Based on the 7-13-2012 Close published Sunday, 7-15-2012.
UPDATE on 7-17-2012: Dr. Bernanke has spoken and the SP500 Index was down at first and is now slightly up and gold is down a bit less than it was when the testimony speech was published this morning. Sometimes it takes a day or two for the true direction of the market to express itself. He is saying that things are not great in Europe, and there are risks with the continuing issue of unemployment, so that keeps the Fed in play, which the market likes. So far, that is the reading reflected in the market. But there is more in this week’s issue that follows…
Market Timing Brief™ for 07-13-2012
Biotech (BTK; IBB) has been in a Bullish trend this year as I elaborated on in my first issue of 2012. It is now moving from support to retest the high. A breakout, if sustained, will be the next buying point. Sustained means it does not break out and in one or two days break down again. Sometimes there is a retest of the breakout where an index slips just below the intraday high breakout point and then rises back and closes above it. That is also a good place to buy.
Buying just below resistance is the worst place to buy. If nothing else, market timing can help you to buy stocks and indices/ETFs where they are most buyable instead of buying them at “dumb” spots on the charts. Buying silver (SLV) when it was massively stretched beyond anything it had done in years has cost investors about half of their money so far. That is another dumb chart point to make a purchase.
The biotech chart is here: BTK – The Biotech Index – The Bonus Chart of the Week: Bonus Chart: Biotech Bull Market
Gold (GLD gold ETF) has been hammering out what gold investors hope is a golden bottom from which it can now rise. They hope they will not need a golden parachute. They will if gold breaks the huge base it has formed. It will likely drop several hundred dollars if it does. With all the central bank printing of false promises called “currency,” gold has a future I believe and will likely hold the base see in the chart below.
Meanwhile, the SP500 Index (SPX, SPY) has immediate overhead resistance as well marked by the two aqua lines on the chart:
Dr. Bernanke’s Humphrey Hawkins Testimony before the Senate on Tuesday and before the House on Wednesday may determine the market’s direction for several weeks to come. My feeling is that the Fed does not need to act right now, because things are just not bad enough to warrant action. They want the stock market to be up in general terms, but it’s high enough to be tolerable to them, so why blow up a bubble and be accused of that?
The other factor is the election. Doing more now could throw it to President Obama and the Fed does not like to meddle in politics. I say Dr. B’s hints in the coming days will be weak and the market will sell off a bit more by Tuesday, the first day of testimony. If I am right and you sell a bit into this rally, you’ll be able to buy it back lower. I am currently hedged with about 50% of my normal allocation to stocks. Formulate a plan that works for you.
The position of the VIX supports my view, having collapsed 8.68% on Friday to support. It can now bounce as stocks sell off again, perhaps as soon as Monday or Tuesday. The dollar is also signaling caution as it is back in Bull 5 mode. That pressures the earnings of US multinationals as discussed recently.
Standard Disclaimer: Remember, it’s your money and your decision as to how to invest it.
The above is the text from the 7-15-2012 “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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