Market Timing Brief™ for the 10-13-2017 Close (10-17-2017 Gold Update – May Be a “Fakeout”): The Threat to the Stock Market Rally. Gold’s a Trading Buy as it Ramps while Rates Fall.

A Market Timing Report based on the 10-13-2017 Close, published Saturday,  October 15th, 2017

I deliver focused comments on market timing once or twice a week.  These are supplemented with daily “Tweets/StockTwits” (see links below).

1.  SP500 Index: The markets were largely in a market timing consolidation this week (moving sideways) as recent big gains are being digested.  The small caps eased down a bit more than the large caps, but within their higher volatility range, held up well enough to allow the rally to continue.

BUT there is a threat to the rally as I discussed last week in some detail HERE.  The slipping sound heard on Friday was by interest rates which headed back down rather than up.  As I’ve said, rates rising is one of the things we need to see for the stock market rally to continue, because the financial sector depends on it, and because it means the economy is continuing to expand, which naturally drives rates up.  It is a complete misconception that when rates rise, the market does poorly.  It is true that rates have never been this low for this long, but the Federal Reserve intends to move them up slowly to avoid market volatility that would be injurious to the economy.

Remember that our “fail safe” is market timing.  When things are turning sour, we’ll see it in the charts before the market falls more quickly.  That’s not a 100% guarantee, but it’s usually the case.  Even in 1987, I saw the damage coming ahead of time.  Initially investors won’t believe the changes in the market that we will be able to see.  Why can we do this?  Because the markets cannot hide three things: Price, volume and volatility.  These are derived directly from market trading and cannot be hidden by Wall Street exchanges or anyone else.  Market timing data is the one thing the clever people on Wall Street cannot take away from us.

You can be sure, as I’ve been doing technical analysis formally and steadily since 2001, that I will continue to follow and report on what the markets are actually doing, not what people think they should do.  

After you review the large cap chart below, have a look at what small caps are doing.

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 31,259 people are joining in…

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

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

sp500-index-spx-market-timing-chart-2017-10-13-close

Stocks holding gains! Rally is still on.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  +12.90% vs. +2.80% last week. Bears gave up about 6 points with about 4 points going to the Bulls and a bit less than 2 to the Neutrals.  Rallies don’t end at these levels.  There are more gains ahead in my opinion (short of unforeseen disasters like a resumption of war with North Korea – yes, resumption as we never signed a peace agreement with them!).

Thurs. 12 am close to poll Bulls               39.77% Neutrals 33.33% Bears      26.90%

2.  U.S. Small Caps: The 10-09-2017 low is likely the base of the current U.S. small cap consolidation in market timing terms. If you look at a magnified chart, you’ll see that.  The point is that the slight dip in IWM last week is still part of a consolidation, not a breach of the trend.

The mid caps are even stronger as you can tell by examining the IJH chart on your own.  This means the rally is intact with great breadth (large down to small cap participation).  So we can check off the “Breadth Box.”

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

iwm-russell-2000-etf-market-timing-chart-2017-10-13-close

Small caps slipping a bit, but rally is not broken.

3. Gold: UPDATE 10-17-2107: Gold has pulled back below the “Trigger Line” (you can see the number in the chart below).  A close below the 10-11-2017 low will reverse the trading signal in my view.  That is called a “fakeout.”  Some breakouts are fakeouts, because markets test just above them and reverse.  Gold is still fine as insurance against the US Dollar and other fiat currencies, but I make a distinction on trades vs. insurance.

Gold visited its market timing trend line (yellow) two Fridays back and then bounced as rates fell from their peak simultaneously (though the bond market was closed this past Monday).  This dance is a continuation from what we’ve seen for some time, which is an inverse trading relationship between gold and interest rates.

This echoes the threat to stocks I spoke of above.  Gold rising above my trigger is bad for the Trump Growth Thesis and negative for stocks.  Falling rates are not what the doctor ordered.  Rates should continue to rise in an expanding economy as the Federal Reserve raises rates.

I have mentioned the inflation scenario under which rates could rise while gold also rises.  That could happen if the Federal Reserve falls behind on inflation.  That does NOT seem to be the case at this time however, as the CPI is running at 2.2%, as reported this past Friday, and core CPI is running at 1.7%.

The measure of inflation the Fed prefers to watch is the 12 month change in Core PCE Prices (Price Index for Personal Consumption Expenditures (PCE)) which was last reported at 1.3%, far below their 2% target.  Dr. Yellen reviewed the inflation problem today in fact as posted HERE.  She pointed out that PCE Inflation (the change over 12 months) had reached 2.0% earlier in the year, while Core PCE Inflation had hit 1.9%.  The drop to 1.3% since then has puzzled the Fed.

Although the Federal Reserve would like to normalize rates, they are cognizant of the fact that the bond market could end up disagreeing, so there is always an out.  She says they do not plan to fidget with the balance sheet rebalancing mechanism as they do with the Fed dictated interest rates, but also reserves the right to slow that down and even reverse the flow if the economy does not do what they expect it to do.

That should address anyone who thought the entire path the Fed is now on was immutable.  It’s not.  They simply want to raise rates “while they can,” so that when they need to lower them, they can impact the economy to steady it.  It IS a manipulation and it is NOT a free market principle that drives it NO, which is why we have gold, and for the adventurous currency pioneers, a smaller amount of cryptocurrency on a percentage basis, as insurance.

The bottom line is this: if rates move back up from here and reach a new high, gold will suffer.  This means any current gold trade could be cut off in just days to a week or two.  Watch the interest rate chart below to figure out where gold will go, as they are firmly LINKED in an inverse relationship – higher rates means lower gold.

