

Twitter® Follow Me on Twitter®.  Follow Me on StockTwits®.

Keep up-to-date during the week at Twitter and StockTwits (links above), where a combined 23, 313 people are joining in…  If you don’t follow me on Twitter already, you’ve been missing a lot…

SP500 Large Cap Index (click chart to enlarge; SPX, SPY):

sp500-index-spx-market-timing-chart-2017-01-13-close

Testing back at the top.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +16.67%  back down a bit from +21.0% last week.

Sentiment around this level leaves room in both directions in the short term, but the behavior of sentiment over longer time ranges says we have not yet reached a market top.  Top’s are not met with mediocre sentiment.

Thurs. 12 am close to poll Bulls               43.64% Neutrals 29.39% Bears      26.97%

2.  U.S. Small Caps: Small caps are holding up in a fairly narrow range.  The assumption is that the market needs to see economic progress under Trump’s administration to make progress or at least that’s the illusion.  Watch the market for the direction of the next move rather than guessing what it will be.  The lines are clear for both large and small caps.

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

iwm-russell-2000-etf-market-timing-chart-2017-01-13-close

Holding up. Waiting for growth?

3. Gold: UPDATE 1-17-2017 Trump Weak Dollar Policy in Action

Gold is rallying as a result of a Trump comment to the Wall St. Journal late Monday, “Our companies can’t compete w them (China) now because our currency is too strong. And it’s killing us.” Everything for Trump is about killing/murder as w drug companies last week.  He sensationalizes everything.  But he makes his view heard, that is for sure.  For this reason, the dollar is down in the current swing farther than I expected, so I’ve removed my small gold hedge.  Beware of Trump “prey” over the next four years.  When he takes his verbal gun out, feathers fly.  Often unexpectedly.

If gold can close up here above the stated target range (see chart below), it could have another strong leg up before this rally is challenged. 

Dropping the hedge may not work out.  Perhaps the market will work through this currency jawboning by Trump, but I made a commitment when I opened the small hedge that I’d keep it on a short market timing leash, so I’ve closed it.  Trump’s willingness to blurt out policy is something that is just part of investing in the Trump era.  Welcome to the “‘New Bizarre’ of American Economic Leadership.”

It’s particularly bizarre given the fact that Larry Kudlow, one of Trump’s advisers is known for his “King Dollar” stance.  The strong dollar is part of rising rates and a stronger economy.  It’s not what Trump thinks.  A strong currency is great IF there is economic growth to go with it.  Message to Larry: Talk to Trump about ‘King Dollar.”

Gold faces the enemy of higher growth with higher rates.  Pulling on the other side is inflation.  If inflation rises faster than rates, gold will do well.  A close over the range shown in the chart below is what I consider the “real test.”  Gold just failed it, but if there is an “Inaugural Dip,” gold could push through to new recent highs.  Follow the market rather than follow the rhetoric.  I suggested taking OFF some gold exposure near the high last week. I hedged part of my long term position, as I felt the dollar was ready to rebound from its recent pullback.

The argument FOR gold is down to one: Inflation will rise faster than the Fed will raise rates.  That is definitely NOT a given.

The return on gold has become far more speculative with both rising rates and a rising US dollar.  Those are huge headwinds as I’ve explained HERE.

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

gld-gold-etf-market-timing-chart-2017-01-13-close

Gold failed an important breakout.

4. U.S. 10 Year Treasury Note Yield (TNX): The market timing “re-breakout” of the 10 Year Treasury yield above 2.621% has not happened…not yet. 

I am currently in the camp that says that if the Federal Reserve continues to raise rates this year, long rates will actually fall rather than rise.  That would means bonds would still do OK this year.  That said, I expect stocks to outperform bonds over the intermediate term (3 months to a year).  The risk?  If the Trump stimulus is quick and massive, inflation could accelerate substantially and wreck bonds. 

You can see where the line has been drawn demarcated by the 2.489% level and the green down trend line in the chart below…

U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2017-01-13-close

Rates backed off of resistance.o

Now please go ahead and leave your comments below where it says “Leave a Reply”… just scroll down and comment…

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the April 2nd issueNote that 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.

Be sure to visit the website for more general investing knowledge 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 © 2017 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, mid-cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 1-06-2017 Close: New Leg Up for Trump Rally? Gold Gasping but Rallying. Interest Rates Fail to Break Out.

A Market Timing Report based on the 1-06-2017 Close, published Sunday January 8, 2016.

