Market Timing Brief™ for the 5-19-2017 Close (5-25-2017 China Update): What the Clinton Impeachment Did to the Stock Market in 1998. Market Timing the Mueller Russia Investigation.

A Market Timing Report based on the 5-12-2017 Close, published Sunday, May  21, 2017

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

UPDATE 5-25-17: Chinese Market Timing Chart Update

Chinese large cap stocks listed in Hong Kong (H Shares; FXI) were up nicely today and are about to test 2015 resistance at 40.59.  This progress is being made despite the downgrade of the Chinese credit status by Moody’s.  My contention as some of you know is that the Chinese economy must do well to support U.S. economic growth.  Chinese stocks are much cheaper still than U.S. stocks, so there’s more upside in valuation and the momentum appears to be building again.  The next test will be further proof for the China Bulls should FXI pass it.

fxi-china-etf-market-timing-chart-2017-05-25-close

Chinese stocks make further progress amid negative credit comments.

Now let’s get back to my previous comments on the U.S. markets, gold, etc…

1.  SP500 Index: Market timing is weak when it does not pay attention to economic correlates.  As mentioned on Friday, the NY Federal Reserve Bank’s estimate of Q2 GDP (NowCast™) is  at 2.3%, up 0.4% from their prior prediction, while the Atlanta Fed moved up from 3.6% on May 12th to 4.1% on May 16th.  Keep in mind these predictions are often wildly wrong, although the longer term trends are more reliable than the quarter to quarter estimates. 

The Bureau of Economic Analysis take one quarter and attempt to predict the entire year based on a seasonally adjusted look at GDP, a seasonally adjusted annualized rate (a.k.a. “SAAR”).  It is NOT reliable to do so.  For that reason, some look at annualized averages to smooth the data, while still attending to acceleration/deceleration in the supporting numbers.  There is a lot of guesswork in it, and I’ve seen very well-intentioned research groups fall flat on their faces in predicting the last recession that did not happen!

The key question to answer to determine what your equity exposure level should be and to engage in market timing is “Is the economy accelerating or decelerating?”  And if it is decelerating, it’s critical to get a sense of whether the deceleration is just a blip or a trend that will lead to recession.  Since the last recession, we have had decelerations that are evident in the GDP charts I’ve posted previously, but we never were tipped into a full recession, so the market simply marched higher, most recently based on expectations surrounding the fiscal policies of President Trump.

Here is where we are and then we’ll look at the Clinton impeachment stock market decline.  You can see we’ve bounced off a middle level of support within a trading range…

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

sp500-index-spx-market-timing-chart-2017-05-19-close-2

Bouncing in the vibrational range.

Only if the investigations of Trump cause businesses to scale back their plans and decelerate the economy do we have to be concerned about the longer term impact.

Now we need to prepare ourselves with the history of prior presidential impeachments (Bill Clinton was the only one impeached since Andrew Jackson, who was also acquitted by the Senate after impeachment by the House) and presidential resignations (Nixon was the only one to resign, who would have been both impeached by the House and convicted by the Senate had he stuck around for it!).

If you believe Trump’s headed to the exits (I don’t at this point, despite the risk), I would scale back to what would be somewhat lower exposure than you generally have with the idea of adding back after/if we get a 10-20% pullback or more.  Nixon left office, but at the time, the economy was a mess unlike now, so the Trump situation is more like Clinton’s than Nixon’s.  We saw a 22.45% pullback in the Bill Clinton impeachment as the monthly chart shows…

SP500-Invex-at-Clinton-Impeachment

President Bill Clinton impeachment impact on SP500 Index

Clinton was impeached on December 19th, 1998.  He then went to trial in the Senate in early 1999.  Note that the market anticipated President Bill Clinton’s acquittal by the Senate almost FOUR MONTHS BEFORE it happened on Feb. 12, 1999.  The impeachment of Clinton turned out to be a blip in a big uptrend.

There is a finite and incalculable risk that Trump will be impeached and/or removed from office.  My concern for the latter is that Trump is exhibiting behavior that smells a bit like a coverup (firing Comey for ex. and all his defensive Tweets) of what happened instead of stepping forward and cleaning up his administration.  That means he himself may have been involved in the collusion that is suspected but has not been proven.

The fact Trump publicly encouraged the Russians to hack the Clinton emails (it’s recorded on video!) certainly makes him suspect, though he could easily claim he was joking to egg the crowds on.  The best case is that he’s being defensive, because he’s protecting his guilty people without knowing who they are.  In other words, the best case is that he’s just blindly trying to shut down the investigations rather than doing so because evidence can be tracked back to his own involvement.

