Market Timing Brief™ for 07-27-2012: Bonds. Treasury Bonds.

Based on the 7-27-2012 Close published Sunday, 7-29-2012

UPDATE AT OPEN 8-3-2012: The SP500 Index has reversed the breakdown in just one day and is now back in the breakout area it was in before the ECB’s Drahgi dragged the market down yesterday.  1380.39 is support now, which is the 7-29-2012 high.  1391.74 is the recent high that represents the next breakout point.  Closing above that 1380ish number would be positive and good for a day’s work.  The reaction to the minimal uptick in the unemployment rate which was almost a rounding error was slightly positive, not negative.   Most of the gains are attributable to European hope that Spain will receive the help it needs on its debt to state it succinctly.  The world must now see that the Europeans are serious about saving the Euro and strengthening their economies.

UPDATE AFTER CLOSE ON 8-02-2012: The SP500 Index has now failed the prior breakout above the previous July high as shown in the chart below and has moved back into the up channel.  The ECB (European Central Bank) failed to take action today, and that is blamed for the fall in the market.  It can drop to the base of that channel, the upwardly sloping red line, and still be in an up trend.  The aqua 50 day moving average could also contain this pullback.  Below there, the May or June low becomes the target.  More below…

sp500-index-chart-2012-08-02-close

SP500 Market Timing Chart for 8-02-2012 Close showing failure of breakout.

UPDATE AT OPEN ON 7-31-2012: The SP-500 Index remains at breakout levels above the prior July high.  The rest is below.  Watch for any reversal of that breakout by the way as you may need stop loss points on trading positions.  The Fed announcement tomorrow is not supposed to say anything new according to most.  Watch for that on Wednesday.  The hope is that the ECB will take the heat and the lead this time.

Market Timing Brief™ for 07-27-2012:

James Bond joined forces with the Queen of England Friday night, but last week bond sellers joined forces with stock buyers!  Finally, the winter of our discontent is lifting with an 8.89% increase in bond yields in one day!  That’s a WOW!  [UPDATE: This moderated a bit with a rally in bonds on Monday, but it’s headed in the right direction so far as the reversal above the 6-1-2012 low in yields is still intact.]  This is great news for stocks because it implies a continued rally for stocks.  The very low yields we were experiencing were a reflection of a market gripped by fear.  Be sure to take some off the table if you are overexposed in bonds right now.  This bond sell-off could continue for a while.  Even the Bond King, Bill Gross, has said bonds just don’t pay enough.  He tweeted that last weekend.

Once it leaves Treasuries (TNX, TYX), the money has to go somewhere.  I believe that gold and other metals have a shot at renewal as well, so I started a gold trading position on top of my long term hold.  The chart this week shows gold shining a bit brighter again:

GLD Gold ETF Chart: GLDTracker™

We also have a new high in the SP500 Index, this and the bond sell-off is thanks to ECB President Mario Draghi and our own Dr. B. who intend to shower printed money on the world until it washes away all the financial sins of the mortgage crisis.  As long as the breakout holds early next week, the Bulls have the ball as shown in the chart here:

The SP500 Index (SPY, SPX) is shown in this chart: SP500Tracker™

The VIX?  It can now fall all the way to the 2011 low (which is a bit higher) or to the March 2012 low in this move.

Drug stocks continue to celebrate the Supreme saving of Obamacare with A MAJOR BREAKOUT.  I make a stock chart prediction of the election at the following link (you heard it here first, and it makes sense):

The drug stock index chart shows the breakout here: DRG Index (XPH) – The Pharmaceutical Index – The Bonus Chart of the Week:

Bonus Chart of the Week

The NASDAQ 100 is at resistance still fighting the triple tops largely due to the heavy influence of Apple stock (APPL) on the index.  Apple has a “delay of purchase” problem this quarter as their version 5 model iphones are not due out for a while and it is causing customers to delay purchases.  The Android software is functionally outperforming that of the iphone at this point according to some.  A phone company rep told me he had to “hack” his iphone to get it to do what he could have had an Android do without any problem.  Steve was always big on “control,” despite his brilliance.  So Android phones may eat Apple’s lunch at least until the next iphone is released.  This will pressure the NDX (QQQ).  The Bull argument at this point is that AAPL is just above the 50 day moving average, and could gain some strength.  It did not continue to break down on Friday.  The point?  Apple weakness explains why the NASDAQ and NDX did not move up with the SP500 Index on Thursday and Friday.

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

The above is the text from the 7-27-2012  “Weekly Wall Street Sun and Storm Report™: www.sunandstorminvesting.com/subscribe-to-sp500tracker-newsletter-and-tips.html

And to follow my Buys and Sells and up to the minute insights, please follow and bookmark my Twitter feed here: http://Twitter.com/#!/SunAndStormInv

Copyright © 2012  By Wall Street Sun and Storm Report, LLC All rights reserved.

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