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

My goal is to provide you with the most information in the shortest time period possible, which I will take to new levels this year.  I will not bow down to the site ranking Gods.  You follow what I do or you don’t.  You hear my warnings and hear what I see as opportunities to invest and trade or you don’t.  Either way I wish you well. 

I’ve been doing this market timing thing (which also involves economic fundamentals), since the early 1980’s and avoided the 1987 crash and warned investors of the 2000 crash and guided my readers through the Great Recessionary Crash of 2008-2009 in the markets to the present day. 

My advice is that if you gain from these insights to please let me know, below the post.  You can also ask questions or make comments.   I’m listening…  If you do not engage, how will I know you are here?  😉

1.  SP500 Index:  The Federal Reserve has acted, employment was a bit weaker than expected, which gives the Fed some wiggle room, and the Trump Rally is now testing the top for the SP500 Index.  The Fed still intends to hike rates at least 3 more times in 2017.  That they’ve said.  The economy will slow due to their hikes if the Trump growth plan does not work or does not work fast enough.  That may be why rates have come back in a bit after failing a critical breakout (see chart #4 below).

The leader in this rally, the small caps, are down a bit and NOT back up testing the top.  I’ve taken some profits this week, but my exposure is still quite high (all posted at social media links).  I took some exposure out of China due to poor performance as the U.S. large caps rallied this week.  The China trade is being hobbled by Trump, more than it should in my opinion, but I change my opinion quickly if the picture changes or does not progress.  That’s what happened in the China trade this week. 

You can see exactly what I did including selling my Facebook trading position at either of these two links:

Twitter® Follow Me on Twitter®.  Follow Me on StockTwits®.

Keep up-to-date during the week at Twitter and StockTwits (links above), where a combined 23, 005 people are joining in…

The market will take another leg up if it believes Trump will make his promises a reality and that he can get past any obstruction by the Democrats, who are showing signs of wanting to retaliate for the lack of confirmation of their Supreme Court nominee, Garland, among other things!  Morgan Stanley says “Sell the Inauguration,” but I don’t agree, exactly.   Even if they are right, I believe the market will exceed the prior top by a substantial percentage.  We will continue to buy the dips and sell a bit at the highs to buy lower.

SP500 Large Cap Index (click chart to enlarge; SPX, SPY):

sp500-index-spx-market-timing-chart-2017-01-06-close

SP500 Index needs Trump action now.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +21.0% up just a bit from +19.8% last week.

More Bulls can be recruited from the Neutrals and Bears before sentiment becomes extreme, but some pullbacks DO occur from around a spread of 20%, which we have, so sentiment is not that helpful at the moment.  There is room in either direction.

Thurs. 12 am close to poll Bulls               46.20% Neutrals 28.57% Bears      25.23%

2.  U.S. Small Caps: Small caps are not leading the retest of the prior high.  The large caps are.  That is actually a NEGATIVE for the very near term.  This is a lousy place to add exposure to the market unless you have none IMO.

I would not add to positions without either:

  1. Another small cap breakout.
  2. A pullback worth buying percentage-wise.

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

iwm-russell-2000-etf-market-timing-chart-2017-01-06-close

Small caps are hesitating ahead of Trump’s inauguration.

3. Gold: GLD has made some more progress, but was repelled from the last upside test.  The upside target is the last breakdown area noted on the chart.  The second possible rally failure point would be the 50 day moving average or thereabouts.  The economic background is not great for gold.  I’ve gone over this in prior posts.

What would be good for gold would be (while not so hot for “people” holding currency):

  1. The Federal Reserve raises rates so fast that it induces a U.S. recession. 
  2. TrumpFlation kicks in as he spends gobs of money on his wall, infrastructure that does not add to productivity of the economy, tax cuts, wars, etc.

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

gld-gold-etf-market-timing-chart-2017-01-06-close

Gold gasps for air, but actually makes some progress.

4. U.S. 10 Year Treasury Note Yield (TNX): The reversal in Treasuries should be watched for a RE-breakout to new highs above the recent high of 2.621%.  That’s the key number to watch. If we go through there, we’ll be at 3% on the 10 Year faster than you can yell “Whoa Janet!”  The financials would love that, but housing would not.

The Fed raising short rates will actually serve to LOWER long term rates if the economy slows as a result.  That won’t happen if Trump’s multiple economic stimuli are launched quickly. 

U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2017-01-06-close-v2

Look for a RE-breakout. If we get that, we’ll be at 3% very fast.