BOTTOM LINE: If Trump was NOT involved in the Russian interference with our 2016 Election, things will go far easier for the U.S. stock market.  There will likely be a few more bumps (dips) along the way and perhaps something a bit more serious such as a mild correction of 5-7%.  As we’ve never seen the removal of a President during good economic times, there’s no guidance from history to tell us how the economy would suffer or whether it could simply chug along.  

My guess is that either impeachment OR removal of Trump could result in a 20%+ correction/mini-Bear market.  Given the current economic picture, we should then recover once the market reassesses the future. 

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 27,221 people are joining in…

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

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  -10.40 from +2.51% last week.  AAII has found that Neutrals being over 40% is a Bullish finding the vast majority of the time in predicting the level of the market 6 months out. It is one of the strongest predictors they have discovered.

Stay long despite the Trump investigations is my take on it.  By the way, a -10%ish Bull minus Bear spread is not that Bearish.  Typically moves to minus 20-30% or more mark temporary and important lows.  The most important lows have very extreme sentiment readings.  We have not seen that.  Dip buyers are stepping in on cue.

Thurs. 12 am close to poll Bulls               23.85% Neutrals 41.90% Bears      34.25%

2.  U.S. Small Caps (IWM,RUT): Small caps never kept their gains above the signal level (top red line) and came close to testing the March market timing low, but not quite.  We cannot know how the investigations will inflect the course of the market, but we’ll stick with trading the range at its extremes.  Right now, we’re in the middle of the range which is not the place to bite unless you are underexposed to equities.  If you are new to this Bull market, you may have to bite every dip you see to participate.

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

iwm-russell-2000-etf-market-timing-chart-2017-05-19-close

Still below signal level.

3. Gold (GLD): Gold is not a good bet in times of positive real interest rates that the markets saw coming after Trump was elected, but in times of turmoil, gold regains a bit of shine.  I believe this market timing move could be short lived, so trade accordingly and keep a good piece of your profits if you bought lower.  Even if gold does well in a period of turmoil leading up to a possible impeachment (not a given), it will have problems thereafter if the economy continues to grow.

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

gld-vs-tnx-market-timing-chart-2017-05-19-close

Gold bounced further on special prosecutor news.

4. U.S. 10 Year Treasury Note Yield (TNX): It’s fascinating that the 10 Year Treasury Yield tested the market timing “trigger line” I defined several weeks ago (orange line in the chart below)Of course, that line is fairly close to the 4-18-2017 low.  If the recovery is still the belief of the market, that trigger line should hold.  If not, beware, because the market may have decided that Trump’s agenda is in trouble…

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

tnx-10-year-treasury-note-market-timing-chart-2017-05-19-close

Rates test the trigger line but bounce.

MY SIGNAL SUMMARY for a Further Trump Stock Market Rally is:

Stock Signal OFF, Gold signal ON, Rate Signal ON.

Again, these signals are close to their switch points and all three must be confirmed to say the Trump Rally is back on track.

Thank you for reading.  Would you please leave your comments below where it says “Leave a Reply”… or feel free to ask a question…

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

Market Timing Brief™ for the 5-12-2017 Close (5-19-2017 SP500 Update): Go Away in May? Stock Signal Vacillating but OFF. Gold and Rate Signals On.

A Market Timing Report based on the 5-12-2017 Close, published Sunday, May  14, 2017

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

UPDATE 5-19-2017: Bounce Attempt Under Way

There is a bounce attempt under way, but the volume behind it is weak across large to small caps.  In addition, at least for the SP500 Index, we’re already about half way back to the prior high.  I was already well exposed to the market (numbers on social media), so I have not added here, but it’s a possible place to add a bit of exposure if you are underexposed to equities.  It’s obviously not the best place to add as volatility has already fallen dramatically off the highs.

The lack of volume at this point can be remedied if more Bulls step up as does happen on some bounces – that is, initially there is a lag in buying and then it kicks in at higher prices.  Without that volume, the market is not a great buy at this point…unless as I said you were underexposed to equities in the first place, and then I would add in steps as we may yet retest the low or find a new low based on the immediate news flow.  In a Bull market the game is to buy the pullbacks, not chase the highs.  Have a plan for these pullbacks and act when they arrive…

sp500-index-spx-market-timing-chart-2017-05-19-1030am

Bounce on light volume.

And now back to this week’s issue….

1.  SP500 Index: The market has to wonder about President Trump’s ability to move his agenda forward when he is bringing the entire focus of the government and the American people to the firing of James Comey, now the former Director of the FBI.  Directory Comey behaved badly prior to the election according to both parties, but the disruption of the ongoing investigation into the Trump election campaign through this firing looks suspicious to most.  Trump will have to refocus the nation’s attention elsewhere very quickly or his agenda will likely lose momentum.