As far as market timing goes, gold is back to an up trend, also trading above my “Trigger Line” for Trump Growth. 

Now after reviewing the gold chart, have a look at the interest rate market timing signal…

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

gld-gold-etf-market-timing-chart-2017-10-13-close

Gold rises above my Trigger Line again!

4. U.S. 10 Year Treasury Note Yield (TNX): The 10 Year Treasury Yield could now back-test that orange line in the chart below that represents the “Trump Growth Trigger Line” for rates.  I told you last week, we could see a bigger drop in rates after it hit the overhead resistance line (the horizontal aqua line in the chart below; see last week’s issue).

This market timing move in rates could take us to the orange Trigger Line or perhaps to the red line below that, which would create a reverse head and shoulders formation, allowing for a bounce.  Could yields plunge still lower?  If Trump can keep legislative momentum on tax reform going, we should not revisit or break the September low.  If we do, the stock market will already be well into a deeper correction.  My favored scenario is a test no lower than the area of the orange Trigger Line or close to it, meaning the April low. 

The markets will do what they want, so we stay alert.  Stay tuned on social media with me this week (links above)!

Now we need to review our three market timing signals (below the chart after you review it…)

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

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

Rates are heading in the WRONG direction.

Let’s review the three market timing signals together….

MY SIGNAL SUMMARY for a Further U.S. Stock Market Rally:

Stock Signal ON (Small Caps above “Trigger Line”; a broad rally including small and mid cap stocks as well as large caps is a positive for stocks).  Stocks consolidated this week. That’s fine for now.

Gold Signal OFF (GLD is above the “Trigger line” which is positive for gold, not stocks).  Gold is linked to rates though, so follow the 10 Year yield with me.

Rate Signal ON (10 Year Yield above the “Trigger Line,” good for stocks, not bonds). The fall I predicted last week may not quite be done yet.  (details above in part “4.”) Going below the orange Trigger Line will hit stocks in my view if rates get that far.

Thank you for reading.  Would you please leave your comments below where it says “Leave a Reply”… or ask a question…  Pay it forward too by sending the link to MarketTiming.Blog to a relative or friend.  Thank you.

Note: My monthly newsletter is now CLOSED to new subscriptions until late this year.  I’ll let you know here if and when it reopens.

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.

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

Market Timing Brief™ for the 10-06-2017 Close (Update 10-09-2017): Many Are Waiting for the Stock Market to Crash Again. Gold at Low End of Range. Rates Can Move Higher.

A Market Timing Report based on the 10-06-2017 Close, published Saturday,  October 7th, 2017

I deliver focused comments on market timing once or twice a week.  These are supplemented with daily “Tweets/StockTwits” (see links below).

Update 10-09-2017: Bank of America: The Market Timing Canary in the Trump Gold Mine

For this rally to continue, there will have to be tax reform, especially corporate tax reform with repatriation, as it’s been at least partially built into the market.  And the other thing that must happen is for rates to rise; otherwise, it means economic slowing will likely occur with a potential recession to follow.  No need to be pessimistic at this point however, so…

My favored scenario is: Rising rates with at least corporate tax reform and some sort of tax reduction for the middle class, which could be enough for the markets, even if individual tax reform is watered down. 

The financials (XLF; financial ETF) are the Canary market timing signal in the coal mine, with Bank of America (BAC) being a more sensitive Canary than the XLF.  I reviewed the comparison chart, and BAC will pack more punch to the upside than will XLF, if rates keep rising with further economic expansion, OR more punch to the downside if rates fall meaningfully from here (not just a few days of a reaction swing lower), and the economy slows. 

The XLF and, more sensitively, in market timing terms, BAC will show us the way forward.

And now back to the major market setup for this week…

1.  SP500 Index: Markets are still strong, but it seems many are still waiting for the next stock market crash, so they can swoop in and buy stocks on the cheap, but instead, they are being sorely disappointed.  Of course, the doomsayers will be right one day, but please don’t mention the cost of their being out of the market since the 2009 bottom to them.  The poor market timing of the average investor is a touchy subject, but is too often left unaddressed with ongoing lousy returns.  And if you are one of the skeptics, it’s OK, because redemption is for everyone.  Winter may be coming, but “Not yet, not yet!” as the Gladiator Juba says after Maximus dies in the Colosseum.  (Gladiator meets Game of Thrones ;))

Investors could have used market timing to enter the SP500 Index SEVEN times just since May of this year.  See the green numbers on the chart below.  The entries were at higher lows or backtests of breakouts, both legitimate buying points. There is actually a 6th and 7th entry, at the breakouts themselves.  Can you find them?  #4 is one of the market timing breakout buys, but there are two others that have not been marked.

Employment did take a hit this past month (the US jobs number was minus 33,000 for September) due to Harvey and Irma, but should rebound along with increased activity due to the rebuilding efforts.  The NY Federal Reserve still expects GDP for Q3 to turn out at 1.53%, slightly above last week’s estimate, while the Atlanta Fed brought down its estimate to 2.5%.  Remember that the quarter to quarter seasonally adjusted annualized GDP numbers are more volatile than the year over year GDP numbers.  At the end of Q2 2017, Year over Year US GDP growth was 2.2%.  You can review the data HEREAs long as the economy is doing OK, and inflation is not running wild, I remain invested in equities.

Review the SP500 Index market timing chart below and then we’ll discuss investor sentiment and the US small caps…

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 31,066 people are joining in…

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

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

sp500-index-spx-market-timing-chart-2017-10-06-close

Hurricanes, North Korea, Tigers and Bears, Oh My!