Now please go ahead and leave your comments below where it says “Leave a Reply”… just scroll down and comment…

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the April 2nd issueNote that 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.

Be sure to visit the website for more general investing knowledge 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 © 2017 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, mid-cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , | 4 Comments

Market Timing Brief™ for the 12-30-2016 Close (UPDATED with 2017 Picks): Is the Trump Rally Going to Continue? Gold Weak. Interest Rates Fail Key Breakout.

A Market Timing Report based on the 12-30-2016 Close, published Monday January 2nd, 2017

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

UPDATE 1-04-2017: My Top Market Picks for 2017

Please note that these picks are based on themes that I see emerging from the current economic and political climate.  There may be other valid themes.  Look for them.  Feel free to share with us below in the comments…

1. Energy and oil: This one is clear.  It’s a clear technofundamental market timing signal.  President Elect Trump will open up U.S. oil production like nothing before.  That means supply, but it also means fewer impediments to the oil and gas industry.  He will push for U.S. exports of energy products, while making sure U.S. prices don’t suffer too badly.  OPEC is working on prices and made some progress recently.  As long as WTI Oil holds the prior near month futures breakout (see chart below), the energy trade will move forward.  

xoil-wti-oil-market-timing-chart-2017-01-04-1048am

WTI Oil must hold the prior breakout.

I’ve already bought XLE and Chevron (CVX) to overweight energy in my portfolio.  Don’t chase, but, rather, buy the dips.  Yes, there is risk the support may not hold, so don’t blow all your powder on one trade.  Today you could add to XLE or start a position on the oil pullback.  You could even sell your position(s) if oil does not hold support.  Your call there.  I believe oil will work higher or stay steady enough to allow for oil companies to be profitable and that decreased regulations under Trump will also help them.

xle-oil-stock-etf-market-timing-chart-2017-01-04-1117am

Holding support along with oil.

My 2017 Pick #2 is Biotech and drugs: This is yet another technofundamental market timing signal.  You’ll get more bang for your buck with biotech, but fewer dividends than with drugs/healthcare (XLV).  I already own IBB via BIB (which has 2X leverage, so set your position size according to the risk).  I’ll like be adding more biotech and/or drug stocks (follow my moves on Twitter/StockTwits). 

The chart is coming, but first I want you to understand my point of view and how the market has not yet discounted it. 

My thesis is that the market was right in the first place after the election when it bid up healthcare stocks.  When it decided the demolition of Obamacare was a bad thing for the healthcare stocks, they pulled back, and about half the gains were lost.

My reading on Trump is that he wants people to have healthcare, and in much greater numbers than traditional Republicans supported in the past.  He said, in fact, “we won’t let people die in the streets.”  Trump is sensitive to public criticism and with healthcare, he’s more Democrat than Republican. 

Obamacare will be gone, but:

1. People who already have coverage won’t lose it.

2. Trump’s administration will negotiate pricing with the pharmaceutical industry on drugs for Federal programs to lower healthcare costs, but he will be sure to keep biotech and drugs highly profitable.  He knows these are jewels of American ingenuity and hard work that he can’t sacrifice.  We lead the world in these industries. 

3. Trump will otherwise seek to increase competition on healthcare pricing across state borders as he has promised and in ways he has not yet discovered. 

Outright cures of diseases such as AIDS and Hep C have come from our companies.  Abuses of companies such as Gilead (GILD) in overpricing drugs they’ve BOUGHT, not discovered, are the issue.  Predatory pricing will stop, but profits won’t. We’ll be buying more healthcare stocks on pullbacks.  They are a bit extended today, so we’ll wait to buy.  I think the market is waking up to the reality of what Trump will actually do… 

That means the next move for these markets will be UP.  If not, we wait until the market sees enough of the reality of Trump health policies to bid up prices. 

Remember, add on pullbacks, not on the big moves UP.  As I wrote this, IBB rose from around +1.5% to +2.5%!  We’ll add on the next pullback.  If you want to add sooner, do so on what looks like an intraday dip.

As said, if you are not connected with me on social media (links below), you will be missing important signals…

Keep up-to-date during the week at Twitter and StockTwits, where a combined 22, 785 people are joining in…

Twitter® Follow Me on Twitter®. 

Follow Me on StockTwits®.

Why we are going to overweight biotech and drugs under Trump.

Why we are going to overweight biotech and drugs under Trump.

Back to this week’s report….

