Market Timing Brief™ for the 9-15-2017 Close (Updated 9-18-2017): Large Caps At An All Time High BUT… 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.

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.

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…

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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.

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.

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.

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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…

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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

Market Timing Brief™ for the 8-18-2017 Close: Stocks Slide. All Small Cap Gains since December Are Gone. Gold Fails a Breakout. Rates Below Trigger.

A Market Timing Report based on the 8-18-2017 Close, published Sunday,  August 20th, 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 “Summer Market Timing Season” is upon us.  And there goes the President’s report card!  He said the stock market was his report card, and he’s just achieved a D (being generous) for small and midcaps.  All capitalizations of  stocks slid on horrendous PR for President Trump, who this past week was unwilling to categorically condemn the Nazi protesters in Charlottesville the prior weekend.

He keeps delving into ridiculous arguments, such as why we should preserve Confederate statues in public parks and has clearly taken his eye off the ball.  Here is how you handle an issue like this: “The statues belong in museums perhaps to preserve history, but need to be placed in proper context.  They do not belong in public parks.”  See how easy it is to lead, when your thoughts are clear?  The President seems addicted to being oppositional and winning arguments at all costs like a poorly behaved child with ADHD thrown in.  Every day is a new attack.  The vast majority of voters are clearly tired of his behavior, now including many Republicans and Independents.  I hope he can get back on track. 

The markets despise uncertainty and now have a heap of it.  Things have not quite gone off the handle, but if our President keeps dripping his acidic remarks on our country, the markets will head down into a real Bear market.  If you care about your money, tweet to the President and urge him to FOCUS ON WHAT IS IMPORTANT.

I took market timing profits in all my new buys (all were profitable) and also took some other profits in a stock that had given up too much for my taste.

The good news is the economy is still on track, but the bad news is that Trump could derail it by further eroding confidence.  How? By firing Att. Gen. Sessions for example.  That would result in a deeper knee-jerk sell-off, because it could endanger Trump.  The market was said to react specifically to the rumor that Gary Cohn, Chief Economic Advisor to Trump, was leaving, but it turned out to be untrue, or perhaps he settled back down.  He is the first choice for Fed Chair, a prized crown, so Mr. Cohn may just suck it up and stay put for that.  First he has to pass tax reform, and then Trump may let him take over for Dr. Janet Yellen in 2018.  I bet Dr. Yellen won’t want to be in the job herself come 2018.

What have my “market timing actions” been?  I have not dropped my exposure all that much yet, but I am watching things and will scale back further if I don’t like what I see there or in Washington.  Until recently buying each market decline has worked, but without a smoothing out of the political path to something better than this week, buying the dips could begin to fail.  Technically, there is clearly room for more of a fall, as we took out a level of SP500 Index market timing support on Friday. 

To see my current exposure, go to one or both of the social media links below and keep in touch during  the week for my up to date buys and sells (I will update it before midnight tonight).

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 29,600 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-2017-08-18-close

Stocks slide and there is room for more of a pullback.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  +1.37% vs. +1.34% last week.

It is interesting that sentiment did not become much more Bearish on the Trump mess with the spread between Bulls and Bears almost exactly the same as last week.  This gives me some sense that as long as the President is QUIET, the markets can recover, and the economy can stay strong.

Thurs. 12 am close to poll Bulls               34.17% Neutrals 33.03% Bears      32.80%

2.  U.S. Small Caps: I said last week: “Small caps concern me more thus far than the SP500 Index…  Still, all gains going back to Dec. 9th have been wiped out by crossing that line to the downside (not counting small dividends).  And that line was a test of the Trump expansion thesis.”  The selling continued this week and we tested 134.12, a point above the red market timing support line shown of 133.12.  Breaking that brings next support into play if it happens this week.  Remember that I refine my view of the market using other technical parameters as they deal with support and resistance lines.  It’s not enough just to look at the lines.  I also track the economic backdrop of the price action, which remains solid thus far, as I discussed above.