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  +2.80% vs. +4.59% last week.  A few more BEARS were recruited from Neutrals last week than were Bulls!  Investors are incrementally more Bearish as the market continues to make new highs.  That means there are more gains ahead!

Thurs. 12 am close to poll Bulls               35.60% Neutrals 31.60% Bears      32.80%

2.  U.S. Small Caps: Mid caps did indeed confirm the small cap market timing signal this week by breaking out to new all time highs.  Small caps moved up yet another notch.

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

iwm-russell-2000-etf-market-timing-chart-2017-10-06-close

Small caps move up once again.

3. Gold: In market timing terms, gold has reached the base of the trading range, which is represented by the yellow trend line in the chart below.
It must bounce from here or that will be a distinctly negative market timing signal.  The GLD price would then undoubtedly test the next red line beneath the current level as an initial downside target.  If you are Bullish, which I am not due to rising interest rates, then buy at the trend line and dump those shares back at the top of the range.  You can keep a core position if you like. I use gold as insurance against fiat currencies.

The one thing gold has going for it at this level is the resistance interest rates are facing (see the next chart).  No guarantees though and my bet is still for 10 Year Treasury Rates moving at least to 2.6%ish over the intermediate term.

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

gld-gold-etf-market-timing-chart-2017-10-06-close

Gold reached the bottom of the trading range.

4. U.S. 10 Year Treasury Note Yield (TNX): Rates moved still higher this week.  I think they have farther to go, as the Federal Reserve will use this time of economic expansion to raise rates and reduce their balance sheet to get ready for the next economic decline. The 10 Year Treasury Yield can certainly run up all the way to 2.6%ish without destroying economic growth.  The Fed will move slowly no doubt, as they’ve never undone QE before as they have raised rates.

Rates hit the top of the recent range and could move back down a bit before moving higher, but my bet is on higher in the intermediate term. 

The Fed has never reduced such a massive balance sheet before, so I’ll follow the charts, not my assumptions about ranges holding!  Rates could just as easily keep moving up steadily.  

Now we need to review our three signals (below the chart after you review it…)

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

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

Rates moved higher still, but bumped up against the July high.

Let’s review the three market timing signals together….

MY SIGNAL SUMMARY for a Further U.S. Stock Market Rally:

Stock Signal ON (Small Caps above “Trigger Line”; a broad rally including small and mid cap stocks as well as large caps is a positive for stocks).  All three market caps are moving higher.

Gold Signal ON (GLD is below the “Trigger line” which is negative for gold, not stocks).  Gold is on support at the moment.  It must hold.

Rate Signal ON (10 Year Yield above the “Trigger Line,” good for stocks, not bonds). There is more room for rates to rise.

Thank you for reading.  Would you please leave your comments below where it says “Leave a Reply”… or ask a question…  Pay it forward too by sending the link to MarketTiming.Blog to a relative or friend.  Thank you.

Note: My monthly newsletter is now CLOSED to new subscriptions until late this year.  I’ll let you know here if and when it reopens.

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, gold, investment, investor sentiment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 9-29-2017 Close: Small Caps Rocket Higher. Fed Confused on Inflation with Market Hitting All Time Highs. Not Gold Though, Down Yet Again as Rates Rise!

A Market Timing Report based on the 9-29-2017 Close, published Sunday,  October 1st, 2017

I deliver focused comments on market timing once or twice a week.  These are supplemented with daily “Tweets/StockTwits” (see links below).

1.  SP500 Index: The US equity markets hit all time market timing highs this Friday and brought the Dow Transportation Index with them (DJT; IYT).  Meanwhile, the Federal Reserve is confused.  Dr. Yellen, the Fed Chair, gave a speech on Thursday saying the Fed may not really understand inflation in the current context, meaning it does not seem able to predict its course.  Normally as the employment drops below 5%, wages rise and inflation ensues.  It has remained tame, with the Year/Year Core PCE Inflation Index the Federal Reserve follows dropping from 1.4% last month to 1.3% this month.  That’s not what is supposed to be happening. The Fed’s target is 2%.

Now the Federal Reserve has a big problem.  It wants to reduce the size of the balance sheet, which involves letting debt run off as I described last week: HERE This will drive up long rates, which will allow them to hike short rates gradually as well, but only if the economy does not slow as a result.

I believe creating the huge balance sheet they have now was easier than unwinding it will be.  The other side of the box they are in is that the longer they put off reducing the balance sheet, the more expensive it will be to reduce it.  As rates rise, our government will have to pay more to finance our national debt. 

What keeps us in the market is US economic growth.  GDP will remain strong over the next few quarters, meaning growth will stay strong for now (the headline GDP number is a measure of US economic GROWTH, not the level of output)  The out-performance in small caps I pointed out early on after the Fed statement’s release has continued as the market timing charts show this week.

Rates are expected to rise as the Fed reduces the balance sheet size, and actually have front run the process, which will begin this month, in October.  If this trend continues, the U.S. dollar will be higher and multinationals will be under relatively more earnings pressure than small caps or mid caps, at least the ones that are not primarily serving an international market.  Plus there is a sizable Russell 2000 exposure to financials, which do well when rates rise and banking spreads rise fueling bank profits.

Review the SP500 Index market timing chart below and then we’ll discuss investor sentiment and the US small caps…

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 30,879 people are joining in…

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

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

sp500-index-spx-market-timing-chart-2017-09-29-close

New all time high as the Fed struggles with its job.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  +4.59% vs. 12.93% last week.  Investors were more Bearish this week just before the market hit all time highs.  This means there is more upside.  Investors will be VERY Bullish when the market reaches its final top.