Retail sales gains this past month under-performed expectations of a 0.6% increase coming in at 0.4%.  It’s still probably good enough for the stock market, which now expects stronger growth through the end of the year.  We’d better get it!  This was despite the cratering of Macy’s stock on Thursday (minus 17%) and Friday (minus 3%).  Amazon and other online businesses are eating Macy’s business up, despite its own efforts to have an online presence.  This is a trend that will likely get worse before it levels out into a steady state.

Normally this is “go away in May” time, and looking at the SP500 Index chart below, just coming down off the all time high would be a convenient spot to “go away.”  Yet, if growth does come through in the coming quarters, you’ll want to be IN this stock market.  If you are market timing the small moves, you’ll have to be nimble, or you’ll miss part of the gains to come.

Continue reading, and I’ll tell you when I will lower my stock market exposure and summarize the “Three Signals” for a further Trump Rally at the end…

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 27,053 people are joining in…

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

sp500-index-spx-market-timing-chart-2017-05-12-close

Backing off the high.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  +2.51% vs +8.12% last week.  Investors just can’t get excited with the market near all time highs.  This is a BIG misunderstanding.  Markets that make new highs often head higher not lower.  Although the US market has had a good run, I do not believe it is over yet, because there is more growth in the economy ahead.  When that reverses, we’ll have to lower our exposure again.

Thurs. 12 am close to poll Bulls               32.73% Neutrals 37.05% Bears      30.22%

2.  U.S. Small Caps: Small caps indeed gave up their breakout above my “number” noted in the chart below (in white; top left).  They are virtually resting on a prior support level as you see on the market timing chart below.  As long as this Trump mess does not blow up further, small caps should move higher from here.  Any further weakness could bring a lower test to 133ish.

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

iwm-russell-2000-etf-market-timing-chart-2017-05-12-close

Small caps pulled back to support, below the key breakout number.

3. Gold: Gold is bouncing as rates resume their fall as shown HERE (note the negative market timing correlation of GLD to the 10 year Treasury Yield in yellow) Gold is something you should hold for currency insurance in my view and is not a trading buy at a time when the economy is due to accelerate.

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

gld-vs-tnx-market-timing-chart-2017-05-12-close

Gold bounces as rates fall once again.

4. U.S. 10 Year Treasury Note Yield (TNX): Rates started falling again at the end of the week breaking the market timing trend as shown in the chart Please note the trigger number in the chart.  Below that line, the “Trump Rally” comes back into question.

I am going to keep the same trigger points for both GLD and TNX despite the moves at the end of the weak and the breakdown of the stock signal.  The stock signal could switch back on and then off again for all we know until the next trend defines itself.  Remember that the game is use market timing parameters to buy the low end of each downward move in a Bull market and this IS very much still a Bull market despite all the warnings you hear.

MY SIGNAL SUMMARY for a Further Trump Stock Market Rally is:

Stock Signal OFF, Gold signal ON, Rate Signal ON.

Again, these signals are close to their switch points and all three must be confirmed to say the Trump Rally is back to a GO.

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

tnx-10-year-treasury-note-market-timing-chart-2017-05-12-close

Rates break the trend line to the downside again.

Thank you for reading.  Would you please leave your comments below where it says “Leave a Reply”… or feel free to ask a question…

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

Market Timing Brief™ for the 5-05-2017 Close: Macron Wins in France. All Signals GREEN for Trump Rally Resumption.

A Market Timing Report based on the 5-05-2017 Close, published Sunday, May  7, 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 French election came out as a big win for Macron (received >65% of the vote), who now needs to find legislators to support his new party.  The French Parliamentary elections are in June.  Our markets may rally a bit more given this result, although it was widely anticipated.  In fact, I saw it as a plus for US markets had the radical (read that racist) candidate won.  It would have destroyed the EU as a trading block.  Yes, it would have also created a near term mess, but the U.S. would have benefited.  Of course, it’s better for European unity that he won.

US Employment was stronger than expected for April at 211,000 vs. the 185,000 consensus (@Bloomberg).  This is enough for the Bulls to move forward with the expected acceleration in GDP through the end of 2017.  In fact, for Q2, the Atlanta Fed expects 4.2% GDP growth (seasonally adjusted Q/Q annualized growth rate, also adjusted for inflation) vs. a puny 1.8% for the Federal Reserve Bank of New York.  This is absurd isn’t it?  That two Federal Reserve Banks can differ so much in their estimates of GDP is remarkable.  In any case, it will be a big acceleration from Q1 GDP which was at just 0.7%.

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 26,922 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-2017-05-05-close

Up against the resistance of the prior high.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  +8.12% vs. +6.34% last week.  This is a joke in terms of Bullishness!   The reluctance of investors to embrace the stock market near all time highs is remarkable and says there is more ahead for the Bulls.

Thurs. 12 am close to poll Bulls               38.07% Neutrals 31.98% Bears      29.95%

2.  U.S. Small Caps: My latest small cap trade is back to green.  It was a fairly shallow fall as you see on the chart below.  The small cap stock signal is also back to GREEN (see below for the other 2 signals). 