Note how the small caps rebounded to test the orange “Trigger Line” from below, before failing once more.  That often happens on bounces that fail.  Resistance is retested and down the market goes…  We may yet head to the next red line below immediate support.  Where this will stop is unclear right now, and that is why I’m looking at the entire economic, technical, and political picture as a whole.  I want to see stabilization in both technical and political terms that match the strength in the economy.   My sense at the moment is the stock market selling is not over yet.   I summarize the “Trigger Line” market timing signals below.

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

iwm-russell-2000-etf-market-timing-chart-2017-08-18-close

Will all the gains be lost since the election of Trump?

3. Gold: Rates began falling early in the week and then reversed as the fallout from the Trump comments hit the fan, but the Friday rally failed.  Therefore, despite the strength, I would trade the range for now and exit new trading positions as gold just failed a market timing breakout on Friday.  I would hold the trades in gold IF gold immediately rallies on Monday.  For now, it looks like a quadruple top, unless it can break to a new recent market timing high.  ONLY if rates fall further from here now that they’ve crossed the “Rate Trigger Line” to the downside, can gold break to new recent highs.

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

gld-gold-etf-market-timing-chart-2017-08-18-close

Gold just failed an important breakout.

4. U.S. 10 Year Treasury Note Yield (TNX): Rates zigzagged this week, just as gold did, but in the opposite direction, going higher and then dropping below the orange market timing “Trigger Line” in the chart below, and that is Bullish for bonds/Treasuries and Bearish for stocks.  Rates fell toward the end of the week based on the loss of faith in the Trump Presidency.  Weak President, weak policy, weak economy, weak dollar.  It all comes home to roost.

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-2017-08-18-close

Rates zigzag higher then lower again.

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”), Gold signal ON (good for stocks, not gold, though barely ON), Rate Signal OFF (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 , , , , , , , , , , , , , , , , , , , , | 3 Comments

Market Timing Brief™ for the 8-11-2017 Close: Trigger Lines Broken. Stocks Slide to Nearby Support. Gold Spikes Higher on Falling Rates.

A Market Timing Report based on the 8-11-2017 Close, published Sunday,  August 13th, 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: I tell you my overall position on a correction at the end of today’s issue.  The market timing “Trigger Lines” are under attack.

This week the market pulled back on the hawkish threats from President Trump, so you can blame Kim and Trump for not working things out and taking your retirement money, at least on paper.  Of course, that’s just the backdrop of a market that has delivered large gains over several years now.

I warned you here last week about the need to have some cash (despite my high relative exposure vs. prior levels, I still have plenty of cash to deploy should things get silly).

Last week I said in the Investor Sentiment Section: “Could some unanticipated event or even a suspected event happen? Of course it could, which is why I always keep some cash around in case there is a “North Korea” opportunity or a “Trump impeachment” opportunity (no proof yet, just suspicion).

I increased my exposure level to equities (see what I bought at the social media links), while others were running in fear, based on my views of the economy and current events like North Korea and Trump’s Russia-gate. I could be early, but I’m investing based on these runs on the trigger lines as being tests.  Tests can go below certain lines and reverse.

The Bears achieved some manner of attention in the prior two trading weeks, despite the acceleration many see of both GDP and earnings into the 3rd and 4th quarters of this year, and into 2018.  I would preserve profits in your individual stocks as you see fit and rotate the money into other growth stocks that may be undervalued on a short term basis. I do not reduce my overall market exposure unless 1. I find I cannot sleep at night. (doesn’t happen) or 2. I am Bearish on the US economy.  (not)  Remember, most individual investors make about 3% on their money on an annualized basis vs. roughly 8% for the market over long periods of time.  A three percent return is achieved through under-investment primarily by buying high and selling low.  That’s what’s called really bad market timing!

Sometimes, as an example, I’ll sell a tech stock such as Microsoft and buy XLK to stick to what is more purely a tech ETF (QQQ contains companies like Costco and is only 58.5% tech as shown HERE.).  I increased my exposure to nearly the max I’ve held since Feb. 2015.  See the links just below here for the exact numbers.  I am obviously still Bullish as long as the economics that underlie this market hold up.

