Market Timing Brief™ for the 2-24-2017 Close: Stock Market Timing Signals OFF Again. Gold Strong and Rates Falling.

A Market Timing Report based on the 2-24-2017 Close, published Sunday February 26, 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:  Are you market timing the Fed?  The Federal Reserve Minutes were released on Wednesday and indicated a Fed that wants to hike, given the inflationary pressure they see, but the bond market pretty much laughed in their faces and Treasury yields fell.  Of course, they fell abroad too.  Review my comments about the three signals we are following: HERE.  All three signals are now off again, although the stock signal may switch back if it does so in the next few days.  The PMI numbers on manufacturing and services are the only data out this week of note.

The U.S. GDP number due out Tuesday is a second revision of Q4 GDP, which should be higher than the prior estimate per Bloomberg News (2.0-3.1% vs. 1.9% prior (1st estimate).  If it is pushing the high end of that consensus range, rates would rise again.  Stocks would also likely rally.  Growth is what the market is yearning for in the numbers.

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

sp500-index-spx-market-timing-chart-2017-02-24-close

SP500 Index moves up to another higher level of consolidation.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +6.15%, up from +0.73% last week.

Thurs. 12 am close to poll Bulls               38.46% Neutrals 29.23% Bears      32.31%

There’s still not enough Bullishness among individual investors to call this a top.   The one negative of this could be that IF we do have a dip from these levels due to some economic number or outside factor, investors may feel their fears were warranted, and the pullback could be a bit deeper than it otherwise would be.  The Bull would likely then resume until euphoria sets in and people who  are not invested in stocks are being called “dumb.”  Then we will sell some or tighten our stops.

2.  U.S. Small Caps:  We finally had the small cap market timing confirmation with the breakout to new highs I was looking for, and suddenly we have a failure or at least a retest in this last pullback.  The stock market signal for a continued strong, broad based rally is now OFF despite what the SP500 Index may do.  Its days will be numbered too if this week small caps cannot reverse their breakout failure.

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

iwm-russell-2000-etf-market-timing-chart-2017-02-24-close

Small caps led the Trump Rally up and then stalled. After breaking out to new highs they “gave it up,” which is a negative.

3. Gold: You could guess that the rise in gold signals inflationary fears, but rates are moving in the wrong direction for that.  Instead gold is still being used as a hedge against falling interest rates or at least negative or at least very low real rates.  Gold should be falling in the scenario known around here as “TrumpFlation,” growth with inflation.  Spending fiscal dollars has a cost known as inflation.  If we get little growth from the spending, we could have stagflation instead.  Not at all what the stock market was expecting when it rallied.

The Bear wedge shown below in magenta needs watching as a market timing signal.  It MUST be cut through to the upside for the gold rally to continue.  The one promising sign was the rise in volume with the last bump up on Friday.

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

gld-gold-etf-market-timing-chart-2017-02-24-close

GLD must break through the top edge of the upward wedge.

4. U.S. 10 Year Treasury Note Yield (TNX): We’re now even further below the 2.489% market timing resistance level I noted many weeks ago.  I said last week, “The trade is in the direction of resolution of this [white] triangle.”  If that breaks to the downside, “TrumpFlation” is off.  Below there, the market would be saying it expects slow growth at best and no significant inflation requiring Fed hikes.  2.309% is the magic support number at that magenta line in the chart below.  Follow it with me next week.  See you on Twitter/StockTwits this week!

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

tnx-10-year-treasury-note-market-timing-chart-2017-02-24-close

10 Year Yield falling again and on last support (magenta line).

Now please leave your comments below where it says “Leave a Reply”… just scroll down and comment or ask a question…

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the April 2nd issueNote that if you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

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 2-17-2017 Close: Stock Market Timing Signal Is ON but the Fed Can Kill the Market. Gold AND Treasuries Rallying.

A Market Timing Report based on the 2-17-2017 Close, published Sunday February 19, 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: What’s the market timing “signal count” you may ask?  We still lack 2 of 3 signals for the next leg of the stock market to be sustainable.  Review my comments: HERE   As you’ll see, the gold and rate signals are OFF, which means they are rallying.  On the other hand, small caps are now verifying the new highs in the large caps although just barely as noted in the IWM chart below.

The Federal Reserve Chair Yellen’s remarks before Congress this week indicated an increased concern for inflation and a willingness to hike, given supportive data.  Despite that, the CME Group data showed little change with just 17.7% expecting a move in March.   That is what is called “not being priced in” by the market.   Either the Fed is bluffing or the market will be caught by the next rate hike arriving much sooner than expected.