1.  SP500 Index: The Trump Rally has been on pause.  The weakness in the SP500 Index is greater than that seen in the small cap market.  It is of concern that the SP500 Index is now testing below support; however, support is just below the current level for the small caps as you will see in the second chart below.

Sometimes the laggard, which in this case is the SP500 Index, will test below support, while the leader holds support.  I laid out the path for higher prices going forward in the prior post (link to upper right), so please read that.  Trump promises must now be fulfilled at a reasonable pace or the market will fall in response. 

The biggest 2017 Market Timing Risks for the stock market are:

  1. Failure of Trump promises to actually stimulate the economy or failure to do so in a timely manner.
  2. The Federal Reserve raising rates too aggressively via multiple rate hikes and slowing the U.S. economy and even counteracting the Trump administration’s attempt to stimulate it further.
  3. A major, expensive ground war against ISIS conducted by U.S. soldiers. Unlikely considering Trump’s attitude toward the spending on the wars in Afghanistan and Iraq.
  4. Repeated deadly terrorist attacks on the United States and Europe.

The recent Istanbul and Munich attacks are a big concern in regard to #4 along with the warning by our own FBI Director Comey that ISIS would metastasize at a faster rate as we shut them down in the Middle East.  No need to live in fear, but we need to be vigilant and on the offensive in tracking down and shutting down terrorists.  There will be an all out war via the internet by the Trump administration against the terrorists.  He will massively increase the scope and aggressiveness of that which has been done to date.

Back to the fiscal stimulus question… In the end, any Trump programs that fail to increase the productivity of the U.S. economy will cause very short term economic growth that will fall off as the stimulus is withdrawn.  We’d then end up with higher debt levels, a huge burden already for our children and their children, and nothing to show for it.  Let’s hope Trump et. al. are smart about the use of “the People’s” money.  Our money.

I bought the dip this week by adding midcap exposure (IJH; testing slightly below support, as well as XLE, the oil stock ETF.  Please review my buys at either of my social media links below.

SP500 Large Cap Index (click chart to enlarge; SPX, SPY):

sp500-index-spx-market-timing-chart-2016-12-30-close

Below support, but the real leadership is holding support.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +19.83% up from +12.33% last week. 

The current sentiment spread between Bulls and Bears can easily rise to the +30%-ish level or higher, but sometimes rallies peter out with sentiment spread at around 20%.  Sentiment at this level is not that helpful to us in deciding where the market will head next.  We will continue to add exposure in steps on pullbacks rather than chasing higher as is our custom around here.   Yes there is obvious room for the market to correct further, but I expect the market to move higher for 2017.

Thurs. 12 am close to poll Bulls               45.57%% Neutrals 28.69% Bears      25.74%%

2.  U.S. Small Caps: The leader, small caps, are on support.  Keep your eye on that ball.  If they break (not just test briefly below support) on Tuesday, we will have another dip on our hands in the Trump Rally.

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

iwm-russell-2000-etf-market-timing-chart-2016-12-30-close

Leader on support.

3. Gold: We’ve been on the right side of this pullback, fully out of our trading position.  We own GLD as insurance only at this point.  GLD just rose to and failed at first easy resistance. It is frankly more of a short on the bounces than a buy until the major trend changes.  To do that, GLD must take out a number of the yellow-line demarcated market timing signals in the chart below.

Gold ETF (click chart to enlarge the chart; GLD)

gld-gold-etf-market-timing-chart-2016-12-30-close

Gold fails at easy resistance. Still weak.


4. U.S. 10 Year Treasury Note Yield (TNX): The failure of the breakout at the 2.489% level is encouraging to bond/Treasury Bulls certainly.  Watch that level.  If rates rise about there, we’ll have another leg up in the 10 Year yield toward 3%.  If you are about to refinance or finance a house, you may want to consider waiting a few days to see what the market does at this key pivot point. 

U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2016-12-30-close

Rates FAIL to hold a key breakout.

 Stay with me throughout the week for the LATEST via the links to Twitter/StockTwits above.  Feel free to ask me questions, comment, retweet etc.

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the April 2nd issueNote that 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.

Be sure to visit the website for more general investing knowledge 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 © 2017 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, mid-cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , | 2 Comments

Market Timing Brief™ for the 12-16-2016 Close (12-30-2016 SP500 Index Update): Trump Rally Pauses. Gold Beaten Down. Interest Rates Break Out.