You can also read my remarks about the North Korea issue and why it will blow over at the social media lings.  It will blow over or be a complete disaster in human terms, so by necessity it will blow over.  Keep that in mind.  This only becomes a structural issue for the economy if we all stay hunkered down in bunkers instead of going shopping for the next several months.  As others have also said, I believe the U.S. is going to have to live with the idea of North Korea having nuclear weapons, because imagine our national indignation if we were told the same thing by an external party.  Don’t get me wrong.  I don’t like the idea of Kim having nuclear weapons, but the North Koreans appear to be intent on having them.

On the chart, we have a backtest of the prior breakout thus far (see below)…

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 29,403 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-2017-08-11-close

SP500 testing first area of support.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  +1.34% vs +4.01% last week.

The movement was not great, but it was a conversion of about 3 percent Bulls to Neutrals.  The Bears hardly budged!  This tells you that individual investors are not terribly concerned about North Korea yet, despite the fact that they have been somewhat brainwashed into fearing the valuation of the market.  Unfortunately for them, markets don’t top until the economy tops and sentiment tops, neither of which have happened. 

Sure, the market can drop another level and that too would be a place to add some more exposure for those who do not have enough.  If you feel the Bear is here, by all means, cut your exposure level.  I do not.

Thurs. 12 am close to poll Bulls               33.67% Neutrals 34.00% Bears      32.33%

2.  U.S. Small Caps: Small caps concern me more thus far than the SP500, but they are expected to give up more during these pullbacks (“higher beta”).  Still, all gains going back to Dec. 9th have been wiped out by crossing that line to the downside.  And that line was a test of the Trump expansion thesis.  Small companies need to participate with large ones if this recovery is going to continue. Thompson Reuters data says Small Caps WILL catch up: HERE.  In contrast you can see the Midcap 400 Index is doing better HERE.  And running in first place on earnings growth from the same quarter last year, the SP500 Large Caps: HERE.

Still, we need to see a reversal back up through that orange line to say the Trump Bulls are correct.  Otherwise the market is telling us it does not believe in the Bullish thesis.  Small cap earnings have not been as nearly good as for large caps, as they have fallen year over year, which is another reason to avoid them on a relative basis.  I have most of my non-US Large cap weighting in mid, not small caps as I’ve mentioned before; however, the Bullish thesis for small caps going into the end of the year and into the first half of 2018 is that earnings are expected to accelerate into Q2 of 2018.  The market generally rallies ahead of the results, but I’d still like to see a reversal of IWM above the orange “Trigger Line” soon.

If you seek perfection in yourself or in others, you will be disappointed.  Within the bounds of “life itself,” that applies to investing and trading as well!  The end results matter as long as your success rate yields an “expectancy” that is high enough.  If you don’t follow your success rate and expectancy at least periodically, you are not a serious trader or investor.  Improvement can only be had when we monitor our results.  Take the time to do that for yourself.  You’ll see patterns and be able to hone your craft over the years.

My market timing mistake this week?  I failed to hold my hedge of calls I sold against my shares, when things were looking rosier earlier in the week, but I did shave a bit off my IWM paper loss by collecting about half of the Sept. call credit. The North Korea Trump comments changed the tone of the market quickly as I showed you on Twitter/StockTwits this week.

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

Small caps break the “Trigger Line.”

3. Gold: This week is the reverse of last: Rates down, gold up.  Any market timing questions?  See prior commentary to catch up… (links to upper right). North Korea fears and perhaps some credit/banking fears pushed gold higher this week.  Remember that support and resistance lines are not magical without the background of macroeconomics.  Also, I do not trade moving average and support/resistance lines blindly, but instead, look at the market’s behavior at the time it hits those target lines.

When the world is calm, business revenue is growing rapidly, earnings are expanding rapidly, inflation is tame, and real interest rates are high enough for investors to be enticed, gold does poorly.  Be prepared to take market timing profits if you are Bullish on our continued economic expansion.  Perhaps we’re headed into the last inning or two of the game, but my opinion is “the Bull is not done yet.”