Thurs. 12 am close to poll Bulls               33.33% Neutrals 37.93% Bears      28.74%

2.  U.S. Small Caps: We DID actually get the strength I was looking for this week and in a big way as the market timing chart shows.  Small caps initially led the charge up after the election, but then stagnated for months as the large caps caught up.  But if you missed the rocket ship that took off right after the election, you missed a lot of the post-election gains.  I think there is still more in this trade though in this move in particular, due to the long consolidation (move sideways) in market timing terms after the election.  For that reason, we added to our small cap position twice last week as noted on social media (links above) in real time.

Mid caps (IJH) are lagging a bit, but did just eek out a new high close of 1795.94, barely above the prior intraday high of 1795.14 on 7-25-2017.  Look for them to move higher early next week to confirm the large and small cap highs.

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

iwm-russell-2000-etf-market-timing-chart-2017-09-29-close

Leading since the election and now leading again.

3. Gold: Again last week, I told you to watch your gold profits, and I was correct.  By market timing of interest rates I knew to tell you to get out of some gold exposure, at least by setting mental sell stops. 

The Federal Reserves plans to raise rates and reduce their balance sheet is not going to be friendly to gold and it could go on for a while.  Only if the Fed falls behind inflation, does gold win.  Read my article on “When Does Gold Shine and When Does It Decline” if you have not (Google that phrase and it’s at the top).

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

gld-gold-etf-market-timing-chart-2017-09-29-close

Gold continues to slide on rising rates.

4. U.S. 10 Year Treasury Note Yield (TNX): This period of economic growth is the Federal Reserve’s chance to raise rates.  If the NY Fed proves to be right about it’s relatively anemic growth prediction for the U.S. economy, rates will come back down again.  That’s not what I believe will happen, but we have to rely on the other questionable economic forecasts to refute the NY Fed!  So I will continue to follow the market timing charts, most of all.  They often tell the truth before economists do.

I told you last week exactly what I am doing with bond funds in particular (link at top right).  I sold muni bond fund exposure just prior to the Fed statement (timestamped on Twitter).  Keeping durations relatively short would be good to do as well.

Now we need to review our three signals (below the chart after you review it…)

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

tnx-10-year-treasury-note-market-timing-chart-2017-09-29-close

More room for rates to rise.

Let’s review the three market timing signals together….

MY SIGNAL SUMMARY for a Further U.S. Stock Market Rally:

Stock Signal ON (Small Caps above “Trigger Line”; a broad rally including small and mid cap stocks as well as large caps is a positive for stocks).

Gold Signal ON (GLD is below the “Trigger line” which is negative for gold, not stocks).

Rate Signal ON (10 Year Yield above the “Trigger Line,” good for stocks, not bonds).

Thank you for reading.  Would you please leave your comments below where it says “Leave a Reply”… or ask a question…  Pay it forward too by sending the link to MarketTiming.Blog to a relative or friend.  Thank you.

Note: My monthly newsletter is now CLOSED to new subscriptions until late this year.  I’ll let you know here if and when it reopens.

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, gold, investment, investor sentiment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , , | 2 Comments

Market Timing Brief™ for the 9-22-2017 Close: Fed Headed to Higher Long Rates. Small Caps Lead the Way, But Need Further Strength to Confirm. Gold Down on Rising Rates Again!

A Market Timing Report based on the 9-22-2017 Close, published Sunday,  September 24th, 2017

I deliver focused comments on market timing once or twice a week.  These are supplemented with daily “Tweets/StockTwits” (see links below).

1.  SP500 Index: The Federal Reserve held the Fed Funds rate steady this week as expected, but will be starting to unwind its balance sheet in October.  As detailed at Investopedia, “$1.4 trillion of the $2.5 trillion in Treasuries have maturities of less than five years.”  This means the money that drove this rally will be withdrawn over several years.  The Fed will roll off $6 Billion in maturing Treasuries and $4 Billion in mortgage backed securities per month and each quarter they will raise that total of $10 B by another $10 B until $50 B/month is reached.  

On the technical market timing side of things, this week the small caps gave us the further market timing confirmation I was looking for in last week’s post.  Please read it HERE as I will not rehash it. (Also, please read the small cap section below.)

Last week I noted IYT, the Transportation ETF, had just formed a right shoulder vs. the March 1st high, but it’s above it now, soon to re-challenge the prior all time high.

In the past week, estimates for US Q3 SAAR GDP, rose from 1.34% for the NY Federal Reserve Bank to 1.56%, due to an increase in building permits, which is still low, and the estimate remained at 2.2% for the Atlanta Federal Reserve BankAs long as we are growing at 2% or more, the US equity market should be OK.  If the NY Federal Reserve is right, the stock market may not like it and react poorly.  They’ve been very wrong before.

Despite the “Threat War” going on between President Trump and Kim of North Korea, the market is not particularly shaken. A threat of a hydrogen bomb test by North Korea in the Pacific was made yesterday, and we’ll have to watch the market’s response in the futures tonight.  North Korea remains a bit of a wild card, despite the lack of apparent military options.  It is hard to account for insane behavior by Trump or Kim in an investment plan other than to own some gold and bonds at reasonable levels.

Review the SP500 Index market timing chart below and then we’ll discuss investor sentiment and the small caps…

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 30,690 people are joining in…

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

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

sp500-index-spx-market-timing-chart-2017-09-22-close

SP500 Index still near the all time high

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  +12.93% vs +19.3% last week.  Investors became more Bearish at the high of the week, which is NOT how Bull markets end, as I say.  Bulls are killed by wild optimism.  I admit, this does not preclude corrections along the way.  We’ve had several along the way since the 3-2009 bottom.