A Market Timing Report based on the 12-16-2016 Close, published Sunday December 18th, 2016

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

UPDATE 12-30-16: SP500 Chart Update (Note: Next issue will be out this by the end of this long New Year’s weekend. See Twitter/StockTwits for most recent updates/links below…)

Santa came early this year.  We are currently testing SP500 Index support at about 2244.  This level should hold even if the test is a bit sloppy (by falling below a bit below support and then recovering), if the market’s assumption is that things will continue to improve under Trump.  The market will need to see evidence of progress.  I believe things will get better for a while, until it dawns on everyone that the U.S. debt level has risen enormously as a result of fiscal spending and tax cuts. 

Rising rates may choke off the recovery at some point if real economic productivity is not raised as a result of the Trump policy changes.  But in the meantime, I believe the market will continue to rise.  Optimism has not topped out in my opinion.  That is why I reported on Twitter/StockTwits that I’d bought several ETF’s and individual stocks (click the social media links below to see the charts related to my buys).

Keep up-to-date during the week at Twitter and StockTwits, where a combined 22, 449 people are joining in…

Twitter® Follow Me on Twitter®.  Follow Me on StockTwits®.

sp500-index-spx-market-timing-chart-2016-12-30-1117am

SP500 eases after an early Christmas.

UPDATE 12-23-2016: GLD Market Timing Update: Gold has been in a down trend since the high of 130.51 on 7-07-2016 with steadily lower consolidation levels, each of which has been broken.  The rally up to the election was quickly wiped away immediately after Trump won.

Growth is in and gold is out for the moment until all the spending involved in the Trump policies raises the inflation rate too high, even as interest rates spike, and the Fed attempts to contain it.  That is why we hold gold as insurance despite the very poor trading behavior to say it nicely.  See the comments on gold and support levels below as well.  We should be down testing the 2015 lows soon. 

gld-gold-etf-market-timing-chart-2016-12-23-1011am

Gold likely headed to complete erasure of 2016 gains.

1.  SP500 Index:  The Federal Reserve raised the Fed Funds rate 0.25% at their FOMC meeting that ended Wednesday to a target range of 0.5-0.75% (0.66% effective rate as of Thursday) and now says it will hike three times next year, whereas the prior plan called for just two hikes, so stocks paused this past week.  The rally should continue as long as the expectations for economic growth and mild inflation continue.  GrowFlation is OK as long as the inflation part of it is not too high and the growth is enough to grow profits again.  We’ve been in a profit recession.  If either growth prospects disappoint and/or inflation gets out of control, the trajectory of the markets will change.  Longer term, if Trump decides to conduct debt driven fiscal policy, we may pay for it down the line in much higher interest rates.

My bias is to have the government support economic growth rather than create it artificially with borrowed money.  Otherwise we become China.  Fixing “infrastructure” may be necessary, especially if critical, but the debt does not help us unless the resulting spending contributes to the productivity of the real economy.   Higher productivity is the only way wages and the quality of living rise as Chair Yellen has said at her Federal Reserve press conferences.

Trump may create lots of infrastructure jobs and be re-elected on that basis, but we need to ask whether the net impact is going to be positive or negative over the longer term.  Again, it will work IF it contributes to productivity.  Send your questions and comments directly to: @realDonaldTrump on Twitter.  😉

I added a bit more stock exposure this week (see social media links below).  I have more powder should prices sink further.

SP500 Large Cap Index (click chart to enlarge; SPX, SPY):

(ignore the big volume spike Friday as it was “Triple Witching” day in the options market)

sp500-index-spx-market-timing-chart-2016-12-16-close

Trump Rally pause but still on track.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +12.33% down a bit from +16.63% last week. 

The fact that Bears are being recruited before sentiment tops out means that there is further upside ahead, even if this “dip” continues.

Thurs. 12 am close to poll Bulls               44.66%% Neutrals 23.01% Bears      32.33%%

2.  U.S. Small Caps: Note the big surges of volume during this small cap rally.  The last dip has been very minimal thus far in comparison to the huge rally from the pre-election pullback.  The rally is still intact.  Market timing signals are still in “go mode.”

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

iwm-russell-2000-etf-market-timing-chart-2016-12-16-close

Minor pullback after a big run.

3. Gold: I’ll stand by my prior statement: “12-12-2016 Update: If the Fed indicates a steady progression of rate hikes from here [as it did in the Weds. FOMC statement], gold will retrace back the entire rally of 2016 (see chart below).”  GLD market timing support below here is at 103.43 and 100.50. Buy some for Christmas, as it’s relatively cheap! But not for a trade at least until we hit bottom again or see a turn up.