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

gld-gold-etf-market-timing-chart-2017-08-11-close

Gold rises to resistance.

4. U.S. 10 Year Treasury Note Yield (TNX): Rates have dropped below the orange “Trigger Line” in the chart below, and that is Bullish for bonds/Treasuries and Bearish for stocks.  All is not lost if the prior market timing low is not exceeded, but we are on the warning track running toward the fence and a possible head injury if you follow.  Rates need to rise in a mature recovery and when they don’t, it tells you the market is afraid the economy may slow down.

Some claim Europe is turning toward the better, while others claim it is now decelerating again.  The same claims are made about China.  I say follow the charts and preserve profits you may have at a certain level.  Don’t go all the way back to zero.  Remember if you get out, you MUST be willing to get back in, or you will tend to under-perform the market.  It is also wise to get out of only a portion of your holdings. 

For example, during the last Bear market (the Great Recession), I held only half of my “usual maximum equity exposure,” and quickly expanded my exposure once the market got a footing.  I bought gold aggressively in the high 300’s when the Hollywood stars were shorting it, but now have just 50% of my highest exposure level.  I sold 100% of my initial investment in gold on the way down off the top at about 1370/oz and just kept profits.  I am riding the gravy.

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-2017-08-11-close

Rates break the “Trigger Line” to the downside.

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

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

Stock Signal OFF, Gold signal OFF (good for gold, not stocks), Rate Signal OFF (good for stocks, not bonds).

All three signals went from ON to OFF.  They must reverse back to ON quickly or we will be headed into a more serious stock market correction (at least 5-10%). 

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 , , , , , , , , , , , , , , , , , , , | 2 Comments

Market Timing Brief™ for the 8-04-2017 Close: The Bears Come Out of Hibernation. Gold Slides on Rising Rates.

A Market Timing Report based on the 8-04-2017 Close, published Saturday,  August 5th, 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: Last week I said “US Employment numbers will be out Friday August 4th.  My sense is they need to be close to 200,000 (170-230K) to keep the market and the Federal Reserve happy.”  The number was 209,000 jobs for July.  Average hourly earnings were up 2.5% Year over Year.  Along with the mainly decent Q2 earnings we’ve seen, this is good enough for a continuation of the market rally.

The Bears have started growling again, as the markets reach ever higher highs.  They don’t like the valuation of the market.  Without peeking, is the SP500 Index cheaper or more expensive than it was last year?  According to Lazlo Birinyi and Associates as published in the Wall Street Journal HERE, the SP500 Index PE was 24.68 last year while it is 23.90 as of Friday’s data.  In case you are interested, I have previously checked with Thomson Reuters, who is the source of the data and found that the trailing earnings are GAAP, not the looser non-GAAP earnings.

GAAP, Non-GAAP, what’s the difference?  Non-GAAP earnings excuse exceptional items from the reported earnings, which is legalized cheating in my book.  You can tell me what the company did apart from GAAP earnings, as long as I get to see the numbers with ALL expenses accounted for.  I want to see the GAAP earnings regardless of how much they want to explain away “extraordinary expenses.”

What about the tech heavy NASDAQ 100?  It is a bit more expensive at a PE of 25.73 vs. 24.35 last year, but that is only 5.66% more expensive.  Given these numbers, why are the Bears out in greater numbers over the last few weeks, while we heard little from them last year (except for the PermaBears who are essentially worthless to consider)?

The important question is “What can one do to protect capital no matter what happens?”  Set stops on your positions, deciding for each position how much of your profits and/or your capital you are willing to give up.

Be careful though.  If you set stops too tightly, generally you’ll be kicked out of a great position early and find it hard to get back in at higher prices.  In the meantime, if the SP500 Index or the index related to the individual stock you sold is still rising, you can redistribute some or all of the capital to the relevant index ETF.  If the entire market is breaking down, you can lower your exposure, but ONLY if you are willing to get back in.  Otherwise, don’t bother selling or you’ll ruin your investment results over the long haul.