There is a potential for a “black swan” European event, one that is becoming more obvious at this point, namely the election of Le Pen in France with an accompanying #Frexit from the European Union.  That would potentially end the EU, or at least its long term viability.  Read about it HERE

A Frexit from the EU could present our next market timing buying opportunity as we saw after #Brexit, when investors understood that Brexit actually helps the U.S. rather than hurts it, because it can make competitive agreements with each European trade partner rather than being subject to the EU negotiating as a cohesive unit. Note that a Frexit would cause a big drop in European stocks in Euro terms.  The Euro would likely crash below 0.95 US dollars.

The good news is that the U.S. market has room to move still higher.  Valuation alone does not stop markets as we learned back in 1998-99, but may suggest one should not be over-leveraged in stocks at this point.  The long sideways move of the Sp500 Index in December and January allows for a further upswing here.

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 24,533 people are joining in…

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Take a look at the chart now and you’ll see the current consolidation setting up for the next move…

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

sp500-index-spx-market-timing-chart-2017-02-17-close

Consolidating, but at a higher high.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +0.73, down from +8.15% last week.

Thurs. 12 am close to poll Bulls               33.09% Neutrals 34.55% Bears      32.36%

Amazingly, there is still no top in sight!  Investors are getting more BEARISH as the market rises.  That is the typical “climbing the wall of worry” scenario.  Investors are definitely not buying the enthusiasm of newsletter writers who are extremely Bullish per Investors Intelligence reporting.  They are yelling “Buy, Buy, Buy!” and yet their readers have been exiting equities and are fearful at all time highs.  We will stay with the trend.

The market, if it corrects, will not correct badly in the absence of economic recession or an event that comes from left field, like a tsunami that washes away Washington, D.C.!  A “Frexit,” as mentioned, is more apt to cause a temporary dip or at worst a correction in the U.S. Bull market.  It would cause a temporary collapse in French shares in Euro terms, but would rally in U.S. dollar terms as happened with the FTSE after Brexit.  The pound was pounded, but the FTSE was strong after a brief swoon.

2.  U.S. Small Caps:  We finally have the small cap confirmation I was looking for.  The stock signal is ON.  We need the rate signal to turn on for this rally to sustain itself.

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

iwm-russell-2000-etf-market-timing-chart-2017-02-17-close

Small caps confirm.

3. Gold: The “gold market timing signal” for the stock market rally is OFF.  IF the rate signal stays in the OFF position, that favors gold holding value and rallying as rates fall, but it would not bode well for the stock market rally if both of these occur. 

The U.S. stock market rally will lose steam after a while if growth is not actually in the cards.  Remember that growth with mild inflation and a vigilant Fed means gold LOSES as explained in my article on “When Does Gold Shine…”

Could gold surprise us and RISE in a continued stock market rally?  Yes, it’s possible in a growth with inflation scenario with the Fed falling behind enough to allow longer term rates to rise.  A proactive Fed could kill stock market momentum by slowing growth and actually lower long rates and flatten the yield curve.  You see how important the Fed is in this equation?

Perhaps Trump induced inflation drives both gold and the stock market higher in the U.S., but rates would have to be rising for that.  This scenario played out in mid-2003 with TNX at 3.35% then rising to 5.14% in mid-2006 and re-peaking in mid-2007 as the stock market was peaking – and then we had the “Great Recession” market decline (although gold was much cheaper back then).  Remember that the Fed cannot, due to its mandate, allow for “rising inflation with falling Fed rates.”  It is sworn to fight inflation particularly when unemployment is at current levels.

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

gld-gold-etf-market-timing-chart-2017-02-17-close

Gold rally still intact.

4. U.S. 10 Year Treasury Note Yield (TNX): We’re still below the 2.489% market timing resistance level I noted weeks ago.  This does NOT confirm the stock market signal.  It suggests that growth may be slower than the market is currently thinking or that the Fed is going to tighten too much, too quickly.
Oddly enough, the stock market breakouts do NOT suggest that, so this must resolve one way or another.  Rising rates and rising stocks or falling rates with falling stocks.   What suspense!

The yellow resistance line now lines up with the top of a triangle.  The trade is in the direction of resolution of this triangle.  If rates break further to the downside (below the triangle and then continue below the 2.309% low for further market timing confirmation), the U.S. stock market rally will stall and could correct.

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

tnx-10-year-treasury-note-market-timing-chart-2017-02-17-close

Yields back down despite Trump’s growth plans.

