Market Timing Brief for 08-17-2012: Creep Up About to Stop? Mixed Signals and Exactly What to Follow

Based on the 8-17-2012 Close published Sunday, 8-19-2012

UPDATE on 8-22-2012 at 10:18 am:  Look for a close below 1410.03 to confirm a correction in the SP500 Index.  The 10 Year Treasury Note (TNX) rally this am, which represents a break of the trend line confirms the SP500 reversal.  I would lean toward lightening up and taking profits here in stocks and buy some municipal bonds if appropriate for your portfolio.

UPDATE on 8-21-2012 at 3:36 pm:  The SP500 Index is currently undergoing a reversal below both the two top lines shown on the following chart (the green and the top aqua line).  These must hold up on the close to be significant and lead to a greater correction.  The same thing has happened in the QQQ (NDX NADAQ 100 Index).  There was an attempted breakout and then a reversal.

sp500-index-chart-2012-08-21-331PM

Falling Below Two Breakout Lines

Market Timing Brief

Last week I said: “The SP500 Index (SPX, SPY) has been creeping up, but just barely over the past 6 days.  To prove itself, it has yet to move above the high from 8-7-2012.  This does not mean the market cannot blast up to about 1415 at the 5-1 high or to 1422 on 4-2-2012 before pausing.”  We are now in between at 1418.16.  The VIX volatility index has blown out the 2010, 2011 and March 2012 lows.  This is a bullish development provided it does not reverse quickly.  The VIX is at the base of the 2 standard deviation 20 period Bollinger bands, so there is room for it to rise.  Without a breach of the lower band on the close, however, it could still continue to fall lower as the SP500 Index rises to challenge the 1422 high and then break out yet again.  The banks continue to rally along with techs which I pointed out recently and are the backbone of this rally.  Rising rates mean the banks are safer because their European exposure is lessened.  Rates are rising as fear subsides.

Here we are:

http://www.sunandstorminvesting.com/sp500-index-sp500tracker.html

Although I’ve been leaning toward a pullback, the 10 year Treasury Note (TNX) has continued to sell-off which fit my Bearish on Bonds-Bullish on Stocks scenario. 

10 Year Treasury Note (TNX) – The Bonus Chart of the Week: http://www.sunandstorminvesting.com/index.html

Remember that a rise in rates to levels above 2.4% would begin to hurt stocks.

The housing market (HGX, ITB) continues to break out to new highs.  It is as if the housing industry is cured.

I asked last week: Should you buy more gold (GLD; gold ETF)?  And said: “Not at these levels.”  Well you still shouldn’t bother, unless you intend to use a stop, because gold is back in a holding pattern.  There is less interest in gold because the dollar (US dollar index; UUP) is going sideways rather than down and the Euro panic is fading so fear based gold buying is lacking.  The chart shows this:

GLD Gold ETF Chart: http://www.sunandstorminvesting.com/gld-etf-gold-market-timing.html

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

The above is the text from the 8-17-2012  “Weekly Wall Street Sun and Storm Report™.  To receive the newsletter every weekend, subscribe here: 

www.sunandstorminvesting.com/subscribe-to-sp500tracker-newsletter-and-tips.html

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

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This entry was posted in gold, gold etf, investment, Market timing, S&P 500 Index, trading, Treasuries, US Dollar Index, volatility index and tagged , , , , , , , , , , . Bookmark the permalink.

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