If you go to a very high level of cash, while the market is still rising, you’ll miss out on what could be big further gains.  Obvious in a way, but it’s a major reason investors under-perform the market.  I expect the gains to continue until the economy says otherwise.  Profits for Q2 are strong and GDP is set to strengthen more in Q3, according to some including the Atlanta Federal Reserve Bank.  The NY Fed is not as sanguine.  You can see their tentative estimates HERE as of Friday.

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 29,199 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-2017-08-04-close

Still in consolidation, yet stepping higher.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  +4.01% vs. +10.14% last week.

The increase in Bears was more than the Bulls, even though the market was simply consolidating (going sideways) over the past week!  This is typical wrong thinking of investors who believe markets that are doing well must be headed into major trouble.  Could some unanticipated event or even a suspected event happen? Of course it could, which is why I always keep some cash around in case there is a “North Korea” opportunity or a “Trump impeachment” opportunity (no proof yet, just suspicion).

Thurs. 12 am close to poll Bulls               36.11% Neutrals 31.79% Bears      32.10%

2.  U.S. Small Caps: My option hedge on my IWM buy last week is paying off as I’m down less than I would be had I not sold the calls against the stock (Sept. covered calls).  Note how IWM bounced after falling to a point fairly close to the orange “Trigger Line” I have defined.  I still believe a violation of the Trigger Line by the small caps will not be a good harbinger for the overall market.  It could signal a broader August correction of 5-10%.  It would mean a wiping out of all small cap gains since the post election Dec. 9th high other than the small dividends received.

Valuations are usually not very reassuring for small caps unless there is a massive wipe out, but they stand at a PE (TTM) of 95.83 vs. “Nil” for one year ago. The data are HERE.  The operating earnings PE is OK, at 19.56, lower than the NASDAQ 100’s, but remember that it’s fudged by not including all costs.  This is why I invest in midcaps and trade in small caps and their ETFs, not that one could not have a position as a long term hold.  Just don’t buy high and sell low.

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

iwm-russell-2000-etf-market-timing-chart-2017-08-04-close

Watch the orange line A close below there won’t be helpful.

3. Gold: Rates up, gold down. Any questions?  See last week’s commentary to catch up… (link to upper right). Also, read my rate commentary below.  It’s why gold likely has further to fall before the next bounce.

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

gld-gold-etf-market-timing-chart-2017-08-04-close

Gold down on rates moving up.

4. U.S. 10 Year Treasury Note Yield (TNX): If US employment and GDP keep performing as they have been, the Fed will continue to slowly increase rates as well as reduce the balance sheet.  There is downward pressure on rates from a sluggish Europe and China, so the Fed may be limited in how much it can do.  If rates move too high too quickly, the dollar will rise quickly and hurt U.S. sales abroad.  There’s a balance to achieve.

Because of my belief that rates will move higher from here, I lightened up on my municipal bond exposure.  I don’t trade individual munis, but I do sometimes trade the ETFs.  I will assess things if we rise to the top of the range and may then buy that exposure back.

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

tnx-10-year-treasury-note-market-timing-chart-2017-08-04-close

Rates may now be rising again higher in the recent range with an improving economy.

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

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

Despite a bit of wiggling up and down, the signals are:

Stock Signal ON, Gold signal ON (good for stocks, not gold), Rate Signal ON (good for stocks, not bonds).

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

Market Timing Brief™ for the 7-28-2017 Close: Trouble Ahead? SP500 Consolidates as Small Caps Fail Another Breakout. New Gold Trading Buy Signal Soon? Rates Remain Low.

A Market Timing Report based on the 7-28-2017 Close, published Sunday,  July 30, 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: SP500 earnings have been going well for most US companies in the SP500 Index.  Those with problems have been punished, such as Starbucks, down 9.24% on Friday.  Per NASDAQ, “Total Q2 earnings for the index are currently expected to be up +9.2% from the same period last year on +5.0% higher revenues.”  This includes the 214 companies that have not yet reported as well as those that have.  The results put earnings at a record high significantly better in performance than Q1, where earnings actually dipped as shown in the bar graph HERE. 