Now please leave your comments below where it says “Leave a Reply”… just scroll down and comment or ask a question…

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the April 2nd issueNote that if you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

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 2-10-2017 Close: Still Lacking Three Signals of Three for the Stock Market’s Next Leg Up. Gold and Rate Signals Off.

A Market Timing Report based on the 2-10-2017 Close, published Sunday February 12, 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: On 1-30-2017, the SP500 Index was back-testing the prior high.  Now it’s up and over the 1-26-2017 high to a brand new all time high, but as I’ll get to, without the small caps.  Trump had a bad week with revelations about Michael Flynn who lied to the administration about his conversations with the Russians and a ruling in an appeals court blocking his immigration ban short of a Supreme Court reversal, which may be abandoned by him.   These sorts of missteps create greater uncertainty in the markets, who seek steady Presidential leadership.

We have as of yet only PART of one out of three market timing signals necessary for the next leg of the stock market to be sustainable.  Review my comments: HERE

As you’ll see below, the gold and rate signals are OFF.  We are also waiting for the small caps (IWM) to confirm the large cap (SPY, SPX) breakout to new highs.

The market may be perturbed by comments before Congress of Dr. Yellen, Chair of the Federal Reserve, scheduled for 10 am  on Tues. and Weds.  If she sounds too hawkish, or even too dovish at this point, the markets won’t like it.  The economy should continue to strengthen or else interest rate hikes won’t be warranted.  Dr. Y. has to come in “not too hot or cold.” Pay attention to her scripted and unscripted comments during these sessions.

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 23, 990 people are joining in…

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Take a look at the chart now, which shows the latest retest and breakout for large caps…

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

sp500-index-spx-market-timing-chart-2017-02-10-close

Up and over. Backtest was successful and now a new breakout high.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +8.15% up from -1.37% last week.

Thurs. 12 am close to poll Bulls               35.80% Neutrals 36.74% Bears      27.65%

There is still no top in sight per this sentiment reading (a spread of 20-30 or more can mark a top).  Interestingly the financial advisors are at high levels of Bullishness per recent Investor’s Intelligence numbers, so individual investors are not yet convinced!  See my Twitter feed for those numbers (link above).  That means there is room to expand the Bull camp. 

2.  U.S. Small Caps:  Nope.  No confirmatory market timing signal yet for small stocks, as small caps, which were the leaders, are now lagging the SP500 Index on a market timing basis.   That is a negative.  The strongest market rallies are broad based, not narrow.

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

Market timing the U.S Small Cap Index (IWM, RUT).

No “Go” for the overall market with small caps still lagging.

3. Gold: The “gold market timing signal” for the stock market rally is OFF, because gold is not breaking down as it should, given a robust economy with inflation under control.  Perhaps the market believes Trump growth will come at the cost of increased levels of inflation that run ahead of Fed policy moves.  Gold investors apparently think so!  The only other camp who would be routing for gold would be those who think 1) Trump policies won’t help growth much and 2) The Fed will have to keep rates low or even drop them back to zero.

Remember that it is possible for the stock market to rise through a period of higher inflation and make the REAL inflation-adjusted return turn NEGATIVE as happened in the 1970s.  Back then, many investors thought they were making money, but they were actually losing it!  Gold was the place to be back then until President Ronald Reagan and Fed Chair Paul Volcker stepped in to change the economic picture away from the stagnation and major inflation under President Jimmy Carter.

Now to the gold market timing chart…Note in the chart, how gold back-tested the prior high and bounced.  It should make another step up this week if this is a real Bull trend.  Dr. Yellen’s comments could obviously impact metals this week, and flip the gold trade upside down.

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

gld-gold-etf-market-timing-chart-2017-02-10-close

Gold signal is OFF for stock rally, meaning gold is still being favored.

4. U.S. 10 Year Treasury Note Yield (TNX): We’re now back below the 2.489% market timing resistance level I noted weeks ago.  This means, just as with gold, that growth and inflation is not seen as likely by the markets.  This week at least!  Not until all three signals fire off (see above) will stocks be in the clear for another market timing leg up.

Here’s the 10 Year Yield chart, showing how the “yellow line” is being held… 

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

tnx-10-year-treasury-note-market-timing-chart-2017-02-10-close

Rates still below target.

Now please leave your comments below where it says “Leave a Reply”… just scroll down and comment or ask a question…

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the April 2nd issueNote that if you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

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 2-03-2017 Close: The Third Signal: Three Signals Will Reveal the Stock Market’s Next Big Move. Gold and Rates BOTH Press for Breakouts.