Remember that if you have a long term outlook, it’s important to keep your long exposure long enough to avoid taxes if that is an issue.  It’s also important to avoid being out of the market when it’s rising rapidly, as if you miss those gains, being in the market late raises the risk level of holding stocks.  At the same time, I like to trade out of part of my long equity exposure near highs and go back in near lows, generally when the near-term outlook is cloudy.  This is why I coined the term “Passive Shorting” HERE.

I added back my recent small cap trading position (IWM) and also added more exposure to my midcap position (IJH; which accrue about the same gains as small caps over time with lower risk since they are larger companies).  See the social media links for my current exposure to equities.

Note that being just above the 138.82 signal means the signal COULD reverse.  Climbing back above that level is just the first step in proving the market believes in “Trump Growth.”

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

iwm-russell-2000-etf-market-timing-chart-2017-05-05-close

Small cap signal for a further stock market rally back to ON.

3. Gold: This is a continuation of the prior selling.  I’ve explained why this is happening, so go to prior issues to review the situation.  For now, growth wins over gold.  The markets are expecting further economic expansion.

Gold ETF (click chart to enlarge the chart; GLD): Chart is of the 5-05-2017 CLOSE NOT 5-7 obviously…

gld-gold-etf-market-timing-chart-2017-05-05-close

4. U.S. 10 Year Treasury Note Yield (TNX): Short of further fears based on North Korean craziness from Kim or a Russian US confrontation in Syria, or as we’ve been hearing, along the Alaskan border, I expect the current up trend to continue.  Please note the trigger number in the chart.  Below that line, the “Trump Rally” comes back into question. 

MY SIGNAL SUMMARY for a Further Trump Stock Market Rally is:

Stock Signal ON, Gold signal ON, Rate Signal ON.

Again, these signals are close to their switch points and this means the rally must be born out, by having stocks, gold, and interest rates all continue to trend in their current respective directions.  All three must be confirmed.

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

tnx-10-year-treasury-note-market-timing-chart-2017-05-07-close

Rates climb further – note it’s back above the white (upper) trend line.

Thank you for reading.  Would you please leave your comments below where it says “Leave a Reply”… or feel free to ask a question…

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

Market Timing Brief™ for the 4-28-2017 Close: Stocks Barely Holding Onto Breakouts. Gold and Treasuries Ease.

A Market Timing Report based on the 4-28-2017 Close, published Sunday April 30, 2017

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

Signal Update 4-30-2017: The Stock Signal is still ON but barely after the pullback on Friday. Gold and 10 Year Treasury Yield Market Timing Signals are also ON provided they don’t break through specified levels to the upside and downside, respectively.  Remember that a gold rally or interest rate decline is a NEGATIVE market timing signal for a further Trump stock market rally, which is the point of the “Three Signals” I am following.  Please see the revisions to Gold and Bond/Treasury Signals (blue paragraphs near top): HERE 

1.  SP500 Index: Consensus for US GDP (quarter over quarter growth seaonally adjusted and projected forward 1 year) per Bloomberg was 1.1% with a range of 0.7 -1.7%. The actual number was 0.7% though the year over year growth was better at 1.9%.  The number was not seen as a disaster, because the markets believe things will improve into the second quarter and beyond into year end.  They see the softness projected forward by the Q1 data as temporary.  You can review the data for GDP headline results HERE.

In the meantime, the SP500 Index market timing breakout is still intact as the chart below shows.  Small caps had a harder day on Friday, during which I took profits out early on.  Yet, the stock market timing signal remains, just barely, in the ON position.

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 26,733 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-2017-04-28-close

Prior breakout still intact despite slight dip…so far.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  +6.34% vs -12.99% last week.  Still, this is very weak net Bullish sentiment near market highs and suggests there is more to come in this rally. 

Thurs. 12 am close to poll Bulls               38.05% Neutrals 33.24% Bears      31.71%

2.  U.S. Small Caps: I was early buying back the small caps after taking a prior trading profit, but it turned into a profit anyway (see social media for actual results).  You don’t always have to pick the exactly perfect entry point to make a profitable trade.  I’ll wait now to add further exposure in either 1. A deeper pullback OR 2. A run higher and buy on the first pullback in that run.

In other words, I don’t in general like to “chase” and instead look for the market direction and then buy the pullbacks to get on board or expand exposure.  Sure there is a risk of “missing” a few percentage points, but remember that my exposure is already high, and I’m simply trading around it to pick up some additional profits and lowering risk a bit when I drop my exposure level.

