Market Timing Brief™ for the 7-13-2018 Close: Earnings Will Rule the Market Over the Next Several Weeks. Gold On Prior Lows. Rates Steady in the Range.

A Market Timing Report based on the 07-13-2018 Close, published Sunday, July 15th, 2018…

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 Market Timing (S&P 500 Index®; SPY, SPX): Let’s check in on two signals we’ve been following:

“Intel-igent Market Timing Signal”:  Negative.  As said, Intel’s price must move back up and close above 54.36 to negate the sell signal.   INTC is our “tell” on 2nd half earnings in tech as noted HERE.  Earnings will be out for Intel on July 26th per NASDAQ.  You should check the earnings dates for all your individual stock holdings by typing “INTC earnings,” or whatever the symbol, into Google.  Recheck the date a week before earnings to be sure they have not changed it.

Be prepared to exit stocks that project weak earnings going forward, unless you still consider them great long term investments despite hick-ups.  Realize though even Berkshire Hathaway’s stock has had multiple 50% pullbacks during Warren Buffett’s tenure.  The last pullback like that was from late 2007 to 2009.  BRKA and BRKB are just above their Feb. lows as financials have been week.  Speaking of which…

Bank of America (BAC) Market Timing Signal:  Negative.  The stock briefly tested above the Feb. low of 29.13 and then failed.  It closed at 28.55 on Friday.  The inability of bank stocks to rally off of massive dividend and share buybacks is striking and a warning sign about where U.S. interest rates are headed.  (see below for more discussion)

The SP500 Index at Friday’s close stopped JUST BELOW the March high of 2801.90 at 2801.31.  We have a re-topping at a prior higher low.  Turning down from here in a significant way would be negative, but we’ll have to see where earnings take us.  Forward guidance into the second half of the year when we can expect Ex-U.S. global slowing to catch up with U.S. multinationals will be the key to achieving gains vs. losses over the next few months.

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 33,560 people are joining in…

Follow Me on Twitter®  Follow Me on StockTwits®.

SP500 Large Cap Index (click chart to enlarge; SPX, SPY):  Stopped JUST below the March high of 2801.90. 

sp500-index-spx-market-timing-chart-2018-07-13-close

SP500 edges up toward top of the 2017 channel range.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +13.90% vs. -11.42% last week.  This changes little as it’s not at an extreme.  There is plenty of room to become more Bullish or Bearish. 

AAII.Com Individual Investor Sentiment Poll
Bulls Neutrals Bears
43.05% 27.80% 29.15%
Thurs. 12 am CT close to poll

2.  U.S. Small Caps Market Timing (IWM): U.S. Small caps are leading large since the May 29th low, whereas mid caps are just barely ahead of large; however, since the June 27th low, large caps lead mid caps, which barely lead small caps. We will have to closely watch for further deterioration of small cap leadership.  Small caps need to resume their gains soon. They are still mid-channel (magenta lines), so there is no major directional change to be seen quite yet.

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

iwm-russell-2000-market-timing-chart-2018-07-13-close

Small cap lead has been dissipating since the end of June.

3. Gold Market Timing (GLD):  My comments from LAST WEEK should suffice here.  Gold is back down testing a major low. 

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

gld-gold-etf-market-timing-chart-2018-07-13-close

Gold back down testing a big low.

4. Interest Rate Market Timing – U.S. 10 Year Treasury Note Yield (TNX): Stuck in neutral but susceptible to being thrashed around within the range based on inflation numbers, which are slated to heat up a bit more this summer before declining once again.  See my prior comments under Section#4 HERE.

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

tnx-10-year-treasury-note-market-timing-chart-2018-07-13-close

Rates stay in range. May react with upswing on inflation data over the next few months.

Now let’s review three key market timing signals together…. 

Do not use these signals as a trading plan.  They are rough guidelines.  I currently share my own moves on social media (links above).

MY SIGNAL AND TREND SUMMARY for a Further U.S. Stock Market Rally with Real GDP Growth (“real” means above inflation):

Stock Signal GREEN for a further U.S. stock market rally with a Bullish SP500 Index trend.  GREEN because the IWM up trend is still intact, as I originated this signal with small caps.  The small caps are a better indicator of the health of the economy, as they are most vulnerable to economic changes.  The VIX closed Friday at 12.18, below the key 13.31 number I have pointed out.   There is room for the VIX to fall to the sub-10 level, but earnings growth projections will allow that or NOT.

Gold Signal  GREEN for a further U.S. stock market rally with a BEARISH Gold Trend. 

Remember GLD is being used as an indicator for the ECONOMY here. 

Rate Signal YELLOW for a further stock market rally with a NEUTRAL 10 Year Yield Trend.  Close Friday was 2.831%.  Things have changed due to the recent swoon and then bounce in rates.  A more definitive rise above 3.036% would turn the rate trend back to Bullish (bearish for bonds).  A fall below 2.717% would be required to turn the rate trend back to Bearish. “Bullish” for yields is Bearish for bonds and vice versa.  This level of the 10 Year Treasury Yield, which is too high for current conditions as explained HERE, could eventually slow the economy.  The market seems to have adjusted to rates of up to 3% or so as said in the signal summary HERE.

Note: I’ve updated my criteria for the equity signal for a further U.S. stock market rally to the following: GREEN = Bullish, YELLOW = Neutral, RED = Bearish.  In other words, the colors tell you whether the signal supports the stock rally or not, while the Bullish, Neutral, and Bearish designations are about the trend. 

NOTE: A BEARISH trend signal does not mean we should not buy.  A BULLISH trend signal does not mean you cannot sell some exposure.  It depends on what is going on in the economy and how oversold/overbought the market is at a given point whether the Bearish signal is to be sold, sold on the next bounce, etc. and whether a Bullish signal is to be bought or if profits should be taken.  A NEUTRAL trend signal does not mean the end of the Bull or Bear. It means to wait and look for possible subsequent entry points within the existing trend, Bull or Bear, but preserve capital if the entry fails.  Our strong intention is to buy low and sell high.  By the way, I will keep showing the prior orange “Trigger lines” in the charts for now as reference points only; they have historical value for us from the post-2016 election period.

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 (that link will immediately connect them to this webpage) to a relative or friend.  Thanks for doing that.

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.

Finally: Excuse and report all typos if you are so moved.  I do my best to pick up most of them, but have not always found them all.  Shoot me a comment (I don’t have to post your typo report as I filter them before publication, but I’ll be grateful to you!)

Copyright © 2018 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 7-06-2018 Close: Summer Dip Over for Stocks? Small Caps Lead. What Gold Needs as Rates Consolidate.

A Market Timing Report based on the 07-06-2018 Close, published Saturday, July 7th, 2018…

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 Market Timing (S&P 500 Index®; SPY, SPX): Let’s check in on two signals we’ve been following:

“Intel-igent Signal”:  Negative.  The current move looks like a bounce in a downtrend.  Intel’s price must move back above 54.36 to negate the sell signal.  The inflection point is 54.36, and the close Friday was 51.37.  INTC is our “tell” on 2nd half earnings in tech as noted HERE.  Earnings start on July 10th as mentioned last week with several big banks reporting on July 13th.