Thurs. 12 am close to poll Bulls               40.14% Neutrals 32.65% Bears      27.21%

2.  U.S. Small Caps: Refer back to last week’s post (link to upper right) for my update. Both IWO and IWM made my stated goals.  We will add more small cap exposure on further confirmation of this breakout.  This trend is a further confirmation of the long Bull market we are in and the fact that it is NOT over.

The negative?  The close leaves us with a tiny market timing breakout of only 0.05 points.  We need more than that.

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

iwm-russell-2000-etf-market-timing-chart-2017-09-22-close

Small Caps lead the way higher.

3. Gold: I told you to watch your gold profits, and I was correct.  Higher interest rates minus extreme inflation is a bad set-up for gold.  The only plus is that GLD tested my “Trigger Line” of 122.61 and passed the test, at least for the first time.  It’s a negative, however, that GLD closed below 123.31, which was the prior breakout level. The close was 123.24.  Gold must rally from here, or I would take more profits off the table.

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

gld-gold-etf-market-timing-chart-2017-09-22-close

Gold is down on the Fed going ahead with balance sheet runoff.

4. U.S. 10 Year Treasury Note Yield (TNX): Rates should go still higher or the stock market rally will be in trouble.  I have used fundamental considerations as well as market timing signals to reduce my muni bond exposure of late. 

If you are holding INDIVIDUAL bonds that were issued by strong companies or municipalities, you’ll probably do OK even if you give up a bit of interest rate opportunity.  I am talking about bond funds that go down when everyone is selling because bonds are illiquid and movements are exaggerated when “everyone is selling.”

Now we need to review our three signals (below the chart after you review it…)

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

tnx-10-year-treasury-note-market-timing-chart-2017-09-22-close

Rates rising.

Let’s review the three market timing signals together….

MY SIGNAL SUMMARY for a Further U.S. Stock Market Rally:

Stock Signal ON (Small Caps above “Trigger Line”; a broad rally including small and mid cap stocks as well as large caps is a positive for stocks).

Gold Signal OFF (GLD above the “Trigger line” which is good for gold, not stocks – but gold must immediately rally as discussed above).

Rate Signal ON (10 Year Yield above the “Trigger Line,” good for stocks, not bonds).

Thank you for reading.  Would you please leave your comments below where it says “Leave a Reply”… or ask a question…  Pay it forward too by sending the link to MarketTiming.Blog to a relative or friend.  Thank you.

Note: My monthly newsletter is now CLOSED to new subscriptions until late this year.  I’ll let you know here if and when it reopens.

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, gold, investment, investor sentiment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 9-15-2017 Close (Updated 9-18-2017): Large Caps At An All Time High BUT…Watch Small Caps! Gold Falls on Bouncing Interest Rates Right On Cue.

A Market Timing Report based on the 9-15-2017 Close, published Sunday,  September 17th, 2017

I deliver focused comments on market timing once or twice a week.  These are supplemented with daily “Tweets/StockTwits” (see links below).  Updated Q3 GDP discussion.

1.  SP500 Index: The Conference Board of “Leading Economic Indicators” for the U.S. ticked up a bit more,  up 0.3% for July, vs. 0.6% for June and 0.3% in May.  The Conference Board believes this augers well for more second half growth in 2017 as discussed HERE.  Our decision to remain long this market via market timing has served us well, including raising exposure ahead of the 2016 election.

It is very positive that small caps are again above my “Trigger Line.”  This market timing signal is significant, because it means the rally is broadening to smaller cap stocks.  Mid caps previously back-tested the Dec. 8th high (for IJH it was 169.86), and are above their trigger line as well, further substantiating the health of the rally.  Here’s the “But.”  “But” both small and mid caps need to proceed to make new highs now.  If they fail at a right shoulder below their all time highs, it will be bad news for the continued large cap stock rally.  I’ll be keeping an eye on this all this week. 

It is of note that IYT, the Transportation ETF, has just formed a right shoulder vs. the March 1st high. You can see it in a chart of the Dow Jones Transportation Index as well (not shown here).  As many of you know, classic Dow Theory says that the Transports must now confirm the new market timing high we have in the Dow Jones Industrial Index.  They have not yet done so.  These signals are important to watch.

Another thing that bears watching are falling estimates for Q3 SAAR GDP, which on Friday fell to 1.34% for the NY Federal Reserve Bank and to 2.2% for the Atlanta Federal Reserve Bank Slower retail sales took off a bit of growth, and with over twice the impact,  industrial production and capacity utilization fell.  The Year over Year US GDP numbers are more steady than the seasonally adjusted annualized rates, which tend to jump up and down along their trend, and are still in the low 2’s for both Fed Banks, not the 3% that the Trump administration would like to see.

Please note that the NY Fed was about 1% too low for Q2 SAAR GDP (the Atlanta Fed does not post the prior data to compare, but their numbers have been off by a mile at times), so take these “predictions” with a grain of salt.

Review the SP500 Index market timing chart below and then we’ll discuss investor sentiment and the small caps…

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 30,494 people are joining in…

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

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

sp500-index-spx-market-timing-chart-2017-09-15-close

US Large Caps at an all time high.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  +19.3% vs -6.46% last week, which reflects a big boost in the number of Bulls and about the same fall in the number of Bears.  Neutrals were up less than 2%.

