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…

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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

Market Timing Brief™ for the 7-21-2017 Close: SP500 Index Near All Time High. Gold and Rate Dance May Change Direction Soon.

A Market Timing Report based on the 7-21-2017 Close, published Sunday,  July 23rd, 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: Companies that had being doing well are holding up through earnings and some that were not doing as well, such as IBM, continue to be troubled.  Thus far, 97 companies have reported Q2 earnings.  This summary shows you where the greatest growth is in both earnings and revenue for the second quarter: HERE 

On the 28th, we’ll get the first estimate of GDP for Q2, which could be between 2% (NY Fed) vs. 2.5% (Atlanta Fed), but don’t bank on those numbers, as they are unreliable historically.  They may get lucky.  A much stronger GDP number than expected will be taken as a positive reading on confidence in the Trump administration, which has been under pressure with the Russia investigation and delayed action on health care.

In market timing terms, the SP500 Index continues to make new highs against a backdrop of investor skepticism, which means there is room for a further rally.  I will continue to stay with this rally until the economy turns, the market timing technicals turn, or both.

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 28,868 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-2017-07-21-close

New highs after consolidation.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  +9.67% vs -1.39% last week.
Bullish sentiment does not generally peak out here and is likely to move to 20-30% before the Bull becomes tired again.

Thurs. 12 am close to poll Bulls               35.48% Neutrals 38.71% Bears      25.81%

2.  U.S. Small Caps: On the negative side, the small caps failed a breakout above a recent high, but on the positive side, they remain well above the orange market timing trigger line we were observing.  My IWM sell on a small pullback turned out to be premature, though my exposure to equities is still quite high.  There was not enough of a drop to make a re-entry IWM trade worthwhile.  It could be that this failed breakout will just be a minor retest of the late April high.  Remember I put my chips in the large caps and mid caps for the longer haul and use the small caps as a trading position.  

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

iwm-russell-2000-etf-market-timing-chart-2017-7-21-close

Small caps fail a breakout but above trigger line.

3. Gold: Gold is moving in the opposite direction of rates.  Keep track of the market timing of rates if you want to know when to exit a trading position in gold.  It’s possible that GLD will reach the April and June highs before this move ends, and the 10 Year Yield will move down to the June low.  It is also possible the 10 Year will respect the orange trigger line and bounce (see below).  Rates are the dog, and gold is the tail, regardless.  I own gold for insurance only, because as the economy improves, rates will rise eventually and pressure gold, which has a yield of zero. 

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

gld-gold-etf-market-timing-chart-2017-07-21-close

Gold in steady up trend with rates in steady downtrend.

4. U.S. 10 Year Treasury Note Yield (TNX): Rates are falling again.  Inflation is still reasonably contained and GDP growth across the world is a bit sluggish.  A stronger economy would lead to higher rates sooner.  The move in rates may be about done here. You can see how rates have respected my market timing “trigger line” a few times already. It’s possible that rates will bob up and down in a fairly low trading range for the next 6 months to a year, perhaps longer. Testing the June low is possible as mentioned above. Remember this decline hurts the financials (XLF).

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

tnx-10-year-treasury-note-market-timing-chart-2017-7-21-close

Rates dropping when the market had been expecting gradually rising rates.

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

Market Timing Brief™ for the 7-14-2017 Close: SP500 with New Breakout. Small Caps Hesitate Off High. Gold Bounces to Resistance. Rates Sink Post-Yellen Testimony.

A Market Timing Report based on the 7-14-2017 Close, published Sunday,  July 16th, 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 SP500 Index is at new market timing highs, while small caps are above my Bullish “Signal Trigger Line,” but hesitating to break out further.  They may yet come along for the ride.  Rates fell after the Federal Reserve Chair Yellen sounded more dovish on the margin in her testimony before Congress this week, and the banks and financials, which depend on their interest rate margins for income sank.  Inflation as measured by the Consumer Price Index was flat in June month over month and CPI was up 1.6% Y/Y while core CPI was up 1.7% Y/Y.  We are about 2 weeks away from the Q2 GDP 1st estimate results.  The market may be buoyed by positive earnings before then, and continue rallying further based on solid GDP results.  There is a Fed meeting on July 25-26 before GDP on 7-28, but they are not likely to hike again that soon given their comments this past week.

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 28,641 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-2017-07-14-close

New breakout to upside.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  -1.39% vs. -0.28% last week.  Read my comment from last week.  It still applies.  The high neutral rate itself is very positive.

Thurs. 12 am close to poll Bulls               28.24% Neutrals 42.13% Bears      29.63%

2.  U.S. Small Caps: I lightened up my equity exposure on Thursday 7-12-2017 after adding exposure back during the swoon to the low end of the recent market timing trading range on 7-6.  I am using IWM and most recently, QQQ put selling to make some trading profits, because the beta and therefore the extent of the swings up and down for these indexes is higher than for the SPY for example.  The failure to break up through the green line noted in the chart below is a negative.  I will likely add back some small cap exposure if we achieve another breakout.  Note the volume decline on the narrow price rise over the past three days, also a negative.

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

iwm-russell-2000-etf-market-timing-chart-2017-7-14-close

Failed breakout. Need a breakout soon to keep the upward momentum.