On this past Friday, July 28th, we got the first estimate of GDP for Q2, which was predicted to be between 2% (NY Fed) vs. 2.5% (Atlanta Fed) and turned out to be 2.6%.  Remember, that number is a seasonally adjusted annualized rate extrapolated from the current quarter’s growth.  It is a very rough prediction of the future reality.

Looking at year over year growth smooths out some of the noise.  So let’s put our economist hats on and look at the actual government data filtered through two charts.

Real GDP below compares the current GDP number vs Real GDP in the same quarter one year ago, as a % increase (Shared on Twitter/StockTwits on Fri.):

2017-07-28-Real GDP-Y over Y

GDP Year over Year Growth in %

You can see above that Year over Year GDP has been rising over the last few quarters, but the next chart shows that the rate of increase is declining.  (The equivalent in the above chart is that the curve has been flattening especially over the past 2 quarters.)

Here is the percent change in the Real GDP Y/Y number vs. the prior quarter, which demonstrates that the rate GDP Y/Y is rising is dropping (a second derivative for math people; for others, it’s enough to see that the rate of growth in GDP Y/Y is falling):

2017-Q2-GDP-Chart back to 2015-% change Q to Q

Real GDP Year over Year Growth as % Change vs. the prior quarter

Note that if you waited to buy the SP500 Index on an economic market timing basis until the above chart inflected upward with the Q2 2016 report in late July, you missed a good portion of the market rally.  That report came out pretty close to the Aug. 2016 high.  You caught more of the gains if you bought the reversal off the Feb. 2016 low instead.

As long as growth remains above 2%, the market will probably be OK, but gains may come slower given the slowing of the rate of acceleration of GDP Year over Year. 

US Employment numbers will be out Friday August 4th.  My sense is they need to be close to 200,000 (170-230K) to keep the market and the Federal Reserve happy.

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 29,052 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-2017-07-28-close

Holding gains nicely in consolidation after a breakout.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  +10.14% vs. +9.67% last week.
Same comment applies as last week so I won’t repeat it (link to upper right). The neutral rate being high is Bullish as I’ve explained in the past.

Thurs. 12 am close to poll Bulls               34.46% Neutrals 41.22% Bears      24.32%

2.  U.S. Small Caps: I added back an option hedged IWM position (covered IWM calls) this past week when the market was down a bit on the 25th.  This gives me a cushion of the 2.5ish points that the option credit yielded.  It looks as though I may need the protection as IWM failed a breakout for the second time (two downward green arrows) as the market timing chart shows below… Note however, IWM remains above the trigger line, which is Bullish for stocks until that changes.  A fall below the orange line would get my attention.  Even falling below the late April IWM market timing high would be a negative and likely result in a back-test of the orange trigger line.

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

iwm-russell-2000-etf-market-timing-chart-2017-7-28-close

IWM with a second failed breakout.

3. Gold: Same story still vs. last week: Gold is moving generally in the opposite direction of rates.  For more on this, see last week’s comments and Google search “When does gold shine” (3rd link down). A new high above the April and June highs would be another market timing trading BUY signal.  Interest rates need to stay low (see last chart below) to allow this to happen.  The first was the bounce off support earlier in July. 

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

gld-gold-etf-market-timing-chart-2017-07-28-close

Gold could keep moving up to the orange line/prior highs.

4. U.S. 10 Year Treasury Note Yield (TNX): The Federal Reserve left rates alone as expected, and rates remained tame, which will continue to hurt financials that derive life from how much they can make on their loans (interest rate margin).  I suspect 10 Year Yields could continue to meander around between the orange line and 2.489% or to the green line in the market timing chart below…

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

tnx-10-year-treasury-note-market-timing-chart-2017-7-28-close

Rates remain tame.

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

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

Stock Signal ON, Gold signal ON (good for stocks, not gold), Rate Signal ON (good for stocks, not bonds).

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