There is still room for the spread to rise, though the easy gains may have passed during this swing up in the market.  If you have not yet learned to buy the dips with me, please learn that lesson.  Don’t chase! 

Spreads of Bulls minus Bears can reach over 30% during periods of Bullishness.  During giddy times like 2000, the peak sentiment spread was a crazy 61.7% for the study ending 1-05-2000.  You would think we would not get back to those levels ever again, but investors and traders have short memories when it comes to greed.

Thurs. 12 am close to poll Bulls               41.29% Neutrals 36.74% Bears      21.97%

2.  U.S. Small Caps: Small caps back-tested the “Trigger Line,” but made more progress this week to the upside.  They need to avoid failing at a right shoulder matching the June high in the market timing chart below. Overall, their participation in the broadening rally is very positive. Again, a brand new market timing high is needed to reinforce this rally.   (UPDATE: Testing above prior all time high this morning on 9-22-2017 of 144.25, but barely above it. IWO is testing above its prior high of 173.93. Watch for both of those to hold on one to three closes for confirmation; the more the merrier.  If you add on the breakout which we usually do in smaller size than our buy lower, use a mental stop and exit a reversal if you plan on trading it!)

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

iwm-russell-2000-etf-market-timing-chart-2017-09-15-close

Small caps need to avoid failing at a a right shoulder.

3. Gold: Interest rates were UP for the past 6 day period, and gold was down.  Got the picture.  See my post from two weeks ago on this relationship.  A reversal to the downside as opposed to a back-test of that upper yellow line in the chart below would be a negative market timing event.  If inflation gets ahead of the Fed, gold can still do well in a rising rate environment, but if the Fed hikes early and lowers its balance sheet exposure, gold will be setting off numerous market timing signals on its way down again. Watch your profits with mental stops.

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

gld-gold-etf-market-timing-chart-2017-09-15-close

Gold down on UP interest rates.

4. U.S. 10 Year Treasury Note Yield (TNX): My call 2 weeks ago that rates would correct UPWARD was correct. 

US Median Housing prices are now well above the prior 1 year average at the prior all time high during the housing bubble.  Rents have shot up much since then, much faster than overall inflation.  The Fed cannot ignore these facts much longer as the bubble in housing was the reason for the Great Recession in the first place.

The Federal Reserve has  managed to reinflate housing with the help of speculators, some large and many small.  Low interest rates have done that, just as they have contributed to all time highs in the U.S. stock market.

The remaining force that can prop up the housing market now, at least for a while) is the lack of inventory.  Builders did not build over the past few years at the clip they did prior to the crisis.  Still, if the Fed persists in its dovish policy, housing prices will escape even further beyond the reach of buyers.  If the Fed raises rates now to head this off, housing prices will moderate and likely fall as housing investors/speculators bail at the margin.

Now we need to review our three signals (below the chart after you review it…)

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

tnx-10-year-treasury-note-market-timing-chart-2017-09-15-close

Rates bouncing again.

Let’s review the three market timing signals together….

MY SIGNAL SUMMARY for a Further U.S. Stock Market Rally:

Stock Signal ON (Small Caps above “Trigger Line”; a broad rally is a positive for stocks).

Gold Signal OFF (GLD above the “Trigger line” which is good for gold, not stocks).

Rate Signal OFF but BARELY (10 Year Yield below the “Trigger Line,” good for bonds, not stocks). This bounce means we could trigger this signal back to ON again, although the signal change attempted Friday failed to hold by the close.

P.S. I’m back in the saddle after Irma.  Winds reached low Category 2 levels where I was located in Florida.  Shingles and various other roofing materials, some lined by scores of nails were flying by at high speeds of over 100 mph for several hours in the middle of the night, early Monday morning.  The damage was very real for many, so please be generous and help others out.  How we serve others is what defines us.  I did post during the week on social media, so please always keep in touch there (links below).  Thanks for your patience and for your support.

Thank you for reading.  Would you please leave your comments below where it says “Leave a Reply”… or feel free to ask a question…  Pay it forward too by sending the link to MarketTiming.Blog to a relative or friend.  Thank you.

Note: My monthly newsletter is now CLOSED to new subscriptions until late this year.  I’ll let you know here if and when it reopens.

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, gold, investment, investor sentiment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 9-01-2017 Close: Is North Korea a Threat with the SP500 Index Back Near Highs? Gold Breaks Out with Rates Moving Off Low.

A Market Timing Report based on the 9-01-2017 Close, published Sunday,  September 4th, 2017

I deliver focused comments on market timing once or twice a week.  These are supplemented with daily “Tweets/StockTwits” (see links below).

1.  SP500 Index: North Korea is believed to have set off a thermonuclear H-bomb device on Sunday, while we were distracted with the Texas and Louisiana flooding.  How will this impact our market?  On an immediate basis, SP500 Index futures are down only 0.32%, while gold is up another 0.71% today.  The reaction is not an extreme one.  As I’ve said before, the military options are all horrendous and therefore will occur only if an error is made by an underling.  For example, if shots are fired across the DMZ by a North Korean set on starting a war, a rapid large scale US and South Korean response could cause a further rapid escalation by North Korea, leading to hundreds of thousands if not millions of deaths near the DMZ.

Alternatively, a North Korean missile could end up in the wrong place and incite an all out war.  If Kim were to launch an attack on Guam, millions of North Korean would die, as I believe Trump would seek to annihilate them as payback.  Use of any nuclear weapon would result in complete nuclear annihilation of all of North Korea.