A Market Timing Report based on the 2-03-2017 Close, published Sunday February 5, 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 did not realize how important the current market timing signals were until I saw how clearly they are laid out. Please don’t leave here until you understand all three signals that will confirm or deny the next leg of the Trump Rally on a near term basis…

What’s the economic backdrop?  The Federal Reserve left rates alone on Wednesday and said they expected inflation “will rise to 2%,” which is their target.  My message showing the changes in their statement from December’s meeting to the meeting ending this past Wednesday is HERE.

The U.S. jobs report number on Friday was 227K while only 175K were expected with a consensus range of 155K to 195K.  One would think the job increases plus the bias of the Fed stated this week should keep rate hikes in the picture, yet wage increases were disappointing and rates moved back up to test ABOVE the key resistance level.  That means that the Treasury market does not believe the Federal Reserve, when it says it will raise rates 3 times in 2017.

On Wednesday, Feb. 1st, the Atlanta Federal Reserve branch upped their estimate of Q1 GDP to 3.4% up from 2.3% just a day earlier (Their Statement)This would support further Fed rate increases as well, and yet the facts are the facts in terms of market timing behavior.  Thus far, we are only testing back above my target level for the 10 Year yield, small caps are still lagging, and gold is still fighting for a new breakout as I will get to…

I promised to reveal the “3rd Signal” that we needed to have another leg up in the stock market rally.

Let’s review all three “super important” market timing signals required for the next UP leg of the post-election rally in stocks:

  1. 10 Year Treasury Yield rises above 2.489% and then breaks out to new recent highs above 2.621% (see 10 Year Treasury Yield chart below).
  2. Gold sinks back below the 115.00-115.20 range and continues downward (see GLD chart below).
  3. Small cap stocks break out to new highs along with large cap stocks that have already done just that.  The “3rd Signal” is small cap confirmation of the large cap breakout (see small cap chart below).

If we see all these signals kick in, the stock market will be moving up another leg in my view.  And vice versa…

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 23, 990 people are joining in…

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Take a look at the chart now.  The backtest and bounce of the SP500 Index is very promising in market timing terms.  But we need other signals to kick in for corroboration of this move…

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

sp500-index-spx-market-timing-chart-2017-02-03-close

Large caps now leading small caps after a big run.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of -1.37% barely up from -1.91% last week.

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

This is Bullish, as we are near all time highs in the SP500 Index with slightly BEARISH sentiment!  The Bulls should be tripping over each other to buy at a real top, and they are no where to be seen.  This means that there are plenty of skeptics, both Bears and Neutrals who can be converted to Bullishness.

2.  U.S. Small Caps:  I’ve been clear.  Look for market timing signal #3 this week (stated above) and corroboration by the other two.

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

iwm-russell-2000-etf-market-timing-chart-2017-02-03-close

Waiting for next market timing breakout.

3. Gold: If you have ever doubted the validity of spotting pivot points in the market, the play around my target range of 115.00-115.20 must have awakened you to their significance.  There has been a dance around that red line (second from bottom in chart below).  It’s possible to locate these targets by applying intuition to charts and then observing the market’s actual behavior around those intuitively identified numbers.  That’s when I broadcast on Twitter and StockTwits that the market has locked onto “my number,” or that it is “playing with my number” as it trades above and below it.

There is still an unresolved conflict between gold and the 10 Year Treasury Yield.  In my view, either gold will break down as rates rise, OR gold will continue its breakout and the Treasury yield will fall.  Follow the direction of the resolution of this market timing conflict if you are trading this. 

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

gld-gold-etf-market-timing-chart-2017-02-03-close

Gold signal is ON but tentatively so…

4. U.S. 10 Year Treasury Note Yield (TNX): We’re now just ABOVE the 2.489% market timing resistance level I locked on some time ago.  Just look at the dance around “my number.”  As Mobius said to Trinity in the Matrix in regard to her skepticism about Neo’s potential, “Now do you believe?”  Seeing is believing.

One’s initial intuition is not always right, but when confirmed, it deserves one’s attention.  This is true for you, so develop your own intuition.  Look for a second breakout to above the recent high of 2.621%.  That should turn gold to the downside if it happens.  By that I don’t mean that gold is “done for,” but I do mean it will trade down and away from current levels.  Inflation and the financial burden of U.S. debt are reasons to still hold “gold insurance.”  But our trading position is “off,” until the signal conflict I described is resolved.  Here’s the 10 Year Yield chart… 

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

tnx-10-year-treasury-note-market-timing-chart-2017-02-03-close

Rates still in process of revealing a key market decision. It’s a pivot point.

