A Market Timing Report based on the 10-26-2012 Close published Sunday October 28th, 2012

UPDATE: Sunday, 11-04-201  There are four markets that will likely predict the election’s outcome on Tuesday.  Find out more by getting the Weekly report via the subscription link below!  The four markets I mention will throw fits come Weds. morning.

The small cap stock (RUT,IWM) rally that began in June has lost its luster.   There has already been a big take back of the prior gains and the index is now teetering on tenuous support consisting of a four day consolidation.

The Russell 2000 Index (scroll down to chart): http://www.sunandstorminvesting.com/

My SP500 Index (SPX,SPY) target of 1396.56 will be reached if the current consolidation (sideways move) fails on the chart:

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

Look where the Bull markets are still hanging on this week (some by a thread, sitting right on critical support; see the MTT table below): Foreign markets (previously bashed down), drugs (DRG) and utilities (UTX) (both do well in a sluggish economy), gold miners (HUI, GDX, with gold now in a Bear correction, so gold must hold right here), and bonds (America’s favorite investment for years despite Warren Buffett declaring bonds a horrible investment at these levels – Warren does tend to be early with his insights).

Gold (GLD) has support at a nearby up trend line on the daily chart and at a nearby moving average as shown: http://www.sunandstorminvesting.com/gld-etf-gold-market-timing.html

The fact that the US dollar index has been having so much trouble mounting a break out is good news for gold Bulls.  The downside is limited unless the US dollar gets moving again to the upside.

The uncertainty of the fiscal cliff coming in January whereby massive government cuts will be imposed if Congress decides to take no action is weighing on many companies.  They realize that such inaction would be a disaster for the economy.  We would undoubtedly go back into recession.  The Presidential election is too close to call, with current polls currently leaning slightly toward Romney.  Drug stocks have still been holding up reasonably well, so Romney is likely not yet in the clear.

Notice your gas prices easing back a bit this past week?  Is that a coincidence or would the oil cartel be much better off with President Obama in office questioning the safety of fracking for oil and gas in the U.S., while overemphasizing technologies that won’t help bring down energy prices for many years.  Did you know that it is impossible to efficiently produce energy via solar power except for local production at a building or house?  As for fracking, there is true concern if it’s done near your house!  A home owner near a fracking site on 60 minutes showed how he could actually LIGHT his water on fire!  The gas rose to the top and exploded when lit!  The concrete walls they build to protect the water supply don’t always work.  Romney says he’ll let the drillers run wild and make the U.S. a big energy producer.

Watch for banking to do well if Romney wins on Nov. 6^th.  Romney has planned to roll back some of the Dodd-Frank legislation governing the banks.  Anything that makes their operations cheaper goes right to the bottom line.  Both sides are OK with you and me getting less than 0.8% on our deposits, while the money goes into the banks’ pockets.

Where is investor sentiment this week per AAII?  Bulls are 29.25%, Bears are 43.08% and the spread is -13.8%.  That is barely changed from the  -15.9% Bull – Bear Spread last week.  We are looking for a spread of -22.4% to -30% to define a bottom.  So despite the current daily chart support in numerous indices, there is still room to the downside.   The 50 day moving average did not support the market this past week and the current consolidations may fail as well.  If you buy anything at these support levels, use a stop and hold some powder on the side in case prices improve.

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

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