Gold ETF (click chart to enlarge the chart; GLD)

NOTE Chart is from 12-16-2016 Close

gld-etf-market-timing-chart-2016-12-16-close

Gold giving up prior gains.

4. U.S. 10 Year Treasury Note Yield (TNX): There is more pain ahead for Treasuries. We have a brand new market timing breakout in yield. Follow the bouncing ball!  Without a quick reversal, the 10 Year Treasury Yield is headed to 3%, likely with fits and starts, as usual.

U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2016-12-16-close

Rates headed to 3%?

 Stay with me throughout the week for the LATEST via the links to Twitter/StockTwits above.  Feel free to ask me questions, comment, retweet etc.

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the January 1st issueNote that 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.

Be sure to visit the website for more general investing knowledge 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 © 2016 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, mid-cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 12-09-2016 Close: Stocks Resume Uptrend. Gold Falls as Rates Spike Up to Retest.

A Market Timing Report based on the 12-09-2016 Close, published Sunday December 11th, 2016

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

1.  SP500 Index:  As said last week: “The Federal Reserve will be raising the Fed Funds rate 0.25% come Dec. 14th as the economy continues to be on the mend.”  Now the probability of that according to the CME Group is 94.9% as of Friday, still as much of a done deal as can be expected.

The Fed will raise rates this week, but what they project going forward in Dr. Yellen’s dog and pony show (aka news conference at 2:30 pm on Weds.) is what guides the markets into the future.  The adjustment to higher interest rates is just beginning.  The U.S. dollar is in a strong Bull market due to rising rates from the expectation of higher inflation, in turn due to strong expectations for an increased growth rate under the Trump administration.

This dollar strength lowers our inflation rate as we purchase foreign goods, but is an issue in selling our goods abroad when it appears before growth has been rekindled.  This can feed back to slow U.S. growth.  The dollar is rising due to U.S. growth that is somewhat improved of late, but really has not yet begun to the extent that is being discounted into the future.  The cart is to some extent running ahead of the horse.  Trump policies must be instituted quickly to produce the expected growth, or the markets will be disappointed, and market timing parameters will be swept aside.

In market timing terms, note that we are coming out of  a long consolidation of the markets (sideways move) with a relatively new breakout, so further progress by the Bulls would not be unexpected. 

Despite any minor pullbacks, the Trump Rally should continue until the market once again changes its mind.

Buy the dips when they appear, not the rallies, to get better entry points.

SP500 Large Cap Index (click chart to enlarge; SPX, SPY):

sp500-index-spx-market-timing-chart-2016-12-09-close

Stocks resume the Trump Rally.

Keep up-to-date during the week at Twitter and StockTwits, where a combined 22, 261 people are joining in…

Twitter® Follow Me on Twitter®.  Follow Me on StockTwits®.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +16.63% down a bit from +18.68% last week.  There is STILL room to move in either direction frankly and the data is less predictive at the moment.  

Thurs. 12 am close to poll Bulls               43.12% Neutrals 30.39% Bears      26.49%

2.  U.S. Small Caps: The crazy small cap rally (crazy in speed) resumed this week.  Small cap stocks don’t have to deal as much with dollar strength.  Plus they represent “beta” exposure, which should be favored in a continuing rally in which higher U.S. growth is expected. 

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

iwm-russell-2000-etf-market-timing-chart-2016-12-09-close

Small caps explode further in the Trump Rally resumption.

3. Gold: We sold our trading GLD position (from the 1-29-2016 entry) profitably based on the market timing signal of a major support break around 115.00 for GLD.  The slide continues and could, as said last week, destroy all gains early buyers of the previous rally have achieved.  Growth means higher rates, which means a higher dollar, which means gold under pressure. (for those who are just arriving, read more here: “When Gold Shines”

12-12-2016 Update: If the Fed indicates a steady progression of rate hikes from here, gold will retrace back the entire rally of 2016 (see chart below).

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

gld-etf-market-timing-chart-2016-12-09-close

Gold still weighed down by prospect of growth and higher rates.

4. U.S. 10 Year Treasury Note Yield (TNX): Note that the 10 Year Treasury Yield hit the 2.489% mark and pulled back yet again.  We have the exact same set-up as last week: That 2.489% mark is clear market timing resistance and, if violated, it means another dose of pain for bond/treasury holders.

U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2016-12-09-close

Rates retest the last top.

 Stay with me throughout the week for the LATEST via the links to Twitter/StockTwits above.  Feel free to ask me questions, comment, retweet etc.

