A Market Timing Report based on the 10-12-2012 Close published Sunday October 14th, 2012

UPDATE 10-15-2012: The market did in fact bounce from support, but not quite enough to say it will again retop or rally further.  Gold broke down today as expected.

The Weekly Wall Street Sun and Storm Report™

The school papers (earnings) are being turned in and the results are not so good.  This is driving stocks down, although both the SP500 and gold are on key support and may choose to pivot either way.  The very short run ups and downs are notoriously hard to call.  The small caps may be hinting the damage about to extend to the large caps in a bigger way.  And to gold and silver as well.  First review the key markets by having a look at the charts.

Small Caps are leading the market down as explained and shown here:

Small Cap Stock Index (Russell 2000 Index, RUT, IWM): The Bonus Chart of the Week: http://www.sunandstorminvesting.com/index.html

The SP500 Index is doing a bit better and is barely above an important support level shown in this week’s chart.

Here’s the SP500 Index Chart:

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

The key question is whether this is just going to be a mild correction of 7-10% or even less, prior to a year end rally or much more.  I’ve even heard normally bearish commentators talk about a year end rally off of SP500 support of 1420.  Well, if they are right, the correction is nearly over, not just beginning.

The other negative sign is that tech is failing.  The NASDAQ 100, the largest 100 tech stocks (NDX, QQQ) are in the middle of a fall now.  Support for the NDX is around 2660.

Hamm funny, it’s not just the SP500 Index, but also the GLD gold ETF that is on a thread of support, near zero support sitting precisely on a key support level as shown: 

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

The Dollar is back just under where it was in 1995 prior to the Clinton-Gingrich Rally.  This rally was based on the eventual balancing of the budget, which Gingrich did with Clinton where Reagan was embarrassingly a failure despite the revisions of history by many.  Speaker Tip O’Neal was a co-culprit in the creation of the first massive federal deficit in our nation’s history.

Read my article from a while back on the “Invention of Fiscal Lying” if you want to know more.  It is an independent view of incompetence on both sides of the aisle.  You can find the article by “Googling” “invention of fiscal lying.”  It is the top article for that search.

Finally!  AAII Survey of Investor Sentiment is of use to us this week!  How bad it may get is discussed here: http://www.sunandstorminvesting.com/aaii-survey-review-investor-sentiment.html

Health care stocks are still handicapping Pres. Obama as the winner.  I mentioned this “tell” on the election weeks ago.  Let’s see what happens after Tuesday’s second Presidential election debate.

The Golden Bull of the week is China, which had a big increase in exports, much more than the market had expected.  The Chinese market (FXI) has outperformed the SP500 the past couple of days and is breaking OUT while our market is showing weakness.  Remember that China has underperformed our market for some time, namely, since March 2012.  Catch up time?  Only if our markets find support soon.  Otherwise the Chinese gains will vanish.  I believe money is starting to shift back to the Chinese stock market relative to the US market and the performance difference will close.

Have a great week!

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