Now please leave your comments below where it says “Leave a Reply”… just scroll down and comment or ask a question…

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the April 2nd issueNote that if you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

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 1-27-2017 Close (UPDATE 1-31-2017 on Gold, Rates, and the US Dollar): SP500 Index Breakout Holding While Small Caps Lag. Gold Fails Key Breakout. Rates Back Below “My Number.”

A Market Timing Report based on the 1-27-2017 Close, published Sunday January 29, 2017.

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

UPDATE 1-31-2017 on Interest Rates, the US Dollar and Gold:

GLD is up 1.44% today because the dollar is down 0.81% (UUP) and the interest rates on the the 10 Year Treasury Note is down to 2.437%.  This happened due to remarks by Peter Navarro, Trump’s trade advisor, to the Germans that they were taking advantage of the Euro’s low valuation to dump their goods in the US.  Those were the comments and these are the market timing signals that matter – rates fell, the dollar fell and gold rose.  It must continue down and violate the green trend line shown below to send gold to new heights:

tnx-10-year-treasury-note-market-timing-chart-2017-01-25-1025am

Will the Fed hold off as expected on Weds. and NOT raise rates again until June or July at the earliest?

Remember that the market does NOT expect the Federal Reserve to raise rates again on Wednesday.  I don’t either based on the odds, but IF they do, gold will head down again and the dollar will soar…

Now please review this week’s market timing signals so you are prepared for the week….

1.  SP500 Index: The Trump Rally is continuing for the SP500 Index, but it has not continued for the small caps as you’ll see below.  I believe the market is waiting for further confirmation of Trump’s promises.  GDP was OK but not surprisingly great for the 4th Quarter of 2016, coming in at 1.9% vs. 2.2% consensus and 3.5% prior.  Remember the headline number I am quoting is a seasonally adjusted annualized rate.  This means that growth weakened into the 4th quarter, and we’ll have to watch its trajectory.  Business activity should strengthen after the lull of the Presidential Election period. 

If you are market timing the next move, watch the small caps, and if they confirm the large cap strength with a new breakout, we may well see another sizable leg up in the U.S. stock market.  If you invest simply based upon valuations, you’ll miss many big market moves.  Given the strong domestic equity fund outflows we’ve seen, there is plenty of room for buyers to come back into this market. 

Also watch the Fed, with their decision on rates out on Weds. Feb. 1st after a two day meeting (no “Fed show” afterwards).  The Federal Reserve is not expected to hike rates further until June or July.  That is when the CME says the odds of a hike approach 50% (June) and then exceed it (July).

Keep up-to-date during the week at Twitter and StockTwits (links below), where a combined 23, 726 people are joining in…

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

You don’t have to Tweet to read my Tweets… Just click above and sign up…

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

sp500-index-spx-market-timing-chart-2017-01-27-close-daily

Breakout is still intact.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of -1.91% down a bit from +4.33% last week.

Thurs. 12 am close to poll Bulls               31.58% Neutrals 34.93% Bears      33.49%

This sentiment weakness is not dramatic and is poorly predictive of future results.  All it says is that there is plenty of room for recruitment of new Bulls from the Neutral and Bear camps.

2.  U.S. Small Caps: Last week I said:  “I would not add to positions without either:

  1. Another small cap breakout.
  2. A pullback worth buying percentage-wise.”

The same market timing signals apply for this week. Stay away without a greater discount or a new breakout.

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

iwm-russell-2000-etf-market-timing-chart-2017-01-27-close

Stuck in range and NOT confirming the SP500 Index breakout yet.

3. Gold: Gold failed the key breakout range of 115.00-115.20 and this must be reversed on a market timing basis quickly or the Bears will extract far more blood.  The Bulls actually have a shot at bouncing from this support level, which nearly coincides with the 50 day moving average.  The fact that rates are falling again this week says this is not an impossibility.  Lower rates are good for gold.

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

gld-gold-etf-market-timing-chart-2017-01-27-close

Gold failed a key breakout area, so Bulls need to reverse this quickly.

4. U.S. 10 Year Treasury Note Yield (TNX): We’re back below the 2.489% market timing resistance level.  As said last week, the reversal in Treasuries should be watched for a RE-breakout to new highs above the recent high of 2.621%.