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the January 1st issueNote that 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.

Be sure to visit the website for more general investing knowledge 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 © 2016 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, mid-cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 12-02-2016 Close: Market Eases from Trump Rally Highs Ahead of December 14th Rate Hike. Gold Punished. Interest Rates Easing Off Major Resistance.

A Market Timing Report based on the 12-02-2016 Close, published Sunday December 4th, 2016

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

1.  SP500 Index:  The Federal Reserve will be raising the Fed Funds rate 0.25% come Dec. 14th as the economy continues to be on the mend.  The probability of that per the CME Group is 92.7% as of Friday, pretty much a done deal.

Employment came in near consensus at 178,000 with 175,000 predicted @CNBC and 170,000 predicted @Bloomberg.   Good enough for Dr. Yellen and crew to pull the trigger after waiting an entire year to make further rate hikes.  I continue to be long, having gotten a bit “longer” on November 2nd, moving up to 100% of my usual equity exposure.  After we review the large cap and small cap market timing charts, we’ll see which index is winning up to last Friday from the Nov. 4th low just prior to the election.

The Trump Rally may not stop here, if the market has really adjusted to the idea of higher interest rates.  The problem with assuming that is the case is that we’ve never come off such a low level before.  We don’t know if the loss of other factors that were prior tailwinds such as share buybacks using borrowed funds will or won’t damage the markets more than expected.  If you add more here, be sure to use a mental stop loss on new positions rather than simply ride the market down.   Next time, stay tuned in during the swoons and do your best to buy LOW not HIGH.

SP500 Large Cap Index (click chart to enlarge; SPX, SPY):

sp500-index-spx-market-timing-chart-2016-12-02-close

One more leg up or was that the end of the Trump Rally?

Keep up-to-date during the week at Twitter and StockTwits, where a combined 22, 063 people are joining in…

Twitter® Follow Me on Twitter®.  Follow Me on StockTwits®.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +18.68% down from +27.81% last week.  There is room to move in either direction frankly and the data is less predictive at the moment.  The Bears are still fairly low in number, so there room for further recruitment there.

Thurs. 12 am close to poll Bulls               43.78% Neutrals 31.12% Bears      25.10%

2.  U.S. Small Caps: Small caps have been doing the best, but are pulling back a bit more than the midcaps as seen on the second chart below.

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

iwm-russell-2000-etf-market-timing-chart-2016-12-02-close

1st leg over?

Here’s the winner to date:  IWM (small caps).  Then IJH (midcaps).  You can see that if you want large cap value, you might consider adding large cap tech (QQQ), but the strength of the U.S. dollar will hurt small and midcaps much less as their businesses are more confined to the U.S. than the large cap stocks, tech or otherwise, so diversification is important.

spx-vs-iwm-vs-ijh-vs-qqq-market-timing-chart-since-2016-11-04-to-2016-12-02-close

IWM leads IJH that in turn leads SP500 Index from the 11-04 low.

 

3. Gold: We’ve sold our gold trading position and maintained profits from our 1-29-2016 buy.  I discussed what had to happen for gold to become stronger in last week’s post and on Twitter/StockTwits, so be sure to review that if you have not already read it (links to upper right for prior posts). 

Gold can clearly slide further and erase the entire rally from last year.  That’s why we do market timing and have a plan to always preserve some profits with gold and gold stocks.  Trump’s spending and tax cut plans could give gold a boost eventually if they produce more inflation than growth, but that’s a longer term issue. 

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

gld-etf-market-timing-chart-2016-12-02-close

Gold broke support. Could retrace the entire rally.

4. U.S. 10 Year Treasury Note Yield (TNX): Rates are probably ahead of where the economy is right now.  Some claim that GDP will slow badly into Q1 of 2017 and if that is the case, yields will fall again, perhaps to a higher low, but they will still fall, and gold will benefit.

Note that the 10 Year Treasury Yield hit the 2.489% mark and pulled back.  That is a clear market timing resistance area and, if violated, it means another dose of pain for bond/treasury holders.

U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2016-12-02-close

Rates pull off prior high.

 Stay with me throughout the week for the LATEST via the links to Twitter/StockTwits above.  Feel free to ask me questions, comment, retweet etc.

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the January 1st issueNote that 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.

Be sure to visit the website for more general investing knowledge 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 © 2016 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, mid-cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 11-25-2016 Close: Stocks Go Higher Still in Trump Rally. Gold Fails Support as Rates Skyrocket.