Now, I should hasten to say that I don’t believe any of that will happen.  It’s the kind of thing that is impossible to protect oneself from in a portfolio, unless it is to unwind some exposure, but “selling everything” to avoid all risk generally results in great under-performance.

In the meantime, the economy is moving along with ISM manufacturing coming in strong at 58.8, despite some underlying weakness showing up in the form of slowing delivery times.  US Employment was OK at 156,000 new jobs created in the month of August vs. 180,000 expected.  (source of economic data = Bloomberg) As I said before the employment number on social media (links below), 156,000 is in the “good enough” range.  The 3 month average after downward revisions was 185,000 jobs per CNBC.

Technically, the SP500 Index broke up through the right shoulder that was forming last week.  In just three days, it’s back to challenging the prior market timing highs.

As long as the economy continues its current growth trajectory, I will remain overexposed to the market vs. my usual exposure.  My up to date equity market exposure number is found HERE.

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 30,026 people are joining in…

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

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

sp500-index-spx-market-timing-chart-2017-09-01-close

Back up near prior ALL TIME highs.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  -14.89% vs. -10.19% vs. last week, and that happened due to an increase in Bears of just 1.6%% and a decrease in Bulls of 3.10%.  Neutrals picked up 1.5%.

There is still room for the spread to rise as mentioned last week (please review my comment, if you did not read it last week – link to upper right).
This does not mean the markets must pullback further, and the pessimism near market highs, even at these moderate levels, is BULLISH.  Only when investors are manically BEARISH near highs, will I have an issue.

Thurs. 12 am close to poll Bulls               25.00% Neutrals 35.11% Bears      39.89%

2.  U.S. Small Caps: I like that small caps are back above my market timing trigger line.  This gives us the hope that the other two signals can switch back as well.  Unfortunately for gold Bulls, gold should not do well in a vibrant lower inflation economy, so watch your profits.  And review the charts below to know when the turn will be.  Large caps typically hold up longer than small caps at the end of a Bull run.

The thing that will convince me the Bull is still healthy is a broad based rally, which is why the stock “Trigger Line” is so important.  Mid caps have had the same reversal above their post-election high as well, so the equity markets are a GO for a continued equity rally.   Rates may have found their bottom, so the rate signal can now turn ON as well.  In this case, stocks are the leading signal.

Now we need a brand new all time high in the small cap index.  Since growth is favored over value in a growth economy, the first thing we should see is a new high in IWO, then in IWM, and then in IWN.  IWO is leading the way back up.

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

iwm-russell-2000-etf-market-timing-chart-2017-09-01-close

Small caps reverse back up through the “Trigger Line.”

3. Gold: Last week I said, “We need a new 2017 high in gold – right away, or we’ll have a marketing timing top.  That would be a close over 123.31 and usually traders look for several higher closes over a resistance level to confirm a move.”  We got that new high and the rally has continued in the overseas markets on Monday.  This is despite the bounce off the lows in the 10 Year Yield.  You MUST watch that number if you intend to trade gold.  See the charts below.

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

gld-gold-etf-market-timing-chart-2017-09-01-close

Gold rally continues, but rates are bouncing.

This chart shows you why you must watch the 10 Year Treasury Yield to trade gold.  If rates have bottomed, gold may start to slide once the North Korea fear passes.

tnx-10-year-treasury-note-vs-xgld-gold-market-timing-chart-2017-09-01

Note the inverse relationship between the 10 Year Treasury Yield and Gold.

4. U.S. 10 Year Treasury Note Yield (TNX): The chart below (click to enlarge) shows a Bullish Engulfing market timing pattern, in which the low and high for the day lie outside the range of the prior day with a close near the high.  The downward move in the yield may have just ended, along with dollar weakness ending, which would be bad for gold as explained above.  It is time to set your mental market timing stops to protect trading gold and gold miner profits.

I’ve already taken some municipal bond exposure off the table, due to this possible low in rates, and will most likely add it back when things swing back the other way.  Bond funds could move down from here, unless the North Korea tension keeps rates artificially low.  Remember one of my main strategies is “passive shorting” explained in detail HERE When you use “Passive Shorting” vs. active shorting, you can reduce your stock exposure without going to an extreme, or generally having to pay attention to intraday trading.

Don’t put those “stop” numbers in the market if you can help it, as market makers benefit from it, and you may be hurt as a result.  FYI, I use stop limit buy/sell orders when 1. I’m going to be indisposed for a while or 2. the market may move very quickly through a particular level.  Realize the stops may fail to get you in or out if the market moves too far and passes your order by.  Set up alerts at your buy/sell price to back up any such order. If your order does not go off, you can go in quickly and remedy the situation. Use your own judgment on whether these sorts of orders work for you.)

Now we need to review our three signals (below the chart after you review it…)

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

tnx-10-year-treasury-note-market-timing-chart-2017-09-01-close

Friday was a Bullish engulfing move on the charts for the 10 Year Yield.

Let’s review the three market timing signals together….

MY SIGNAL SUMMARY for a Further U.S. Stock Market Rally:

Stock Signal ON (Small Caps above “Trigger Line”; a broad rally is a positive for stocks).

Gold Signal OFF (GLD above the “Trigger line” which is good for gold, not stocks, but only IF inflation actually increases from here).

Rate Signal OFF (10 Year Yield below the “Trigger Line,” good for bonds, not stocks). But note the possible bounce in rates on Friday as discussed above.

Thank you for reading.  Would you please leave your comments below where it says “Leave a Reply”… or feel free to ask a question…  Pay it forward too by sending the link to MarketTiming.Blog to a relative or friend.  Thank you.