Market timing practitioners should follow these key numbers and trade in the direction of the next move, which remains to be seen.  A double failure of a breakout could be seen as decisive, but I’d like to see follow through on it.  Furthermore, that green trend line must be quickly violated to the downside by the Bond Bulls.

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

tnx-10-year-treasury-note-market-timing-chart-2017-01-27-close

Failure of interest rate breakout a second time.

Now please leave your comments below where it says “Leave a Reply”… just scroll down and comment…

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the April 2nd issueNote that if you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

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 1-20-2017 Close (1-26-2017 GLD Update): Inauguration Day Chart. SP500 Index Still Testing Top. Small Caps On Support. Gold AND Rates Testing Key Targets.

A Market Timing Report based on the 1-20-2017 Close, published Sunday January 22, 2016.

I deliver focused comments on the markets.  These are supplemented with “Tweets/StockTwits” (see links below).

UPDATE 1-26-2017: “Gold pivot point confirmed. Going down”…

I pointed out in my market timing blog post of 1-06-2017 GLD was going to test a key target range of 115.00-115.20 and this would be a pivot point.  When the price is increasing, pivot points are where the Bulls have to show strength and continue the rally.  When they don’t, the pivot becomes a trading sell point with a downward pivot.  That’s what I suggested was happening and now we have three days of declines.

There is one catch, given the nuances of the current market timing chart.  GLD could pull back to test the 50 day moving average and then rally again.  Could.  It’s just one spot where a counter-rally could occur.  In the meantime, you should have preserved your trading gold profits.  If we get another rally that takes us above 115.20, it’s very possible it would stick.  It would be a place to add exposure, OR we wait for a rebound off of significantly lower prices.

gld-gold-etf-market-timing-chart-2017-01-26-1218pm

Market timing failure at key target.

Back to this week’s market timing post…

1.  SP500 Index:  President Trump was inaugurated Friday and just before his speech, the markets rallied, then retested the close from the prior day and, finally, rose into the close to recoup just over half the initial gains. 

Here is what happened on a market timing basis:

sp500-index-spx-market-timing-chart-inauguration-day-2017-01-20-1-min-chart

1 Minute SP500 Index Market Timing Chart of Inauguration Day.

The market is at a decision point.  It must decide whether further proof of Trump’s policies and their associated economic successes will be required or not, before there is a further significant rally.  Interestingly only 2 of 21 Trump cabinet appointees have been appointed by the Senate, which is well behind the Obama confirmation schedule in 2009.  If the Democrats are unwilling to cooperate out of a vindictive spirit (to get back at the Republicans for opposing all that they wanted done after President Obama’s first 2 years), things could go much slower for Trump in instituting his policies.  That could disappoint the markets.  We have “powder left” should the markets pull back and plenty of long exposure should they break out again.

I believe that gold and the 10 Year Treasury Yield could be a strong market timing “tell” on what the stock market will do next.  If you see rates breaking out above resistance (noted below; see chart) or gold rising easily past the current target range it very NON-coincidently landed in, stocks will likely suffer further losses.  On the other hand if those two head lower, stocks will likely break out to new market timing highs.  The ultimate market timing impact of the Fed raising interest rates over the next couple of years as they threaten to do will be to drive down long term rates UNLESS Trump policies spark major inflation.

That prediction aside, we can follow the move out of the current consolidation range.   The next move should be several percent and tradable if you are interested. 

We’ll be buying lower on any Trump Dip if it occurs and ready to take some profits if the next move is through the top of this consolidation.

You can see exactly what I did this week at either of these two links:

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

Keep up-to-date during the week at Twitter and StockTwits (links above), where a combined 23, 505 people are joining in…  If you don’t follow me on Twitter already, you’ve been missing a lot…

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

sp500-index-spx-market-timing-chart-2017-01-20-close-daily

Stocks next move will depend on “politics.”

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +4.33%  down from +16.67% last week.

This has happened despite the fact that the market remains near all time highs.  This is Bullish, not Bearish over the intermediate term.  The short term market timing set-up could be another story altogether.

Thurs. 12 am close to poll Bulls               37.01% Neutrals 30.32% Bears      32.68%

2.  U.S. Small Caps: Small caps are testing the bottom of their recent range.  A break here would cause a bit of damage.  Follow small caps along with gold and the 10 Year Yield on Monday.  A breach by small caps could give way to a bigger “Trump Dip.”

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

iwm-russell-2000-etf-market-timing-chart-2017-01-20-close-2

Small caps testing support.