A Market Timing Report based on the 11-25-2016 Close, published Sunday November 27th, 2016

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

1.  SP500 Index: SP500 Large Cap Index (click chart to enlarge; SPX, SPY): Stochastically, the market can be seen to be stretched at the moment (not shown).  If you did not add when I did prior to the election, you were not fully on board for the rocket trip up after the election.  That’s OK, but now it’s more tricky to add exposure.  My thesis was that the market would dive post-Trump, but that it would be a buying opportunity.  I did not know that the swoon would be confined largely to the overnight futures and pre-market.  It was.  There was a small discount (drop left) by the open on Nov. 9th and then up the market went.  In fact, the market (SP500 Index) began to bounce on a market timing basis on the day before and the day of the election, then it pulled back in the futures, opened a bit lower than the prior day, and then the Trump Rally was fully on. 

Now you’ll have to add on pullbacks or find stocks or markets that have not yet fully participated in the Trump rally.  I’d be cautious of those sectors that are doing poor post after Trump’s election, as the under-performance could continue.

Chair Yellen of the Federal Reserve will have no problem raising rates in mid-December.  The stock market is doing well and can absorb the shock right?  That is only true IF the economy begins to heal due to lower uncertainty about the future.  That shift in sentiment would precede any real implementation of Trump fiscal stimulus policy.  Remember however, that the market anticipates the future growth of revenue and earnings by a number of months.  Follow the charts and follow the trajectory of the economy at the same time.  It’s what I like to call “technofundamentals.”  We will need both technicals and fundamentals to navigate this market over the longer term.

sp500-index-spx-market-timing-chart-2016-11-25-close

Trump Rally continues.

Keep up-to-date during the week at Twitter and StockTwits, where a combined 21,879 people are joining in…

Twitter® Follow Me on Twitter®.  Follow Me on StockTwits®.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +27.81%, again up from the prior week, when it was only +20.08%.  We are now getting close to the top of the typical spread seen near the highs of market swings, which is a move to 20-30%. 

This is from last week: “The last higher surge of sentiment than the 11-05 number occurred with the 2-19-2015 report date’s surge to +29.1%.  The next highest was on 11-04-2014 to +37.6%.  See the recent pattern?  November surges.  In 2013 there was an October surge to 31.6% and then a December surge to +36.5% at the Dec. 26th report.  I expect this sentiment surge to continue at least to the 29% level from here.  Trump Fiscal stimulus is on the way, which is like ‘Christmas for the Markets.'”

I also said (and it’s still true): “The percentage of ‘Neutrals’ is far BELOW 40% this week (above 40% Neutrals is Bullish on a market timing basis for higher prices out 6 months from today per AAII studies of their statistics).”

I still believe this as said last week: “I think that means that we should expect another dip or two in the next 6 months.  These may be more shallow than before.”  If you want to enter this market, do so on pullbacks, not rips. Market timing your entries is important.

Thurs. 12 am close to poll Bulls               49.89% Neutrals 28.03% Bears      22.08%

2.  U.S. Small Caps: Once again, the small caps are at a new post-election market timing high and at an all time high.  They are very stretched at the moment, and earnings will have to pick up to justify the rally that has already occurred.  Read my post from last week to understand the reason why small caps are finding favor post Trump: HERE.

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

iwm-russell-2000-etf-market-timing-chart-2016-11-25-close

Another all time high.

3. Gold: Gold was already on its knees post-Trump’s election, and last week the trade broke down. You should already be out of your trading gold position.  We still had a nice profit on gold you hopefully bought on my signal just after my 1-29-2016 report.  You must use market timing for your trades in gold in my opinion.  Not doing so does not recognize that it comes into and falls out of favor.  I still hold GLD as currency insurance, but not as a trade for now.  I’ve gone over what makes gold shine. Read it HERE.

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

gld-etf-market-timing-chart-2016-11-25-close

Gold trade breaks down.

4. U.S. 10 Year Treasury Note Yield (TNX): No new info since last week.  Just a further VERY steep climb up in rates, perhaps ahead of reality at this point, but not a market timing trend we want to fight.

U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2016-11-25-close

Rates zoom higher again this week.

 Stay with me throughout the week for the LATEST via the links to Twitter/StockTwits above.  Feel free to ask me questions, comment, retweet etc.

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the January 1st issueNote that 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.

Be sure to visit the website for more general investing knowledge 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 © 2016 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, mid-cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , , | Leave a comment