If that sort of trading at the margin doesn’t suit you, don’t do it!  Find a plan that works for you and then STICK TO IT!  If you freeze when you PLAN to sell, you have no plan.  If you don’t have a plan, you’ll never improve your investing and trading except by bumbling into success.  I choose and teach a conscious investing and trading path…

The small cap market timing signal is still ON for a “further Trump Rally” as long as it’s above the key level noted on the chart in the upper left (top red line). The failure to achieve a brand new high above 140.86 is already a sign of some weakness however temporary.

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

iwm-russell-2000-etf-market-timing-chart-2017-04-28-close

Small caps backtesting the prior breakout (note white number to far left at top of chart!  That is the breakout level.).

3. Gold: Gold pulled back as rates rose and stocks broke out.  The market timing dance is working as advertised.  Gold can rise either because Trump’s tax “reform” giveaways cause inflation that exceeds the Fed’s efforts to contain it OR because growth is lousy and real returns in the stock market go flat with mild inflation.  The latter combo still gives you negative real rates, which gold LOVES.  If real rates of return in either stocks or bonds are high, gold tends to do relatively badly, sometimes over very extended periods of time (e.g., 1990’s).

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

gld-gold-etf-market-timing-chart-2017-04-28-close

Gold eases as stocks rise.

4. U.S. 10 Year Treasury Note Yield (TNX): Rates rose as stocks rose, which is the expected market timing dance around another successful UP leg in the Trump rally, but at the end of the week, rates slipped and gold caught a bid with small caps retesting their key breakout…so the Trump Rally market timing signals are right on the edge…  There is more information about the economy due out this week (ISM manufacturing and services as well as the “Employment Situation” jobs numbers on Friday May 5th) and a Fed meeting ending Wednesday May 3rd (statement release only after the meeting; no dog and pony show until June meeting; no rate hike expected by the market per the CME Group). Nevertheless, the Fed Statement or the data could push the market into its next significant move.  Stay tuned on social media at the links above…

Finally, remember geopolitical risk is not gone yet.  North Korea tried to launch another missile which failed, but called into question China President Xi’s ability to twist Kim’s arm.  Trump seems to enjoy saber rattling, although I’m sure the troops on the DMZ and the South Koreans don’t appreciate it much.  They are on the line here if there is any crazy military action taken.  As I laid out in prior issues, there are NO military options because they all end in human disasters.

If the North Koreans were to misfire a missile into Japan (they hit the Sea of Japan not long ago) or fire a rocket into South Korea, the 10 Year Treasury will rally hard, stocks will plunge (5-10% in days) and gold will fly.  There is always a risk, although close to zero, of “totally crazy” manifesting.  The lifting of this cloud should help the markets as will a defeat of the right wing candidate (it does not deserve to have its name mentioned – too lacking in humanity for that)  in the French election next Sunday. 

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

tnx-10-year-treasury-note-market-timing-chart-2017-04-28-close

Rates must rise with economic expansion. The decline in rates is a negative for further progress.

Thank you for reading.  Would you please leave your comments below where it says “Leave a Reply”… or feel free to ask a question…

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, mid-cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , | 4 Comments

Market Timing Brief™ for the 4-21-2017 Close (Updated 4-24-2017 AND 4-26-2017 for Small Caps and Gold/Treasury Signal Revisions): 100 Days and Counting In a Sideways Market. Gold Still a Bull. Rates Say No to Growth.

A Market Timing Report based on the 4-21-2017 Close, published Sunday April 23, 2017

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

UPDATE 4-26-2017: Stock Signal ON. Revision to Gold and Bond/Treasury Signals

Small cap stocks (IWM) have given the market timing “all clear” for a big, new leg UP in the Trump Rally.  We are above my breakout number (see chart below for the number).

But what about the gold and interest rate signals that are also keys to a new rally?  Market timing signals need to be grown organically through observation.  Since gold and Treasuries/Bonds overshot to the upside, it would not be reasonable to use the prior markers as the trigger points.  The initiation of a step-wise DECLINE even on short term charts in gold (GLD) and a RALLY in rates (TNX; remember, rates up = Treasuries and bonds down) can be taken in my view as a confirmation of the market timing breakout of small caps (see IWM chart if you don’t know what that is or yesterday’s Tweets/Twits on social media!  I try to not make it too easy for crawlers to find my breakout numbers.). 

NEW Gold and Treasury Signals: First, note that “ON” for each signal means it is confirming a further RALLY IN STOCKS.  I am using short term market timing chart trends to say the recent trends in gold/Treasuries are reversing: for GLD we’ll use 122.61.  A move above there means gold has recovered into possible Bull mode and the signal is OFF (remember, gold tends to do poorly when real returns above inflation are HIGH, so economic growth and gold go in opposite directions as long as inflation stays subdued.  One can argue the latter with rising deficits under an aggressive Trump tax cut plan.) 

The 10 Year Treasury Yield Signal will be considered OFF if it sinks below 2.209%.  Below there the prior trend may be reasserting itself. 