3. Gold: First see my UPDATE from  1-17-2017 – Trump Weak Dollar Policy in Action (Scroll Down to Gold Update)

We are right in the middle of the market timing target range I picked out on 1-06-2017. From here we pivot up or down.  Traders and even investors should consider following this bouncing ball.  Add with a stop in mind in case the market rises and then reverses lower, or exit more of your profitable gold positions if the market fails here.  The move from here could be sizable, up or down.

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

gld-gold-etf-market-timing-chart-2017-01-20-close

Gold has a decision to make. This is a pivot point.

4. U.S. 10 Year Treasury Note Yield (TNX): The yield remains in a test of key levels.  You can see where the line has been drawn demarcated by the 2.489% level and the down trend line in the chart below…  The second yellow line from the top, that 2.489% level, will be the next test.  Others say the key yield breakouts are a bit higher.  You can read my Twitter feed for those numbers.  Keep in touch on social media during the week… (links above)

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

tnx-10-year-treasury-note-market-timing-chart-2017-01-20-close

Above the trend line but below resistance.

Now please go ahead and leave your comments below where it says “Leave a Reply”… just scroll down and comment…

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the April 2nd issueNote that if you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

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 1-13-2017 Close (1-17-2017 GLD Gold ETF Update): SP500 Index Back Testing the Top. Chinese Internet Exposure. Gold Reaches Important Pivot and Falls. Fall in Rates Pauses.

A Market Timing Report based on the 1-13-2017 Close, published Monday January 16, 2016. Happy Martin Luther King Day!

I deliver focused comments on the markets.  These are supplemented with “Tweets/StockTwits” (see links below).

1.  SP500 Index: We’ll get to the U.S. market in a moment.  I sold my Facebook position too early (after making about 7% in 4 market days on it), but have redistributed the profits in the Chinese internet ETF, KWEB.  Here is the market timing chart:

kweb-chinese-internet-stock-market-timing-chart-2017-01-13-close

Moving up within a triangle.

I shared that with you on Twitter and StockTwits on Friday.

There are some doubts about the vibrancy of the Chinese economy.  The index (FXI) is still having some trouble making new highs.  We will have big trouble in the U.S. economy if the Chinese do poorly as I’ve said.  We are in this together.  The growth of our companies depends on growth throughout the world, not just in the U.S, which is perceived as guaranteed by Trump’s domestic spending plans.  Although I cut back my more generic Chinese exposure a bit, I’m now back up to an 88% China exposure level using the above ETF (that is as a percentage of “usual maximum exposure”; adjust it to your own taste/risk parameters).  I believe Trump will have to work things out constructively with China.

The value of the internet in China is going to compound rapidly, and their companies are going to venture out into the world.  I believe Alibaba CEO Jack Ma’s comments to President Elect Trump the other day that he planned on creating over 1 million jobs in the U.S. over the next 5 years tells you that “the Chinese are Coming!”  And it will be via the internet not off a submarine as in the case of the 1966 movie, “The Russians Are Coming.”  I believe this will force the resolution of the huge market timing triangle that you see in the KWEB chart above to be resolved to the upside.

If you do choose to invest in KWEB, please note that the number of shares traded daily is not tiny, but is somewhat limited, so refuse to pay too big of a spread between the net asset value and the trading price!  Otherwise you are just handing money over to the market makers.  Check the premium being paid HERE (or go to Morningstar and look up the symbol).  As an ETF the fund will create more shares each day to accommodate interest, so the price will readjust toward the net asset value as demand increases and decreases.  The risks obviously include Trump Twitter and press comments about high tariffs being applied to Chinese imports.

Trump’s news conference this week was troubling for the markets, and for market timing practitioners with their fingers on their trading buttons.  I agree with them.  He spent precious time answering completely false “fake news” charges.  He claimed he would not have done what the “fake news” claimed, because “I’m a huge germophobe.”  You don’t answer stupid claims like that.  That’s exactly what the opposition wants. Once they create that picture in people’s heads, it’s stuck there despite claims to the contrary.  It’s the “don’t think of an elephant” routine.  The mind thinks in pictures.

Trump should have been answering key questions about the economy and tax reform etc.  He didn’t.

He also attacked the drug industry out of the gate in his first few words, saying that the drug companies “are getting away with murder.”  There are issues to be dealt with there, and it’s imperative that the pharmaceutical industry gets its act together and sits down with him and strikes a balance between the profits required to finance drugs at huge costs vs. the risks of those ventures failing.

We should all want our President to succeed at making our country better.  I do want that, but the sort of inexperience and ineptness that we saw this week is not something the markets want to see in a leader of the largest economy in the world.  If the trajectory of growth from tangible Trump policy changes becomes fuzzy, the markets will correct.  That’s the biggest risk to this rally.