Bank of America (BAC) Signal:  Negative.  Even dead animals bounce, so they say, but BAC did not bounce, even after the Fed cleared them for big dividend payments and buybacks.  The BAC low in Feb. was 29.13 and the close Friday was 28.03, just below the close of last Friday of 28.19. The failure of a rally after the announcement higher dividends and buybacks would be allowed at the big banks by the Federal Reserve makes it even more negative.  This poor behavior of financials, as I’ve said, indicates a poor prognosis for the economic recovery in the U.S. as slowly rising rates are expected, not the falling rates we’ve seen of late.  Even if inflation ticks up a bit more, it could be transient, as the rest of the world slows with only a few exceptions worldwide. 

Last week I outlined two possible outcomes in the near term.

First Option: We descend in an A (down) – B (consolidation) – C (down) fashion with C ending at worst at the orange line in the chart below that represents the base of the 2017 channel. Other choices include the 200 day moving average or the May 29 low.   I would prefer to see the May 29th low hold.  I also said: “The trend will remain intact as long as the orange up trend line is held or if 2594.62 holds, which is the May 3rd low.”

Second Option: This option has prevailed for now, the No C Wave Option (Down Wave – Consolidation – Up Wave): The 2698.67 initial low of the current consolidation, which was tested twice with slight breaches, could be challenged again, but no more.  2691.99 would have to hold at worst.”  2698.55 was the re-challenge low reached on July 2nd.  And then the SP500 Index bounced on cue. 

I added small cap exposure near the first recent low, which has worked out well thus far.  You have to “buy fear” if you want to beat the market, and unfortunately, after your first buy, you sometimes are forced to “buy fear” at even lower levels!

Despite the Trump Trade War risk, the market chose to ignore it as what I’ve called “sloppy public trade negotiation” that will pass, though it could take a while and provide further buying opportunities.

What I’m concerned about is the infection of the U.S. economy by foreign economic illness (deceleration of growth), which would only be worsened by a real trade war.  Remember: Lower growth means lower profit growth, which in turn means lower stock prices based on the falling return generated by stocks. 

I have cash available, but may choose to raise more or at least rotate more exposure out of the SP500 Index and into higher yield (REITs as mentioned on social media are leading since the May 3rd low (VNQ)) and defensive positions like healthcare and bonds.  I share my exposure level changes, when they are significant, on social media (links below).

The SP500 Index trend now?  I consider it Bullish again, as we’ve just seen a higher low, and the price is moving up above the middle of the 2017 channel (orange lines on the chart below…).

This move must keep going obviously, or there will be a reversal at a right shoulder of a head and shoulders formation, which could return us back to the prior lows.  Right – not good!  Please stay tuned at the social media links below, because summers are long, and dip opportunities may abound in the midst of Presidential tweets!  Love him or not, he and his administration move the markets. 

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 33,568 people are joining in…

Follow Me on Twitter®  Follow Me on StockTwits®.

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

sp500-index-spx-market-timing-chart-2018-07-06-close

Moving up in the upward channel. That’s called an UP trend!

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of -11.42% vs. -12.25 the prior week.  It barely budged.  No change from my view last week, which you can see by scrolling down to it HERE.

AAII.Com Individual Investor Sentiment Poll
Bulls Neutrals Bears
27.86% 32.87% 39.28%
Thurs. 12 am CT close to poll

2.  U.S. Small Caps Market Timing (IWM): U.S. Small caps continue to lead large caps.  Mid caps are doing better than large caps, but small caps take the prize.  Note the similar location within the upward channel vs. the large caps.  The out-performance could continue with the tariff battles and the strong U.S. dollar.  The latter should become more pronounced as assets are relocated to the U.S. from weaker economies around the world.

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

iwm-russell-2000-market-timing-chart-2018-07-06-close

Small cap trend still strong and intact.

3. Gold Market Timing (GLD):  Gold should rally once the Federal Reserve reverses course and becomes marginally more dovish, OR if panic ensues abroad as emerging markets collapse further.  Panic can drive gold and the U.S. dollar up at the same time. 

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

gld-gold-etf-market-timing-chart-2018-07-06-close

Gold won’t turn in a meaningful way until rates fall harder after inflation peaks and falls OR unless panic breaks out abroad.

4. Interest Rate Market Timing – U.S. 10 Year Treasury Note Yield (TNX): It may be safe to hold bonds for a while, although a bit more rate upside risk (within the yield down trend) remains, as inflation peaks in the coming months.  Accumulating REITs has worked, and in fact TLT just broke out to a new recent high on Friday.  Follow the trend.  Although I am calling the overall 10 Year rate trend “Neutral,” the immediate trend is down, off a lower high.  (see further comment on rates 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-2018-07-06-close

the 10 year yield is neutral overall, but currently in decline.

Now let’s review three key market timing signals together…. 

Do not use these signals as a trading plan.  They are rough guidelines.  I currently share my own moves on social media (links above).

MY SIGNAL AND TREND SUMMARY for a Further U.S. Stock Market Rally with Real GDP Growth (“real” means above inflation):

Stock Signal GREEN for a further U.S. stock market rally with a Bullish SP500 Index trend.  GREEN because the IWM up trend is still intact, as I originated this signal with small caps.  The small caps are a better indicator of the health of the economy, as they are most vulnerable to economic changes.  The VIX closed Friday at 13.37, flirting with the key 13.31 number I have pointed out.   The Bulls must quickly take out the 13.31 target to succeed from here.

Gold Signal  GREEN for a further U.S. stock market rally with a BEARISH Gold Trend. 

Remember GLD is being used as an indicator for the ECONOMY here. 

Rate Signal YELLOW for a further stock market rally with a NEUTRAL 10 Year Yield Trend.  Things have changed due to the recent swoon and then bounce in rates.  A more definitive rise above 3.036% would turn the rate trend back to Bullish (bearish for bonds).  A fall below 2.717% would be required to turn the rate trend back to Bearish. “Bullish” for yields is Bearish for bonds and vice versa.  This level of the 10 Year Treasury Yield, which is too high for current conditions as explained HERE, will eventually slow the economy.  The market seems to have adjusted to rates of up to 3% or so as said in the signal summary HERE.

Note: I’ve updated my criteria for the equity signal for a further U.S. stock market rally to the following: GREEN = Bullish, YELLOW = Neutral, RED = Bearish.  In other words, the colors tell you whether the signal supports the stock rally or not, while the Bullish, Neutral, and Bearish designations are about the trend. 

NOTE: A BEARISH trend signal does not mean we should not buy.  A BULLISH trend signal does not mean you cannot sell some exposure.  It depends on what is going on in the economy and how oversold/overbought the market is at a given point whether the Bearish signal is to be sold, sold on the next bounce, etc. and whether a Bullish signal is to be bought or if profits should be taken.  A NEUTRAL trend signal does not mean the end of the Bull or Bear. It means to wait and look for possible subsequent entry points within the existing trend, Bull or Bear, but preserve capital if the entry fails.  Our strong intention is to buy low and sell high.  By the way, I will keep showing the prior orange “Trigger lines” in the charts for now as reference points only; they have historical value for us from the post-2016 election period.

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 (that link will immediately connect them to this webpage) to a relative or friend.  Thanks for doing that.

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.

Finally: Excuse and report all typos if you are so moved.  I do my best to pick up most of them, but have not always found them all.  Shoot me a comment (I don’t have to post your typo report as I filter them before publication, but I’ll be grateful to you!)

Copyright © 2018 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 6-29-2018 Close: Bigger Summer Dip Ahead? Both Large and Small Caps Fall to Mid-Channel. Gold Slump Continues As U.S. Dollar Rises. Rates Ease.

