5-6-2012: (Update at 5-7-2012 close and again on 5-10-2012)
5-10-2012 UPDATE: Yesterday the SP500 Index closed just below support, which was at the April low. If the pop this morning holds on the close today , we can rise to at least the mid-April high or the 50 day moving average. If the reversal above the April low is reversed on the close, we are apt to see a significantly lower low in the SP500 Index (SPY, SPX). Investor sentiment is not negative enough to call an “all clear” as I mentioned on Twitter this morning (see the Tweet to the bottom right). I’ll have more on that this weekend in the weekly newsletter.
The old adage is “Sell in May and Go Away,” meaning that most of the year’s profits are made outside that time period, when the market is often weak. Well this year, they went away in early April and came back to play a bit and went away again on May 1st never exceeding the April high.
The VIX is blasting off again and has a few days to move up before meeting first resistance. You can see the chart as the Bonus Chart this week (link below). The banks are breaking and several indices as you can see in the MTT below are reaching or are at support. They may bounce a bit from there and then we’ll see.
UPDATE 5-7-2012: The VIX barely came down today. That is negative for the SP500 Index (SPY, SPX) and other stock indices.
I have been getting out of the way in stages and there is always the risk of exiting too early. I Tweeted all my sells this past week.
What if the market goes right back up in one more zany move to the prior top and makes fools of all the Bears? Then it will likely turn around and make the Bulls look foolish as it did this past week. Apple’s stock is clearly not going to go to $1000/share in one move. When you hear those huge numbers being bandied about it smells like 2000 all over again. Do you remember when Qualcomm was supposed to go to the stratospheres?
I told my Twitter followers that I’d explain my REIT sale on Friday morning. It’s simple. Look at the correlation on a Yahoo Finance comparison chart between the SP500 Index and VNQ. You’ll see they are well correlated in general, so with the SP500 running down ahead of REITs I knew they would be next to fall. Sometimes what is very popular in the market, and REITs have had a great run recently, are the last to fall. Investors just cannot give up their concepts and turn on a dime to preserve profits. Well, at least averaging out should help if an investor does not like 100% sells.
UPDATE 5-7-2012: Today was a place to sell higher, not buy. Not yet anyway.
I told you I was stocking up on Munis a while back. Municipal bonds are moving to new highs (PZA). I favor buying individual munis if you can. Now they are not as cheap, so I’ll wait to buy again.
The metals? The silver ETF (SLV) recovered from a false breakdown in the chart, but needs to show more strength for a buy. The gold ETF (GLD) is still above the red line seen in this week’s chart. Above there, it must move through that down trend line you’ll see and then we’ll likely have a rally for a bit. The gold stocks have been lambasted for weeks and to some, given the still relatively high price of gold represent true value here. If gold does not hold support, that may no longer be the case. With QE threatening to rear its head around the world, I feel gold will hold its own until recovery is really here. There is still too much debt for gold to suffer. Due to the debt, real interest rates are negative due to Central Bank actions and that is a huge support to gold prices.
UPDATE 5-7-2012: There was little movement for the SP500 Index which is Bearish. This was a consolidation day and the momentum is still down barring some wildly Bullish news.
If you have not seen them, have a look at the charts from this week as well. They are listed on my “feed page” here:
Enjoy your week!
Standard Disclaimer: Remember, it’s your money and your decision as to how to invest it.
The above is the text from the 5-06-2012 “Weekly Wall Street Sun and Storm Report™. To see the current issue and this week’s ratings of all 35 markets I follow and receive the newsletter every weekend, subscribe here:
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