Given the above definitions I am considering all three market timing signals as ON, meaning there is another leg to this Trump Rally ahead of us.  I remain overexposed (see Twitter/StockTwits for numbers – I print them generally after each trade.) to the market vs. my “usual exposure.”  I will talk about this over the weekend in my next post, but I believe that however misguided the Trump Tax Plan is fiscally (will heap LOADS of debt on our children), it will fuel a major leg in the stock market rally.

Remember that market timing signals do not mean once ON they have to stay ON.  Sometimes they are triggered, and we see reversals in the same day or week.  A test of a breakout is just that.  It must be verified by continued buying and a continued uptrend after the breakout despite any normal backtesting that may occur. 

A Warning: We generally DO NOT buy breakouts (unless for a single company with fantastic news that will drive earnings for many quarters to come for ex.), but instead we buy the pullbacks in index ETFs BEFORE the breakout as we just did with IWM.  If you buy a breakout, wait for the first pullback after the breakout (unless things have changed in a big way economically etc. to explain the pullback, in which case you may choose to pass on buying), and you’ll often get a better entry point.

UPDATE 4-24-2017: Le Pen to Lose French Election on March 7th per Markets and World Markets Rally

We will have a GREEN Stock signal in my three signal predictor of a “further Trump Rally” if small caps can close above the critical level shown in the chart below (Green Line at top).  The gold and 10 Year Treasury Yield signals will take a while to turn positive again, but if they are trending down with an IWM win, I’ll take that as a sign that the markets are ready for more gains in stocks.   Once again, the market “has my number,” which simply means the number marking that green line is what the market is now trading around, currently at 138.83 having moved to a high of 139.34 earlier.  Watch that number (testing back BELOW the breakout to 138.70 as I type this).  A close back below the key level will be a negative in at least short term trading. 

The GDP number on Friday is still extremely important to the market.  A number that is too weak will be evidence that the market is more overvalued than investors currently believe.  To be clear, I still believe there is another big push up left in the markets based on further Trump wins, like him or not.  That’s why I remain long with overexposure vs. the usual maximum exposure level (follow social media links for my actual exposure level).

iwm-russell-2000-etf-market-timing-chart-2017-04-23-1024am

Small caps break out…if the gains hold into the close.

And now back to this week’s issue. Read it to understand the set-up for the U.S. GDP release on Friday…

1.  SP500 Index: Gold and bonds/Treasuries have direction, but stocks still do not. The big number out this week, really big, is the U.S. GDP report on Friday at 8:30 am ET.  Market timing mavens need to wake up for this.  The Atlanta Fed expects almost no growth with their seasonally adjusted annualized rate of GDP growth at just 0.5%.  On the other hand, the New York Fed predicts much stronger growth at 2.7% for Q1 2017 and 2.1% for Q2 2017. Consensus per Bloomberg is 1.1% with a range of 0.7 -1.7%.

That tells you pretty much how well these numbers are predicted!  And those are their predictions just 4 working days ahead of the number’s release.

A strong GDP number could help the market extend the current rally to a new leg up.  A very weak number could cause a further dip/correction, as most feel the market is somewhat overvalued.

If we are in the late innings of an economic expansion, we should expect one more push up by the economy and the markets in my view.  Market timing based on valuation is notoriously faulty.  Valuations can certainly help you rebalance your porfolios to a lower equity exposure, but I’m not doing that at this point in the cycle.  My working hypothesis is that Trump Growth will occur due to fiscal policy changes (however delayed) and push this market up one more time prior to a more significant correction. 

Remember that the market doesn’t like uncertainty, so the French election of Marie Le Pen, an anti-immigrant racist (“they’ll steal the wallpaper off your walls” and “rape your wife.”)  would upset the markets temporarily, but remember that as with Brexit, a Frexit would help the U.S. by dissolving the EU Trading block.  The EU cannot survive without France.  It would have no credibility with the UK now also gone.  That would destroy the European currency.  I think the entire experiment was dumb.  Our country is one in which states that are incredibly different are now stuck together.  Texas and California would not agree to be a part of the same country in a 2017 referendum.  There is no unified fiscal discipline in Europe and given that, there can be no viable European Union.  Security issues are also a problem across nations in the EU.

If our markets were to go down on a Frexit from the EU, it would be a buying opportunity.

We’ll continue to follow my 3 signals defined in early February HERE.

As of today the signals are still ALL off for a continued Trump Rally: STOCK SIGNAL: OFF.  GOLD SIGNAL: OFF ( means gold is rallying).  INTEREST RATE SIGNAL: OFF (means Treasuries/bonds are rallying).

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 26,570 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-2017-04-21-close

A strong GDP number will push the market to new highs.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  -12.99% down a bit more from last week’s -8.41%.  These numbers confirm our strategy to buy the dips given investor sentiment is this bad near all time highs in stocks.