A Market Timing Report based on the 06-29-2018 Close, published Sunday, July 1st, 2018…

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 Market Timing (S&P 500 Index®; SPY, SPX): Let’s check in on two signals we’ve been following:

“Intel-igent Signal”:  Negative.  The inflection point is 54.36, and the close Friday was 49.71, 8.56% off that point.  INTC is our “tell” on second half earnings in tech.  They had warned on possible weakness in the second half as noted HERE.  Earnings start on July 10th as mentioned last week with several big banks reporting on July 13th.

Bank of America (BAC) signal:  More Negative than last week.  The BAC low in Feb. was 29.13 and the close Friday was 28.19, 3.33% below that low. The failure of a rally after the announcement higher dividends and buybacks would be allowed at the big banks by the Federal Reserve makes it even more negative.  The fact that financials are not coming along for the recovery, means the recovery’s momentum is in doubt.  Lack of economic momentum means lack of earnings growth momentum,which leads to failing stock market momentum.  

Two weeks ago I pointed out: “The SP500 Index is hugging the upper trend line of the 2017 channel.  This is not a problem, but it allows for a pullback within the trend without ending it.”  I also said it was a “place you could ‘Take some off’ if you are overinvested in stocks.” Yes, that was right.

This was my conclusion last week: “The loss of key breakouts noted as well as negative INTC and BAC signals, as well as a breach of that yellow up trend line shown in the SP500 Index chart below indicates something more than a couple day dip is in store for the market.  (see chart in last week’s post; link to upper right).”  The dip started right at the open on Monday. 

If the general up trend is to survive. there are two possible outcomes in the near term.

  1. We descend in an A (down) – B (consolidation) – C (down) fashion with C ending at worst at the orange line in the chart below that represents the base of the 2017 channel. Other choices include the 200 day moving average or the May 29 low.   I would prefer to see the May 29th low hold as if it does not, there will be a lower low, which could signal to many investors that the prior down trend has resumed.  The last high achieved on 6-13-18 intraday was a lower high vs. the Feb. and March highs.  No one will argue with this: “A downtrend is established by a series of lower lows and lower highs.”
    1. The caveat I’ll share here is the May 29th low was not truly a legitimate low in the trend, as it consisted of a one day test below the prior consolidation support.
    2. Conclusion: The trend will remain intact as long as the orange up trend line is held or if 2594.62 holds, which is the May 3rd low.
  2. The No C Wave Option: The 2698.67 initial low of the current consolidation, which was tested twice with slight breaches, is challenged again, but no more.  2691.99 would have to hold at worst.

Both of those scenarios are possible.  The bigger sell-off is a risk particularly given the messy nature of Trump’s public trade negotiation with “shots fired” on our trading partners.

I have cash to take advantage of any further dip as delineated on my social media feeds (links below)…

We are heading into a mid-week holiday with normally positive seasonality and the U.S. Jobs number coming out on Friday should say things are still going well in the U.S.  That will help the dollar and particularly U.S. Small Caps.  Remember, the Fed is no longer focused on jobs; it is focused on inflation and financial stability.

The SP500 Index trend now?  I consider it “Neutral,” due to the lower highs and higher lows.  Within that neutral trend, the 2017 up trend is still intact.  It will break though, if “global deceleration” infects the U.S.  

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 33, 557 people are joining in…

Follow Me on Twitter®  Follow Me on StockTwits®.

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

sp500-index-spx-market-timing-chart-2018-06-29-close

Just a quick “Summer Dip” or more?

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of -12.25 vs. +12.54% the prior week.  There is still room for more downside, despite the drop this week.  The recruitment of 14.62% more Bears this week says that Bears are being converted on this swoon and more could join them.  Realize both sentiment, and the markets could turn very quickly on any Trump chatter about trade solutions.  In conclusion: This level of sentiment spread is not that useful.  I’ll tell you when it is…

AAII.Com Individual Investor Sentiment Poll
Bulls Neutrals Bears
28.45% 30.75% 40.80%
Thurs. 12 am CT close to poll

2.  U.S. Small Caps Market Timing (IWM): Small caps are also mid-channel, but off a new all time high.  The dollar is still trending up.  UUP made a new high this week and pulled back just a bit.  This could continue as the rest of the world prints softer economic numbers, and the U.S. prints decent growth numbers for both GDP and company earnings.  Money flow to where growth is in the world.

Dollar strength means small caps could continue to be favored still over large caps.  Unfortunately, both small and large caps are in decline of late.  Be sure you are not holding companies with falling earnings expectations, as they will tank the fastest. 

Although small caps remain stronger than large caps, given the breakout to a new all time high, optimally, that breakout must be maintained. 

The increase of volume on the recent drop is a negative (see green volume arrow below).  As stated, small caps are mid-channel, so the base of the channel can come into play with survival of the up trend in small caps.  (lower magenta line). 

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

iwm-russell-2000-market-timing-chart-2018-06-29-close

Must maintain the prior breakout.

3. Gold Market Timing (GLD):  Falling rates say the Fed’s course in raising short rates is wrong, but gold declined some more this week.  The bigger turn will come when the Federal Reserve is forced to reverse their hawkish stance and move to neutral initially, then potentially back to dovish again if the global picture drives them there.  If things get bad enough prior to the September meeting, they won’t hike, and gold will already be rising.

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

gld-gold-etf-market-timing-chart-2018-06-29-close

Gold slump continues. Waiting for a Fed reversal.

4. Interest Rate Market Timing – U.S. 10 Year Treasury Note Yield (TNX):  The 10 Year Yield is being buffeted by both inflation worries due to higher employment in the U.S. (a late cycle issue) and global deceleration.   The yield is now at the lower end of the recent range of 2.717% to 3.115%.  All this says bonds won’t do as badly as the pundits had predicted they would, at least for now.

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

tnx-10-year-treasury-note-market-timing-chart-2018-06-29-close

Rates in the lower end of their recent range.

Now let’s review three key market timing signals together…. 

Do not use these signals as a trading plan.  They are rough guidelines.  I currently share my own moves on social media (links above).

MY SIGNAL AND TREND SUMMARY for a Further U.S. Stock Market Rally with Real GDP Growth (“real” means above inflation):

Stock Signal GREEN for a further U.S. stock market rally with a NEUTRAL SP500 Index trend.  GREEN because the IWM up trend is still intact, and I originated this signal with the small not large caps.  The VIX closed at a “Bears Mean Business level” of 16.09, above the key 13.31 number I have pointed out.   That’s why I expect another test is coming per the above delineated scenarios.

Gold Signal  GREEN for a further U.S. stock market rally with a BEARISH Gold Trend. 

Remember GLD is being used as an indicator for the ECONOMY here. 

Rate Signal YELLOW for a further stock market rally with a NEUTRAL 10 Year Yield Trend.  Things have changed due to the recent swoon and then bounce in rates.  A more definitive rise above 3.036% would turn the rate trend back to Bullish (bearish for bonds).  A fall below 2.717% would be required to turn the rate trend back to Bearish. “Bullish” for yields is Bearish for bonds and vice versa.  This level of the 10 Year Treasury Yield, which is too high for current conditions as explained HERE, will eventually slow the economy.  The market seems to have adjusted to rates of up to 3% or so as said in the signal summary HERE.

