Market Timing Brief™: Treasuries and Gold Will Signal a Real Economic Recovery When It Happens. For Now Safety Rules!

Based on the 6-22-2012 Close published Sunday, 6-24-2012.

First, thank you for continuing to drive this newsletter higher in the various Google and other rankings.  I appreciate your interest and loyalty!   I have some really key insights this week that I am excited to share with you.  So now…the news…

The Fed disappointed the markets last week, so despite the Greek elections succeeding to support a unified Eurozone, the markets were upset with both metals and stocks dropping quickly.   So as not to repeat myself, please read the text and see the charts from this week, first silver and gold,

SLV – The Bonus Chart of the Week:

GLD Gold ETF Chart:

Then have a look at the SP500 Index:

SP500 Index:

The key for the metals is survival!  They must hold the prior lows.

The key for the SP500 Index is buoyancy.  It must move above the March 6th low in a definitive way on Monday.  Otherwise Friday just represented a blip up in a downturn.  That is what I favor, but shorting is not an easy thing to do, i.e., just as the Bears count on the market falling, it bounces and the Bears are clobbered.  Then after they give up the market bounces a bit more.  Then the Bulls get overeager and invest at the top of the bounce.  At that point the selling starts over, driving out the weak Bulls and bringing the Bears back from the sidelines, now a bit late already.  And on it goes.  It is hard for Bears to stay short during these counter trend rallies. 

The VIX volatility index has pulled back enough on Friday to now continue back up, but there is room also for the VIX to fall if the Bulls can carry the ball and drive the SP500 Index back above that March low.  So the VIX is not much help here unless you like playing craps.

If you step back from the SP-500 market timing chart, it looks like a good place to fail – it happened right at the 50 day moving average.  I would say the Bears have the ball until proven otherwise.  As Proctor &Gamble and other big companies are starting to report slowdowns in business, earnings this quarter could disappoint the markets and drag the indices lower.

I’ve labeled most of the weak markets as holds rather than sells.  Many are on some support at this point.  Selling intraday when I did (reported on Twitter) made more sense than selling at the close.  I don’t claim to know what will happen on Monday.  I do feel my sells were timed reasonably well until proven otherwise. 

Stepping way back and comparing this summer to last, what I cannot rule out is a bounce back up to retest the June high and then a failure.  I am leaning toward another rough summer for the markets based on Euro-uncertainty and a slowing economy worldwide.

Some markets look like they are ready to move higher, including biotech (BTK).  Biotech is as safe as the manliest man on the Bachelorette, because it is now linked to new drug discovery and is no longer tracking with risk.  The Biotech boy is now a man, baby!  These companies are being bought out, not looked at to check their cash burn rates and distant prospects.  Drug companies (who are buying biotech with their cash flow in tow) are also holding up well (DRG).  Utilities have lost some luster from their prior Bull 5 signal, but are still Bull 3.  The theme?  Investors are favoring SAFE, SAFE, and SAFE!  How does this verify my feeling that the summer will be rough?  Safety rules in what?  A weak economy!  So the MTT (table below) is predicting a weak economy without further stimulus.

Treasuries (TNX, TYX) will likely signal the end of this recent selling.  Watch for a reversal of the 10 year note above the Sept. 2011 low in yield – that will be a strong signal to start buying stocks again if other things are aligned.  I’ll let you know in my opinion when they are.

What about gold and silver and other metals holding the line here?  Will that be Bullish for stocks?  If the economy were strong, gold and other metals could sell off and all could be well for employment and business profits, but that is not the case.  So a sell off in gold will simply be the foreshadowing of a deeper stock market correction in my opinion.  All valuation is relative and if there is going to be deflation now, because of the lack of Fed easing, all the boats will be revalued lower.  Metals and stocks will fall or rise together, until real interest rates rise, which will ONLY happen when the economy is truly recovering. 

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

The above is the text from the 6-24-2012  “Weekly Wall Street Sun and Storm Report™.  To see the rest of 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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Copyright © 2012  By Wall Street Sun and Storm Report, LLC All rights reserved.

This entry was posted in Biotech, Economy, federal reserve, gold, gold etf, investment, Market timing, S&P 500 Index, silver, silver ETF, trading, Treasuries, volatility index and tagged , , , , , , , , , . Bookmark the permalink.

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