Thurs. 12 am close to poll Bulls               25.71% Neutrals 35.59% Bears      38.70%

2.  U.S. Small Caps: I’m now in the green in my “early” buy in IWM.  Buying at the low end of the range is a routine market timing maneuver.  Even if you don’t trade, I recommend you time your new buys using new capital in this way.

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

iwm-russell-2000-etf-market-timing-chart-2017-04-21-close

Small caps bounce off the prior lows.

3. Gold: Gold is still happy with crashing rates and geopolitical nonsense going on including a French election that could destroy the European Union.

Europeans hiding in gold of late could come OUT of hiding if Le Pen loses and sell.  A Le Pen victory on Sunday, May 7th could add some fire to the gold rally.  Gold has entered a consolidation over the past few days.

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

gld-gold-etf-market-timing-chart-2017-04-21-close

The destruction of the Euro on a Le Pen victory would drive gold up further.

4. U.S. 10 Year Treasury Note Yield (TNX): The financials are testing the January lows still, based on the dive in interest rates in March.  If the GDP number is “hot,” yields will shoot up quickly.  If very cold, the 10 Year Treasury Yield could easily revisit the Election Day levels.  Remember too that US Treasuries see a market timing rally if the Euro is doomed by a Le Pen win on May 7th – a flight to safety rally away from the Euro.

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

tnx-10-year-treasury-note-market-timing-chart-2017-04-21-close

Rates showing no signs of a rally. GDP could change that.

Thank you for reading.  Would you please leave your comments below where it says “Leave a Reply”… or feel free to ask a question…

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, mid-cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , | 2 Comments

Market Timing Brief™ for the 4-18-2017 Close: Stocks Pumped Up by Trump, Now Sagging. Gold and Treasuries In Big Rallies, Are Not Waiting.

A Market Timing Report based on the 4-18-2017 Close, published Tuesday April 18, 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 index is sagging but not broken on a market timing basis.  The market ran up fast after the election.  I anticipated that and added exposure prior to the election in order to be fully invested.  My theory was that the market just wanted the uncertainty to end, and it would end either way.  President Trump’s entry was more exciting with the election evening dive, but the recovery was swift.  I’ve continued to add exposure slowly on pullbacks, most recently adding some small cap exposure.

If Q1 GDP is as bad as the Atlanta Fed is guesstimating (0.5%!), the market could sink further prior to the actual enactment or visibility thereof of Trump economic policies, both tax reform for companies and for individuals.  If GDP surprises to the upside by a big degree, the buying opportunity of today will be in the rear view mirror very quickly. We’ll be finding out the answer on GDP at the end of the month.

There is another looming set of issues…geopolitical.  Any threat of war such as we are hearing about with North Korea gives the market gitters.  Nuclear weapons are being discussed as an option by the insane Kim, who knows how to manipulate people.  President Trump is not helping either by saying the prior tolerance of misbehavior won’t be his course.  But what does that actually mean practically speaking?

President Trump has two options, both horrible really: conventional attack which will immediately imperil millions of South Koreans and 28,500 US troops at the DMZ.  The second option is nuclear war which would only be started by Kim, but it’s obviously a horrible idea for both sides.  I don’t believe either option is realistic and therefore my sense is that Trump is bluffing.  If so, he’s trying to get leverage for negotiation via China to settle the whole thing down and contain North Korea’s aspiration to build an ICBM that can level Los Angeles with a nuclear weapon attached.  But in the meantime, markets HATE uncertainty and the situation with North Korean needs to be overcome for the markets to be at ease. 

Dropping the “Mother of all Bombs” on ISIS tunnel systems in Afghanistan actually named for real the “Massive Ordinance Air Blast,” also made the world a bit more on edge about the war with ISIS.  The ISIS war is a chronic issue that the market has been willing to ignore. That would change if Trump puts American soldiers in harm’s way in large numbers.  The markets would react negatively to a major new war effort in the Middle East involving our troops. 

sp500-index-spx-market-timing-chart-2017-04-18-close

Off a retest low, but still waiting for Trump to succeed in enacting his plans.

We’ll continue to follow my 3 signals defined in early February HERE.

As of today the signals are still ALL off for a continued Trump Rally: STOCK SIGNAL: OFF.  GOLD SIGNAL: OFF ( means gold is rallying).  INTEREST RATE SIGNAL: OFF (means Treasuries/bonds are rallying).

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 26,202 people are joining in…

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

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

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  -8.41%, just a bit more Bullish than last week’s -11.32%.  Buy the dips as long as investors are squeamish about stocks near the all time highs!