Note: I’ve updated my criteria for the equity signal for a further U.S. stock market rally to the following: GREEN = Bullish, YELLOW = Neutral, RED = Bearish.  In other words, the colors tell you whether the signal supports the stock rally or not, while the Bullish, Neutral, and Bearish designations are about the trend. 

NOTE: A BEARISH trend signal does not mean we should not buy.  A BULLISH trend signal does not mean you cannot sell some exposure.  It depends on what is going on in the economy and how oversold/overbought the market is at a given point whether the Bearish signal is to be sold, sold on the next bounce, etc. and whether a Bullish signal is to be bought or if profits should be taken.  A NEUTRAL trend signal does not mean the end of the Bull or Bear. It means to wait and look for possible subsequent entry points within the existing trend, Bull or Bear, but preserve capital if the entry fails.  Our strong intention is to buy low and sell high.  By the way, I will keep showing the prior orange “Trigger lines” in the charts for now as reference points only; they have historical value for us from the post-2016 election period.

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 (that link will immediately connect them to this webpage) to a relative or friend.  Thanks for doing that.

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.

Finally: Excuse and report all typos if you are so moved.  I do my best to pick up most of them, but have not always found them all.  Shoot me a comment (I don’t have to post your typo report as I filter them before publication, but I’ll be grateful to you!)

Copyright © 2018 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 6-22-2018 Close: Summer Market Dip Starting? Get Your Buy List Ready. Gold Down Another Notch with Rates Mid-Range.

A Market Timing Report based on the 06-22-2018 Close, published Sunday, June 24th, 2018…

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 Market Timing (S&P 500 Index®; SPY, SPX): Let’s check in on two signals we’ve been following:

“Intel-igent Signal”:  Negative.  The trigger point is 54.36 and the close Friday was 52.50, despite INTC guiding earnings for the current quarter upward.   There was also the small thing of the CEO being forced out for fraternizing with an employee in the age of #MeToo ethical standards.  It was also an Intel rule, and he violated it, so he’s out.  This may taint this “tell” on the market a bit, as the CEO had been doing good things in redirecting the companies efforts more away from the PC toward data centers or as it is better marketed to stockholders – “the Cloud”!   The CFO supposedly knows what the company needs in the meantime as they search for the next CEO.

Remember that INTC was supposed to be our “tell” on what the second half of the year in tech could look like in terms of earnings.  They had warned on possible weakness in the second half as noted HERE.  Despite the CEO issue, I believe the market will look past it to the company’s performance, although there could be some degree of damage.  The Q2 earnings season starts with Pepsi (PEP) on July 10th followed by JPM, C, WFC, and PNC banks on Friday July 13th.

Bank of America (BAC) signal: Negative.  The BAC low in Feb. was 29.13 and the close Friday was 28.99 with small caps and the QQQ – the latter not all tech, but heavy in tech at new all time highs, although that is barely the case for QQQ, as the Trump Trade War heats up.  The QQQ close Friday was 175.32, while the breakout was at 175.21.  XLK which is “pure tech” in the SPX is below the breakout at 71.34 with a close Fri. of 70.80.

I had said, “We’ll keep an eye on whether BAC can hold the prior recent major lows.  If not, a greater decline in interest rates would be expected.”  I believe interest rates will fall further in the U.S. as global deceleration of growth sinks in.  This will temper the gains in the U.S. perhaps, but remember that the U.S. is among the strongest economies left, so money has rotated into the U.S. from abroad.  That’s exactly what I did near the Feb. lows, and it has paid off.  The U.S. market has recovered while Europe, Japan, and China ETFs have lagged very badly.  FXI (China Big Cap) is BELOW the Feb. low.  EWJ, which is the Japan ETF is near the Feb. low, and Europe (VGK) is as well.  Studies have shown that when markets diverge, you can do better by concentrating your investment in the strongest countries rather than just going to cash. 

Last week I pointed out: “The SP500 Index is hugging the upper trend line of the 2017 channel.  This is not a problem, but it allows for a pullback within the trend without ending it.”  I also said it was a place you could “Take some off” if you are overinvested in stocks.  What happened is the market did pull back from that channel top  a bit, but it’s only down about 21.1% from the top of the channel.   It could slide further, depending on the trajectory of the tariff disputes Trump is engaged in.

The midcaps, QQQ, and XLK, all among the leaders, are back down below their prior breakout points.  Small caps are 4.47% above their breakout on the other hand.  A  breakdown there would be an extremely negative sign for the market, because the thesis there has been that the U.S. economy can be very strong domestically, even if foreign predominantly large cap sales suffer from the trade disputes.  If that’s not the case, then the supposition is that the large cap suffering is going to spill over into all stocks, even the small caps.  There is no definitive break yet in the midcaps either though, despite being belong the breakout point.

The loss of key breakouts noted as well as negative INTC and BAC signals, as well as a breach of that yellow up trend line shown in the SP500 Index chart below indicates something more than a couple day dip is in store for the market.   The other softer sign of a “problem” is that some stocks like Netflix are up 34.08% since my buy on 4-24-18.  At this rate, by 4-23-19, NFLX will be at 918 for a gain of 200.6%.  Does that seem likely?  Possible perhaps in a nutty world, but not likely, so some sort of pullback is needed along that path.  If you have no cash, this may be the time to raise a bit, so you can buy stocks back lower this summer. 

One warning though: Don’t sell your winners unless it is to take some modest profits off the table, but do it on a stop loss basis for a strong stock like NFLX.  And be sure the company you buy is as good as or better than the one you sell.  If not, why are you selling?  To de-worsify?  To buy cheap companies that may take years to turn around? 

Sell your losers first to raise cash and get a list ready to redeploy the assets into strong companies with strong balance sheets and a high return on equity, one of the top criteria Warren Buffett uses to identify great companies with a consistent operating history.  Why is that?  It is because earnings mean nothing if a company does not create shareholder value from those earnings.  Buffett states that a company should be able to create at least $1 in value for every $1 of retained earnings.

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 33, 540 people are joining in…

Follow Me on Twitter®  Follow Me on StockTwits®.

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

sp500-index-spx-market-timing-chart-2018-06-22-close

Just a dip or more?

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +12.54% vs. +23.08% vs. the prior week.  I said last week: “This is compatible with a continued Bull move, but allows for a dip of a few percent (say 3%) or a period of consolidation.”  We’re down only a little so far.  Sentiment in this range says there is room for both downside and upside, so it’s not that helpful.  We are not at a pivot point in sentiment terms, which is just one parameter I follow.

AAII.Com Individual Investor Sentiment Poll
Bulls Neutrals Bears
38.72% 35.10% 26.18%
Thurs. 12 am CT close to poll

2.  U.S. Small Caps Market Timing (IWM): As said above, the small cap breakout must be maintained or a big crack in the continued U.S. expansion will be exposed.  Follow these signals with me on social media (links above).

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

iwm-russell-2000-market-timing-chart-2018-06-22-close

Small caps lead still.

3. Gold Market Timing (GLD):  I believe the current gold decline is temporary, due to a miscalculation by the Federal Reserve.  They are raising rates into a global deceleration and will be forced to at least hold off from further hikes after a Sept. hike, as I discussed last week (links to past issues to upper right).  When they become less hawkish on inflation, the U.S. dollar and long rates will both be falling and gold will rise again.  It’s a bad trade for now, but the reversal is coming.

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

gld-gold-etf-market-timing-chart-2018-06-22-close

Gold is still weak and may be for weeks to months.