That said, the market still has the opportunity to have a market timing breakout to new highs.  If it happens after an “Inaugural Pullback,” a further rally will still occur in my view.  Have some cash handy in case there is some sort of “Sell the Trump Inauguration” move in the markets.  I remain highly invested however and my exposure levels are given at the social media links below…

You can see exactly what I did this week at either of these two links:

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

Keep up-to-date during the week at Twitter and StockTwits (links above), where a combined 23, 313 people are joining in…  If you don’t follow me on Twitter already, you’ve been missing a lot…

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

sp500-index-spx-market-timing-chart-2017-01-13-close

Testing back at the top.

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +16.67%  back down a bit from +21.0% last week.

Sentiment around this level leaves room in both directions in the short term, but the behavior of sentiment over longer time ranges says we have not yet reached a market top.  Top’s are not met with mediocre sentiment.

Thurs. 12 am close to poll Bulls               43.64% Neutrals 29.39% Bears      26.97%

2.  U.S. Small Caps: Small caps are holding up in a fairly narrow range.  The assumption is that the market needs to see economic progress under Trump’s administration to make progress or at least that’s the illusion.  Watch the market for the direction of the next move rather than guessing what it will be.  The lines are clear for both large and small caps.

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

iwm-russell-2000-etf-market-timing-chart-2017-01-13-close

Holding up. Waiting for growth?

3. Gold: UPDATE 1-17-2017 Trump Weak Dollar Policy in Action

Gold is rallying as a result of a Trump comment to the Wall St. Journal late Monday, “Our companies can’t compete w them (China) now because our currency is too strong. And it’s killing us.” Everything for Trump is about killing/murder as w drug companies last week.  He sensationalizes everything.  But he makes his view heard, that is for sure.  For this reason, the dollar is down in the current swing farther than I expected, so I’ve removed my small gold hedge.  Beware of Trump “prey” over the next four years.  When he takes his verbal gun out, feathers fly.  Often unexpectedly.

If gold can close up here above the stated target range (see chart below), it could have another strong leg up before this rally is challenged. 

Dropping the hedge may not work out.  Perhaps the market will work through this currency jawboning by Trump, but I made a commitment when I opened the small hedge that I’d keep it on a short market timing leash, so I’ve closed it.  Trump’s willingness to blurt out policy is something that is just part of investing in the Trump era.  Welcome to the “‘New Bizarre’ of American Economic Leadership.”

It’s particularly bizarre given the fact that Larry Kudlow, one of Trump’s advisers is known for his “King Dollar” stance.  The strong dollar is part of rising rates and a stronger economy.  It’s not what Trump thinks.  A strong currency is great IF there is economic growth to go with it.  Message to Larry: Talk to Trump about ‘King Dollar.”

Gold faces the enemy of higher growth with higher rates.  Pulling on the other side is inflation.  If inflation rises faster than rates, gold will do well.  A close over the range shown in the chart below is what I consider the “real test.”  Gold just failed it, but if there is an “Inaugural Dip,” gold could push through to new recent highs.  Follow the market rather than follow the rhetoric.  I suggested taking OFF some gold exposure near the high last week. I hedged part of my long term position, as I felt the dollar was ready to rebound from its recent pullback.

The argument FOR gold is down to one: Inflation will rise faster than the Fed will raise rates.  That is definitely NOT a given.

The return on gold has become far more speculative with both rising rates and a rising US dollar.  Those are huge headwinds as I’ve explained HERE.

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

gld-gold-etf-market-timing-chart-2017-01-13-close

Gold failed an important breakout.

4. U.S. 10 Year Treasury Note Yield (TNX): The market timing “re-breakout” of the 10 Year Treasury yield above 2.621% has not happened…not yet. 

I am currently in the camp that says that if the Federal Reserve continues to raise rates this year, long rates will actually fall rather than rise.  That would means bonds would still do OK this year.  That said, I expect stocks to outperform bonds over the intermediate term (3 months to a year).  The risk?  If the Trump stimulus is quick and massive, inflation could accelerate substantially and wreck bonds. 

You can see where the line has been drawn demarcated by the 2.489% level and the green down trend line in the chart below…

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

tnx-10-year-treasury-note-market-timing-chart-2017-01-13-close

Rates backed off of resistance.o

Now please go ahead and leave your comments below where it says “Leave a Reply”… just scroll down and comment…

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the April 2nd issueNote that if you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

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