Note: My monthly newsletter is now CLOSED to new subscriptions until late this year.  I’ll let you know here if and when it reopens.

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, gold, investment, investor sentiment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 8-25-2017 Close: SP500 Index Falters at Lower June High. Gold Fighting for New Breakout. Rates Falling Since July.

A Market Timing Report based on the 8-25-2017 Close, published Sunday,  August 27th, 2017

I deliver focused comments on market timing once or twice a week.  These are supplemented with daily “Tweets/StockTwits” (see links below).

1.  SP500 Index: This is what many summers and falls “feel like.”  They can be rough on traders and investors alike.  Market timing approaches require shorter time frames during this period.

Technically speaking, the SP500 Index is sagging below a head and shoulders top formed with the left shoulder in June and the head in August.  The last such formation was in Summer of 2016, which ended with a slump off the right shoulder.  If things proceed as they did before, we can look forward to either a retest of the Aug. 21st low of 2417.35 or the 6-29-2017 low of 2405.70.  Technically, the last four days could be seen as a sloppy consolidation (sideways move), but I would say the Bears have a slight edge.  The good news?  As long as the economy remains on track, this pullback should be temporary. 

Meanwhile, despite the leadership disarray in both Congress and in the White House, investors are looking for tax reform by the end of the year.  We were told by Treasury Secretary Mnuchin this week a government shutdown was NOT going to be an issue.  A budget still needs to be passed and Trump has threatened a government shutdown if he does not receive funds for his pet wall project (hint: The Rio Grande River which marks many miles of our southern border cannot be bounded by a wall as it would force flood waters into Mexico. For that reason, building one would be illegal by international law.)  Technology is clearly a better solution along much of the rough terrain at our southern border.

For Trump, the “wall” is of symbolic importance more than anything, so Congress may give him enough of a wall to show something to the public and prove his accomplishment to his supporters.   I would hope the stock market can read between the lines on all but tax reform.  The market will not look past a tax reform failure.  Tax reform is the one thing the market expects, including some sort of repatriation of earnings stashed abroad by the US multinationals.

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 29,801 people are joining in…

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

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

sp500-index-spx-market-timing-chart-2017-08-25-close

More weakness ahead?

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  -10.19% vs. +1.37% last week.

Investor Bearishness has perked up a bit, but is nowhere near the big numbers seen at big turns (Bull Bear spreads of 20-30% or more).  The degree of Bearishness we had this week can be an inflection point UP at times, but this surge in Bears has not occurred at what looks like a market bottom.  My sense is there will be  a bit more market weakness this round.  Check out my current investment level at the social media links above.

Thurs. 12 am close to poll Bulls               28.10% Neutrals 33.61% Bears      38.29%

2.  U.S. Small Caps: Small caps had a weak market timing bounce up this week, but technically, nothing much was accomplished unless there is an assertive continuation of this move.  Only a charge up and through the orange “Trigger Line” would convince me the last low means anything.  Look at the chart.  It’s a lower low vs. the immediately prior daily low on 8-11. It becomes a higher low vs. the March low only if the rally continues with strength.

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

iwm-russell-2000-etf-market-timing-chart-2017-08-25-close

Bouncing, but how far?

3. Gold: We need a new 2017 high in gold – right away, or we’ll have a marketing timing top.  That would be a close over 123.31 and usually traders look for several higher closes over a resistance level to confirm a move.  Trade accordingly.  Rates were testing last Friday’s low this Friday and that bodes well for gold, but another rate breakout to the downside (below 2.163%) will be needed to seal the deal.  It may not come, so be nimble.

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

gld-gold-etf-market-timing-chart-2017-08-25-close

Gold still looking for a new breakout.

4. U.S. 10 Year Treasury Note Yield (TNX): The 10 Year Yield is below the market timing trigger line (in orange in the chart below) for Trump growth.  As I’ve recited many times, rates normally rise as an economy heals, so they should be rising now.  If we do not see rates rise soon, you won’t see the stock market rallying to new highs in my view.  They don’t have to move that high, perhaps to an upper range of 2.489% to 3%.  Then they could slosh around in a fairly low range through the end of this economic recovery.  The good news is GDP is set to continue to rise in the coming quarters, provided the President can get back on track and focus on the important business at hand, namely, tax reform.

There are two pivotal things that need to be accomplished in tax reform.  1) A Middle Class tax cut.  If President Trump breaks his promise of giving the most back to the middle class over the upper class, 2018 and 2020 could be rough on the Republican Party.  2) A Lower Corporate Tax Rate along with repatriation of money held overseas by our big companies at a low tax rate.  U.S. corporate taxation must become more competitive, or we’ll continue to lose business to other countries.

Now we need to review our three signals (below the chart after you review it…)

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

tnx-10-year-treasury-note-market-timing-chart-2017-08-25-close

10 Year Yield below the orange “Trigger Line.”

Let’s review the three market timing signals together….

MY SIGNAL SUMMARY for a Further U.S. Stock Market Rally:

Stock Signal OFF (Small Caps below “Trigger Line”; lack of a broad rally is a negative for stocks).

Gold Signal OFF (GLD above the “Trigger line” which is good for gold, not stocks, though barely OFF).

Rate Signal OFF (10 Year Yield below the “Trigger Line,” good for bonds, not stocks).

Thank you for reading.  Would you please leave your comments below where it says “Leave a Reply”… or feel free to ask a question…  Pay it forward too by sending the link to MarketTiming.Blog to a relative or friend.  Thank you.

Note: My monthly newsletter is now CLOSED to new subscriptions until late this year.  I’ll let you know here if and when it reopens.

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