4. Interest Rate Market Timing – U.S. 10 Year Treasury Note Yield (TNX):  Rates are mid-range as the chart shows and could move a bit higher on inflation news and lower on global deceleration news.  Seems too hard to trade to bother, but there are always those who do.

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

tnx-10-year-treasury-note-market-timing-chart-2018-06-22-close

The 10 Year Yield is in the middle of the recent range.

Now let’s review three key market timing signals together…. 

Do not use these signals as a trading plan.  They are rough guidelines.  I currently share my own moves on social media (links above).

MY SIGNAL AND TREND SUMMARY for a Further U.S. Stock Market Rally with Real GDP Growth (“real” means above inflation):

Stock Signal GREEN for a further U.S. stock market rally with a Bullish SP500 Index trend.  The VIX closed at 13.77, above the key 13.31 number I have pointed out.  The close was 11.98 last week and 12.18 the prior Friday.  A rise above 14.57 would be a concern for a more serious correction, although on Thursday the high was 15.18, so a quick test above is not enough to tip the market over. 

Gold Signal  GREEN for a further U.S. stock market rally with a Bearish Gold Trend. 

Remember GLD is being used as an indicator for the ECONOMY here. 

Rate Signal YELLOW for a further stock market rally with a NEUTRAL 10 Year Yield Trend.  Things have changed due to the recent swoon and then bounce in rates.  A more definitive rise above 3.036% would turn the rate trend back to Bullish (bearish for bonds).  A fall below 2.717% would be required to turn the rate trend back to Bearish. “Bullish” for yields is Bearish for bonds and vice versa.  This level of the 10 Year Treasury Yield, which is too high for current conditions as explained HERE, will eventually slow the economy.  The market seems to have adjusted to rates of up to 3% or so as said in the signal summary HERE.

Note: I’ve updated my criteria for the equity signal for a further U.S. stock market rally to the following: GREEN = Bullish, YELLOW = Neutral, RED = Bearish.  In other words, the colors tell you whether the signal supports the stock rally or not, while the Bullish, Neutral, and Bearish designations are about the trend. 

NOTE: A BEARISH trend signal does not mean we should not buy.  A BULLISH signal does not mean you cannot sell some exposure.  It depends on what is going on in the economy and how oversold/overbought the market is at a given point whether the Bearish signal is to be sold, sold on the next bounce, etc. and whether a Bullish signal is to be bought or if profits should be taken.  A NEUTRAL signal does not mean the end of the Bull or Bear. It means to wait and look for possible subsequent entry points within the existing trend, Bull or Bear, but preserve capital if the entry fails.  Our strong intention is to buy low and sell high.  By the way, I will keep showing the prior orange “Trigger lines” in the charts for now as reference points only; they have historical value for us from the post-2016 election period.

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 (that link will immediately connect them to this webpage) to a relative or friend.  Thanks for doing that.

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.

Finally: Excuse and report all typos if you are so moved.  I do my best to pick up most of them, but have not always found them all.  Shoot me a comment (I don’t have to post your typo report as I filter them before publication, but I’ll be grateful to you!)

Copyright © 2018 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 6-15-2018 Close: The Fed is Boxed In. Stocks Still Edging Higher with Turbulence Ahead. Gold Falling on Dollar Rising. Rates Falling in the Range.

A Market Timing Report based on the 06-15-2018 Close, published Sunday, June 17th, 2018…

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 Market Timing (S&P 500 Index®; SPY, SPX): Let’s check in on two signals we’ve been following:

“Intel-igent Signal”:  Positive, but consolidating.  Last Friday’s close was 55.05, but this week the close was just 55.11.  This is still above the 54.36 number we’re following, but not making progress.  The move out of this consolidation, up or down, will be a “tell” on the market.  Read last week’s blurb on this to understand its importance as a “tell” for the general stock market in the U.S. HERE.

Bank of America signal: Negative. I said last week: “Looks like it is rolling over again at the 50 day moving average.”  The February low in BAC was 29.15 and the close Friday was at 29.28.  It is in danger of breaking, and if it does, it could be a sign for the overall market to fall.  It could be an indication that the markets are expecting another significant decline in interest rates.  Gradually higher rates are OK in a strong recovery; “Rate Shock” is not OK, as I explained back in February when many commentators were falsely blaming “inflation fears” for the market’s precipitous fall.  You can read about that HERE if you haven’t.  Then again, falling rates don’t compute in a strong recovery.  They are a sign of deterioration of prospects.  We’ll keep an eye on whether BAC can hold the prior recent major lows.  If not, a greater decline in interest rates would be expected.

The Federal Reserve this week stayed on track with their planned hike of 0.25%.  That is exactly what the market expected.  The Fed expects two more hikes this year, one in September and one in December.  There is an aggregate 86.6% probability of one or more Sept. hikes and a 55.4% probability of one or more hikes in Dec. per the CME.

Of course, the Federal Reserve remains “data dependent,” meaning that if circumstances intervene that prove there is slowing of the economy, they may forego one or both of these hikes.  From my reading of the data, unless there are intervening emerging market blow-ups before September, the hike in September is highly likely.  Given the Ex-U.S. global deceleration occurring now, the U.S. may start showing cracks before December, causing the Federal Reserve to back off from the last rate hike.

The SP500 Index is hugging the upper trend line of the 2017 channel.  This is not a problem, but it allows for a pullback within the trend without ending it.  The trend is still up, so I’m sticking with it for now.  If you are over-invested, the top of the current range is where you can “take some off.”

The Federal Reserve dot plots expect slowing of GDP growth from 2.8% this year, to 2.4% in 2019, and to 2.0% in 2020 with a longer run tendency running at 1.8%.  If growth is slowing, growth rates of companies will be slowing more or less depending on the nature of the businesses considered, and slower growth will mean lower stock prices, if in fact the market is now valuing stocks at their current earnings and revenue growth rates.  If this general slowing hits your companies over the next two years, their stock prices should fall.

This means we must watch for deceleration in revenue and earnings growth of the companies we own!  Even the Federal Reserve is indirectly telling investors that stock prices won’t do as well over the next two years as they have in the past due to deceleration in the growth of the overall economy. 

If the companies you own remain at the top of the heap despite some slowing, you may want to ride out the fluctuations in their stock prices.  If not, you may want to seek out companies with higher growth rates, especially companies that can grow despite the global economic deceleration.  One example, could be companies that deal with internet/computer security.  Companies are forced to invest in security to meet threats regardless of what the economy is doing.

Biotech companies are other examples of course, as their products are in demand to solve medical problems regardless of the economy’s trajectory.  The government has spent billions of dollars on Hepatitis C cures and AIDS treatments, because companies discovered the drugs.  AIDS patient treatment did not stop, even during the Great Recession.

Deceleration of growth does not have to mean an immediate recession.  Recession by definition means a contraction of GDP over two or more quarters.  Decelerating growth can simply bring stock valuations down as company revenues and earnings fail to meet prior growth expectations.  The coming earnings reports out in July could lead to such adjustments in expectations for the final two quarters of 2018 and lower prices in a number of stocks.

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 33, 527 people are joining in…

Follow Me on Twitter®  Follow Me on StockTwits®.