3. Gold: Last time I reported here, rates were rising and gold was falling and now we have the reverse going on in market timing terms.  A breakout above the orange line, and because it is close by, a second breakout above the aqua line will spell a real change of character for gold.  Note that GLD rose and tested the prior up trend line from below and pulled back a bit.  That itself is a possible short set-up (with a stop), but the fact that the May low held is a positive working against that.  We have a trading range until the previously mentioned breakouts occur.

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

gld-gold-etf-market-timing-chart-2017-07-14-close

Gold subject to interest rates as usual.

4. U.S. 10 Year Treasury Note Yield (TNX): Rates fell on the recent dovish Federal Reserve comments although they remain above my “Market Timing Signal Trigger Line” (orange line in chart below).  I believe if earnings remain solid (banks were so so on Fri.) as we head into the main part of earnings season, rates could test around the April or May lows to create a reverse head and shoulders formation, and then rally again.  Fiscal stimulus may be required to drive rates back above that green line on an intermediate term basis.  Investment in higher productivity is much better for our economy longer term.

Just providing tax cuts to boost spending is a temporary fix that weakens the nation’s balance sheet in the end.  It is short sighted.  Infrastructure spending could boost productivity a bit, but such moves mean little when compared to innovation and research and development with resulting new products/greater productivity.

But what kind of education do we need? Better education could be along the lines Trump has been pushing to mimic the German Hochschule model, which trains workers with specific skills instead of sending kids off to 4 year Beerfests, would allow for more of the 6 MILLION open jobs to be filled. Students who represent the upper cut of students could attend the “University” system and go on to masters and doctorate degrees.  We are not about to achieve high levels of productivity with an ignorant, unskilled nation, or “Idiocracy,” to borrow a satirical movie title. 

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

Top line reads “Treasury Yield 7-14-2017 Close, Trigger line…”

tnx-10-year-treasury-note-market-timing-chart-2017-7-14-close

Rates falling back toward the orange trigger line.

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

Market Timing Brief™ for the 7-07-2017 Close: Stocks Recover from Dip. Gold Diving as Rates Climb.

A Market Timing Report based on the 7-07-2017 Close, published Sunday,  July 9th, 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 launched what appeared to be an ICBM with a trajectory that could have brought it to Alaska, which unnerved the markets.  I pointed out on StockTwits and Twitter that there is no military solution to the situation, so none was likely.  They all involve catastrophe as the South Koreans as well as our 28,000 troops on the DMZ would be imperiled.  Kim is crazy, but not completely insane.  Trump has insisted that North Korea will never be allowed to have the ability to launch a nuclear missile toward the U.S.  The North Koreans have not yet put together all the ingredients to make that happen, so there is time to work out an agreement with them.  This is not something that can stop the stock market on an immediate basis, which is why I was buying the dip this past week (see the social media links below…).

The jobs report was strong enough this week, and earnings are going to be good this season, so I am staying invested until that picture changes.  Is there risk? Yes, because some company valuations are already stretched, but they are nowhere near 2000 levels.  The key is to maintain a certain level of profits on all your positions as the market climbs.  If you don’t do that, you are falling asleep on your prosperity.  Not a good idea!  Stay aware.

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 28,455 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-2017-07-07-close

Survived a dip.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  -0.28% vs. +2.85% last week.  Amazingly sentiment is stuck in neutral, not too hot or cold.  This is not how a Bull market ends.  There is far too much skepticism for that to happen at this time.

Thurs. 12 am close to poll Bulls               29.58% Neutrals 40.56% Bears      29.86%

2.  U.S. Small Caps: Small caps backtested my orange trigger line this week.  The way it was trading at that lower level was positive, so I bought back half of my prior trading position and also added QQQ large cap tech exposure for the same reasons.  There have been two small cap backtests of the orange trigger line coming up from the last lows.  A third test may not be taken as well however.  Small caps should move up from here based on earnings, or this may turn out to be yet another false breakout above the trigger line.  For now, I’m impressed that the two backtests were passed by the small caps.

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

iwm-russell-2000-etf-market-timing-chart-2017-7-07-close

Backtest succeeded.

3. Gold: Gold is sliding as rates are rising.  Read the comments from last week if you are not up to date.  Gold is heading lower as long as the current interest rate up trend continues.  It may not.  As the Fed raises rates, long rates and inflation may be contained.  If rates stay within a reasonable range, so will gold, despite these recent ups and downs.  For now, gold has broken the recent up trend and will likely trade down to one of the lower support lines noted in the chart below, but should rally in response to the next downturn in interest rates.

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

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

Gold is range bound, but has now broken trend.

4. U.S. 10 Year Treasury Note Yield (TNX): The rate signal for a further stock market rally is also ON.  If the economy is indeed strengthening, rates can still go up at a very slow pace, IF inflation stays low.  This week the Fed will have more inflation data out with PPI on Thursday and the CPI release Friday.  Note how the banks/financials trade with the 10 Year Yield.  Rates are up and banks are up.  Better spreads mean more profits.  If yields pull back again, the financials will also.

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

tnx-10-year-treasury-note-market-timing-chart-2017-7-07-close

Rates are climbing and the signal is ON.

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