Thurs. 12 am close to poll Bulls               28.97% Neutrals 33.64% Bears      37.38%

2.  U.S. Small Caps: I bought a bit ahead of the retest, but the low has held.  Buy low when you can.  Obviously a breach of the top red line might lead to a bigger dip/correction.  That would be an even better buying opportunity barring some sort of international disaster (a conventional war against North Korea for ex.).

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

iwm-russell-2000-etf-market-timing-chart-2017-04-18-close

Also waiting! Buy the dips IMO.

3. Gold: Finally, gold was able to break out to a brand new recent high.  That is impressive and says that investors are very hesitant, both about Trump’s prospects (I believe they are underestimating what he’ll be able to do – speaking without reference to politics!) as well as his handling of the geopolitical scene. 

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

gld-gold-etf-market-timing-chart-2017-04-18-close

Another breakout amidst uncertainty at home and abroad.

4. U.S. 10 Year Treasury Note Yield (TNX): That white triangle we’ve been watching is a goner!  Left behind as rates plunged!  Notice election day on the chart below?  We’re time traveling back to November 8th in market timing terms below the bottom white trend line.  It is not what economic Bulls want to be seeing.  Financial stocks don’t like this at all.  You can look at any of the financials since the election or look at XLF (the financial sector of the SP500 Index) and see that it is testing the January 2017 low.  The current breakdown in yields is a major disappointment for growth Bulls.

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

tnx-10-year-treasury-note-market-timing-chart-2017-04-18-close

Treasuries predicting a very slow economy.

Thank you for reading.  Would you please leave your comments below where it says “Leave a Reply”… or feel free to ask a question…

Note: My monthly newsletter is now CLOSED to new subscriptions until late this year.  I’ll let you know here if 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, mid-cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , | 2 Comments

Market Timing Brief™ for the 4-07-2017 Close: Stocks, Gold and Rates Stuck.

A Market Timing Report based on the 4-07-2017 Open, published Sunday April 9, 2017 (well OK, 12:58 am Monday the 10th!)

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

This is a tax time special…long on charts, but short on words.  The set-up is the same as last week, given the assumption that the low employment growth in March was a “one off” weak data point.  The market is waiting for signs that Trump’s economic growth plans are going to manifest. We’ll continue to track the 3 market timing signals we’ve been watching since early February to show us the way.

1.  SP500 Index: Off the all time high, but not by much.

sp500-index-spx-market-timing-chart-2017-04-07

Stuck in a trading range.

Continue to follow my 3 signals defined in early February HERE.

As of today: STOCK SIGNAL: OFF.  GOLD SIGNAL: OFF.  INTEREST RATE SIGNAL: OFF.

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 26,202 people are joining in…

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

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

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of  -11.32% vs -7.16% last week.  Once again, this is NOT what we expect to see at all time highs in the markets, at which point investors should be excited to own stocks, so despite any dip or correction that may occur, the Bull run is not over.

Thurs. 12 am close to poll Bulls               28.30% Neutrals 32.08% Bears      39.62%

2.  U.S. Small Caps: I re-entered a small cap position last week, a bit early in market timing terms. The small caps bounced off the top red line in the chart below.  We will continue to look for opportunities to “buy low” as this Bull market continues. 

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

iwm-russell-2000-etf-market-timing-chart-2017-04-07-close

Small caps stuck too, more so than large caps.

3. Gold: Gold failed another market timing test of the February high.  It will likely be “interest rates up and gold down” if Trump succeeds, but if he doesn’t OR if the Fed falls behind on inflation, gold can do well.

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

gld-gold-etf-market-timing-chart-2017-04-07

Gold fails another breakout.

4. U.S. 10 Year Treasury Note Yield (TNX): We are testing the lower white line in the market timing triangle yet again.  The behavior of the 10 Year Treasury is probably our best “tell” on whether the market believes in “Trump Growth” or not.  So far, it’s a big fat “maybe!”  “No” would be a market timing move below the magenta line and “Yes” would be a move above the green line.

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

tnx-10-year-treasury-note-market-timing-chart-2017-04-07

Rates also stuck in a range and the move out will be telling.

Thank you for reading.  Would you please leave your comments below where it says “Leave a Reply”… or you should also feel free to ask a question…

Note: My monthly newsletter is now CLOSED to new subscriptions until Dec 2017.  If all goes as planned, I will reopen the wait list for the end of December/January Issue in December.

Be sure to visit the website for more general investing knowledge at:

Sun and Storm Investing™

Standard Disclaimer: It’s your money and your decision as to how to invest it.

I thank Worden Brothers for the charting system I use to post these charts.  If you want to know more about the charting system I use every day, go to my “Other Resources” page here:  Other Resources   It makes it much easier to follow along with me if you can see the charts and manipulate them on your own computer.  It’s a great investment to have an excellent charting system.  Check it out with a free trial at the link above.

Copyright © 2017 By Wall Street Sun and Storm Report, LLC All rights reserved.

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