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

sp500-index-spx-market-timing-chart-2018-06-15-close

Uptrend intact.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +23.08% vs. +12.21% vs. the prior week.  This is the strongest Bullish spread number since February when the market was in the middle of its first bounce.  This is compatible with a continued Bull move, but allows for a dip of a few percent (say 3%) or a period of consolidation.  Sentiment alone gives me no reason to “sell some” just yet.  I already have some excess cash/short term Treasuries to take advantage of pullbacks. (I share my exposure level on social media at the links above if you are curious.  Simply scroll back to the last message which says “Now at X% of usual max. equity exposure worldwide (meaning vs. usual max. for a Bull Market.”)

AAII.Com Individual Investor Sentiment Poll
Bulls Neutrals Bears
44.78% 33.52% 21.70%
Thurs. 12 am CT close to poll

2.  U.S. Small Caps Market Timing (IWM): The small cap rise has decelerated, but that’s all at this point – it’s called a consolidation (4 days).  There is no reason IWM cannot make higher highs.  In general, small caps should not be doing this well and leading the SP500 Index if the belief were the U.S. economy is headed for trouble.  The U.S. remains a prime place to invest in the midst of global deceleration, and investors believe small caps have a home stadium advantage as they do most of their business in the U.S. vs. large cap multinationals.  It is the relative U.S. advantage that may keep the rally going here as long as the emerging market blow-ups don’t threaten the global financial system.

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

iwm-russell-2000-market-timing-chart-2018-06-15-close

Small caps still above breakout.

3. Gold Market Timing (GLD): Gold is in a “heap of trouble.”  The chart (second below) looks bad with lower lows being made.  Friday’s break was on very high volume, which is a bad sign.  But let’s also examine the relationship of the US dollar plotted against the 10 Year Yield (TNX) and GLD.

The first chart below that starts at 4-23-2018 shows this: Since the U.S. dollar broke out of its prior consolidation on 4-23-2018, TNX has been rising and falling, while GLD has made a series of 3 lower lows.  Remember gold reacts most strongly to real rates, so this means the market believes real rates are rising in dollar terms, not falling.

The Federal Reserve is raising rates while the rest of the world’s economy outside the U.S. slows.  The slowing takes pressure off of input pricing and hence dampens inflation.  Higher rates with falling inflation (from the current highs or so) is a recipe for higher real rates and BAD FOR GOLD.  That last statement is WORTH GOLD!  😉  Watch your stops.  We have no trading positions on when gold is falling.   We only use it for “insurance” during those periods.

When the Fed is forced to reverse course (which could take months as described), gold will rise again. 

uup-vs-gld-vs-tnx-market-timing-chart-2018-06-15-close

U.S. Dollar (UUP) vs. GLD and TNX (10 Year Treasury Yield)

The Gold ETF (click chart to enlarge the chart; GLD): You can see the breach!

gld-gold-etf-market-timing-chart-2018-06-15-close

Bad break on high volume.

4. Interest Rate Market Timing – U.S. 10 Year Treasury Note Yield (TNX): You can play the trading range of rates, but you had better be prepared to act outside the typical monthly newsletter time frame!  Inflation could rise a few more months on a Y/Y basis and drive the Fed’s rate hikes into Sept. but global slowing (initially from higher to lower growth rates and then potentially into recession starting outside the U.S.) could cause the Federal Reserve to pause and forego the December rate hike.

As said above, falling rates are NOT what we want to see in a strong recovery.  The Fed is already ahead of the global economy as I summarize below in the “Signals.”   This does not mean it will impact the U.S. stock market immediately, but it does mean “global slowing” may come home to roost on a time lag.   If the Fed ignores this, it will flatten and then invert the yield curve – not a good thing as demonstrated by history.   Why invest in corporate debt if you can get “risk free” U.S. Treasuries at relatively high rates over short periods of investment (like 2 years)? 

Just to clarify this point even more…  The Federal Reserve has ALREADY tightened too much vs. prevailing global economic conditions in reaction to U.S. inflation.  That is its “job,” but it does not make it correct in the sense of sustaining the recovery.  The Fed in fact, created the inflation by inflating asset prices.

Trump and the GOP have now added to inflation via late fiscal stimulus, regardless of whether we and corporations like the cuts or not.  They may have accelerated the arrival of U.S. growth deceleration leading to the next U.S. recession.  Why?  Because they are forcing the Fed to raise rates in response to inflation induced by their stimulus.

The Fed tightening is already blowing up emerging markets and will compound the global slowing that is already occurring.  They could have raised rates much earlier when the global economy was accelerating.  Now the world economy will lead them by the nose.  If you do not lead, you will be led. 

Now the Fed is boxed in!  If they don’t raise rates, U.S. markets could become inflated, and inflation will rise across the economy as well.  Then the Fed would be forced to raise rates to curtail inflation as that is half of their mandate.  The endpoint, if they do nothing, is stagflation, which means GDP stagnation/recession and inflation.

If they do raise rates, that could put them ahead of the rest of the central banks, and they then impact the entire global economy to further slow it.  That slowing impacts U.S. companies, particularly multinationals, and stock prices fall.  The endpoint if they hike too aggressively is recession and deflation.

In summary, the Fed must act cautiously in its reading of the economy and must not ignore global issues.  For now, it has ONE mandate, which is to fight inflation as employment is “low enough” in its view.   This mandate could lead us into the next recession as I’ve outlined in the above scenarios and lead to the next major market decline.  Be careful about acting too early though as the “over-exuberance” of the last innings can be huge. 

First review the rate chart below and then look at the signal updates…

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

tnx-10-year-treasury-note-market-timing-chart-2018-06-15-close

Rates falling after Fed FOMC meeting.

Now let’s review three key market timing signals together…. 

Do not use these signals as a trading plan.  They are rough guidelines.  I currently share my own moves on social media (links above).

MY SIGNAL AND TREND SUMMARY for a Further U.S. Stock Market Rally with Real GDP Growth (“real” means above inflation):

Stock Signal GREEN for a further U.S. stock market rally with a Bullish SP500 Index trend.  The VIX is back to levels below 13.31; a rise back above that could lead to significant selling.  The close was 11.98 for the week and 12.18 the prior Friday.

Gold Signal  GREEN for a further U.S. stock market rally with a Bearish Gold Trend. 

Remember GLD is being used as an indicator for the ECONOMY here. 

Rate Signal YELLOW for a further stock market rally with a NEUTRAL 10 Year Yield Trend.  Things have changed due to the recent swoon and then bounce in rates.  A more definitive rise above 3.036% would turn the rate trend back to Bullish (bearish for bonds).  The close this week was 2.924% and 2.937% the prior Friday.  A fall below 2.717% would be required to turn the rate trend back to Bearish.

I have been calling rising rates a “positive” thing for U.S. stock market gains as that is what normally happens in the late stage of recovery, yet the current situation is very abnormal.   I am calling rates above my 2.676% number, but below 2.943% YELLOW for a further stock market rally. “Bullish” for yields is Bearish for bonds and vice versa. There is a twist here.  This level of the 10 Year Treasury Yield, which is too high for current conditions as explained HERE, will eventually slow the economy.  The market will likely be far happier if rates stay within a lower range, while not too low and not too high.

Finally, and this is an update, the market seems OK with rates up to 3% or so for now vs. current U.S. growth.  A rise above the prior high of 3.115% could mean trouble for stocks; however, this depends on the economic context. Currently, moving above there could jar the stock market.

Note: I’ve updated my criteria for the equity signal for a further U.S. stock market rally to the following: GREEN = Bullish, YELLOW = Neutral, RED = Bearish.  In other words, the colors tell you whether the signal supports the stock rally or not, while the Bullish, Neutral, and Bearish designations are about the trend. 

NOTE: A BEARISH trend signal does not mean we should not buy.  A BULLISH signal does not mean you cannot sell some exposure.  It depends on what is going on in the economy and how oversold/overbought the market is at a given point whether the Bearish signal is to be sold, sold on the next bounce, etc. and whether a Bullish signal is to be bought or if profits should be taken.  A NEUTRAL signal does not mean the end of the Bull or Bear. It means to wait and look for possible subsequent entry points within the existing trend, Bull or Bear, but preserve capital if the entry fails.  Our strong intention is to buy low and sell high.  By the way, I will keep showing the prior orange “Trigger lines” in the charts for now as reference points only; they have historical value for us from the post-2016 election period.

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 (that link will immediately connect them to this webpage) to a relative or friend.  Thanks for doing that.

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.

Finally: Excuse and report all typos if you are so moved.  I do my best to pick up most of them, but have not always found them all.  Shoot me a comment (I don’t have to post your typo report as I filter them, but I’ll be grateful to you!)

Copyright © 2018 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 6-08-2018 Close: SP500 Index at Top of the Upward Channel. Gold Pauses as Inflation Numbers Move Higher vs. a Stronger Dollar. Rates in a Range.

A Market Timing Report based on the 06-08-2018 Close, published Sunday, June 10th, 2018…

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 Market Timing (S&P 500 Index®; SPY, SPX): Let’s check in on two signals we’ve been following:

“Intel-igent Signal”:  Positive. Still above the 54.36 number we’re following with a Friday close at 55.05.  I’m following Intel as a proxy for tech as it is a market timing leader as well as #1 holding of the semiconductor index.  They’ve also warned that although they expect good things for Q2, the second half of the year could disappoint.  The stock market discounts events ahead of time, so these “tells” can be very helpful in addition to the behavior of the overall U.S stock market.

Bank of America signal: Negative. Looks like it is rolling over again at the 50 day moving average.  The stock has formed two consecutive lower double tops since it peaked.  The pattern will be reversed once it makes a higher high on the daily market timing chart.  If interest rates go down further from here, as the rest of the world runs into economic slowing ahead of the U.S., the banks won’t beat the market.

The SP500 Index has made a higher high and is back in an up trend.  This was the 3rd higher high; however, it is also back to the top of the 2017 upward channel, which could mean traders will take some profits.  Things have gotten stretched with the QQQ’s testing back above the prior high of 175.21 and pulling back to 174.44 on Friday.

The Federal Reserve will meet this week and ends their two day meeting on Weds. June 13th.  It intends to raise rates by another 0.25% per the futures markets as I’ve recently discussed.  Inflation data is coming in on Tues. with CPI expected at 2.2% (Y/Y core without food or energy) and PPI-Final Demand on Weds. with the Y/Y core number without food, energy, or trade services at 2.5% consensus (review the data HERE).

I provide LIVE coverage of Fed statements and the dog and pony show that follows (every other meeting) on social media.  Follow me at the links below…

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 33, 521 people are joining in…

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

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

sp500-index-spx-market-timing-chart-2018-06-08-close

Back to the top of the 2017 Channel (orange lines).

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +12.21% vs. +8.67% the prior week.  Still room for more Bull recruitment.  We are at the TOP of a range (the channel) and investors are not Bullish, which means we need to continue to buy the dips.  Buy ONLY the strongest indexes and stocks though.  Forget the rest.  Weed your portfolio, and put the money where it can grow.  Make sure the reasons you bought the stock or ETF are still valid. 

AAII.Com Individual Investor Sentiment Poll
Bulls Neutrals Bears
38.93% 34.35% 26.72%
Thurs. 12 am CT close to poll

2.  U.S. Small Caps Market Timing (IWM): The small cap trade is still working.  They are leading along with the midcaps.

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

iwm-russell-2000-market-timing-chart-2018-06-08-close

Small cap rally is intact.

3. Gold Market Timing (GLD): Rates are rising because inflation is rising and the Fed is reacting by raising short rates.  When investors are paid well vs. inflation, they don’t run to gold for protection.  The rising dollar makes gold cheaper for those with dollars.  The dollar is rising because other currencies are being trashed in the emerging markets.  They are not all running to Bitcoin, which has been in a down trend (though it may create a bottom eventually!). 

So why is gold not breaking even lower?  That is because there was a break in the dollar rally as rates pulled back a bit.  Lower real rates and a weak dollar drive up gold prices.  The lack of a rally here means the market is still undecided about the course of inflation.  The numbers out this week should help break the deadlock.

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

gld-gold-etf-market-timing-chart-2018-06-08-close

Gold is caught between rising inflation and a vigilant Fed focused mainly on inflation with a strong U.S. dollar due to foreign troubles.

4. Interest Rate Market Timing – U.S. 10 Year Treasury Note Yield (TNX): Rates are not likely to get out of control with the rest of the world in a troubled state, but inflation is still rising in the U.S., so the Federal Reserve feels the need to be proactive, and is slowly raising rates.

The Federal Reserve said they’ll tolerate an inflation rate a bit above their target of core PCE Inflation of 2%.  The latest reading in May was 1.8% as noted HERE.  The rising U.S. dollar is a force working against inflation in the U.S. and for anyone holding the USD.  The battle between Ex-U.S. deflationary forces as foreign economic slowing occurs in the midst of currency blowups, vs. rising inflation in the U.S., will sort itself out, but the combination is not likely to yield runaway inflation necessitating aggressive Federal Reserve action in the near future.

First review the rate chart below and then look at the signal updates…

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

tnx-10-year-treasury-note-market-timing-chart-2018-06-08-close

Rates are below the 2.943% level, but barely and with warmer inflation data coming out this week.

Now let’s review three key market timing signals together…. 

Do not use these signals as a trading plan.  They are rough guidelines.  I currently share my own moves on social media (links above).

MY SIGNAL AND TREND SUMMARY for a Further U.S. Stock Market Rally with GDP Growth and Low Inflation:

Stock Signal GREEN for a further U.S. stock market rally with a Bullish SP500 Index trend.  The VIX is back to levels below 13.31; a rise back above that could lead to significant selling.  The close was at 12.18 on Friday.

Gold Signal  GREEN for a further U.S. stock market rally with a Bearish Gold Trend. 

Remember GLD is being used as an indicator for the ECONOMY here. 

Rate Signal YELLOW for a further stock market rally with a NEUTRAL 10 Year Yield Trend.  Things have changed due to the recent swoon and then bounce in rates.  A more definitive rise above 3.036% would turn the rate trend back to Bullish (bearish for bonds).  The close Fri. was 2.937%.  A fall below 2.717% would be required to turn the trend back to Bearish.

I have been calling rising rates a “positive” thing for U.S. stock market gains as that is what normally happens in the late stage of recovery, yet the current situation is very abnormal.  For this reason, I will call rates above my 2.676% number, but below 2.943% YELLOW.  “Bullish” for yields is Bearish for bonds and vice versa. There is a twist here.  This level of the 10 Year Treasury Yield, which is too high for current conditions as explained HERE, will eventually slow the economy.  The market will likely be far happier if rates stay within a lower range, while not too low and not too high.

Note: I’ve updated my criteria for the equity signal for a further U.S. stock market rally to the following: GREEN = Bullish, YELLOW = Neutral, RED = Bearish.  In other words, the colors tell you whether the signal supports the stock rally or not, while the Bullish, Neutral, and Bearish designations are about the trend. 

NOTE: A BEARISH trend signal does not mean we should not buy.  A BULLISH signal does not mean you cannot sell some exposure.  It depends on what is going on in the economy and how oversold/overbought the market is at a given point whether the Bearish signal is to be sold, sold on the next bounce, etc. and whether a Bullish signal is to be bought or if profits should be taken.  A NEUTRAL signal does not mean the end of the Bull or Bear. It means to wait and look for possible subsequent entry points within the existing trend, Bull or Bear, but preserve capital if the entry fails.  Our strong intention is to buy low and sell high.  By the way, I will keep showing the prior orange “Trigger lines” in the charts for now as reference points only; they have historical value for us from the post-2016 election period.

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 (that link will immediately connect them to this webpage) to a relative or friend.  Thanks for doing that.

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.

Finally: Excuse and report all typos if you are so moved.  I do my best to pick up most of them, but can’t find them all.  Shoot me a comment (I don’t have to post your typo report as I filter them, but I’ll be grateful to you!)

Copyright © 2018 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 6-01-2018 Close: Is the U.S. Stock Market the “Best Game in Town”? Strong Dollar Holds Gold Down. Rates Fall and then Bounce.

A Market Timing Report based on the 06-01-2018 Close, published Sunday, June 3rd, 2018…

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 Market Timing (S&P 500 Index®; SPY, SPX): What did the Intel-igent Signal say this week?  INTC closed at 57.08 for the week with the breakout at 54.36.  The signal is now again positive for a continued large cap rally after reversing previously.  This is despite warnings from the company itself that the second half of the year could show slowing growth.

I warned you last week about the Bank of America signal, and it has continued to fall vs. the prior week, but has for the moment bounced off the May low, which is below the February low, where the S&P500 Index bottomed.  BAC is also just above the February low as well.

The SP500 Index is still above that key 4-18 top at 2717.49 approaching the higher high of 2742.24, the next test of Bullish interest in buying.  The VIX volatility index closed Friday at 13.46, above the Bullish 13.31 target we’ve been following; hence, the “volatility decision” has yet to be fully made about which way the market will turn from here, but the Bulls have more of an edge now, and sentiment is cooperative as you’ll see below…

One advantage now about investing in the U.S. is that European, Japanese, and Chinese growth rates are slowing.   You may say “China is still growing faster than the U.S!” yet, that’s not how the market looks at it.  A faster rate of growth is already priced into the market and if the growth rate slows, PEs must compress further regardless of the absolute level of earnings and revenue growth.

The U.S is “the best place in town” to invest…and with a rising U.S. dollar, it’s even better for foreign investors to buy U.S. stocks denominated in U.S. dollars. The challenge down the road will be slowing profits for U.S. multinationals in those slowing economies.   When the U.S. could catch an economic cold is a question we need to keep in mind in relation to our exposure level to U.S. stocks. 

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 33,495 people are joining in…

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

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

sp500-index-spx-market-timing-chart-2018-06-01-close

That last retracement test worked!

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +8.67% vs. +13.40% the prior week.  Sentiment is still not at an extreme, which means we can still add to stock holdings at these levels, because many investors are still skeptical.  Investors became marginally MORE Bearish as the SP500 Index ROSE!  That is Bullish.

AAII.Com Individual Investor Sentiment Poll
Bulls Neutrals Bears
35.02% 38.63% 26.35%
Thurs. 12 am CT close to poll

2.  U.S. Small Caps Market Timing (IWM): The breakout is still intact, and I’ve added once again to my growing position.  Small caps will be a major part of the last big blow off top in the U.S. markets. 

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

iwm-russell-2000-market-timing-chart-2018-06-01-close

Small caps have an edge with the strengthening U.S. dollar.

3. Gold Market Timing (GLD): I would expect U.S. Treasury rates to move up a bit more from here as U.S. inflation gradually rises, but not if Italy is falling apart, so playing rates here is a tricky business.  The U.S. dollar strength due to higher rates, European instability, and slower economic growth abroad are reasons gold could suffer, yet gold could benefit from a flight from the Euro if the Italy story worsens.  Still, it’s hard to make money trading gold against a strong U.S. dollar except for times of outright panic.

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

gld-gold-etf-market-timing-chart-2018-06-01-close

Gold is still fighting higher U.S. rates and a stronger U.S. dollar.

4. Interest Rate Market Timing – U.S. 10 Year Treasury Note Yield (TNX):  The 10 Year Yield rose a bit last week after a bigger fall.  For now, the 2.717% low is the Bond Bull target and 2.943% is the Bond Bear target to be captured.

First review the rate chart below and then look at the signal updates…

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

tnx-10-year-treasury-note-market-timing-chart-2018-06-01-close

Rates rising or falling? Lower than last week but bouncing.

Now let’s review three key market timing signals together…. 

Do not use these signals as a trading plan.  They are rough guidelines.  I currently share my own moves on social media (links above).

MY SIGNAL AND TREND SUMMARY for a Further U.S. Stock Market Rally with GDP Growth and Low Inflation:

Stock Signal GREEN for a further U.S. stock market rally with a Bullish SP500 Index trend.  The SPX retook the 4-18 high and the VIX dropped below 13.31. 

Gold Signal  GREEN for a further U.S. stock market rally with a Bearish Gold Trend. 

Remember GLD is being used as an indicator for the ECONOMY here. 

Rate Signal YELLOW for a further stock market rally with a Bearish 10 Year Yield Trend.  TNX must rise above 2.911% to turn back to neutral and above 2.943% to turn back to Bullish.  

I have been calling rising rates a “positive” thing for U.S. stock market gains as that is what normally happens in the late stage of recovery, yet the current situation is very abnormal.  For this reason, I will call rates above my 2.676% number, but below 2.943% YELLOW.  “Bullish” for yields is Bearish for bonds and vice versa. There is a twist here.  This level of the 10 Year Treasury Yield, which is too high for current conditions as explained HERE, will eventually slow the economy.  The market will likely be far happier if rates stay within a lower range, while not too low and not too high.

Note: I’ve updated my criteria for the equity signal for a further U.S. stock market rally to the following: GREEN = Bullish, YELLOW = Neutral, RED = Bearish.  In other words, the colors tell you whether the signal supports the stock rally or not, while the Bullish, Neutral, and Bearish designations are about the trend. 

Explanation: Note that a BEARISH signal does not mean we should not buy.  A BULLISH signal does not mean you cannot sell some exposure.  It depends on what is going on in the economy and how oversold/overbought the market is at a given point whether the Bearish signal is to be sold, sold on the next bounce, etc. and whether a Bullish signal is to be bought or if profits should be taken.  A NEUTRAL signal does not mean the end of the Bull or Bear. It means to wait and look for possible subsequent entry points within the existing trend, Bull or Bear, but preserve capital if the entry fails.  Our strong intention is to buy low and sell high.  By the way, I will keep showing the prior orange “Trigger lines” in the charts for now as reference points only; they have historical value for us from the post-2016 election period.

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 (that link will immediately connect them to this webpage) to a relative or friend.  Thanks for doing that.

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.

Finally: Excuse and report all typos if you are so moved.  I do my best to pick up most of them, but can’t find them all.  Shoot me a comment (I don’t have to post your typo report as I filter them, but I’ll be grateful to you!)

Copyright © 2018 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