A Market Timing Report based on the 5-30-2014 Close, published Sunday June 1, 2014

The SP500 Index (SPX, SPY) reached a brand new all time breakout high this week, delaying the inevitable next correction for now.  Please view my latest YouTube® video by clicking on the video (or in an email click on the top email link and then the video itself) on the US stock (SP500), gold (GLD), and interest rate market (TNX) charts here and then read below the video for a few additional points (remember that it’s your money and therefore your decision as to how to invest it):

A Few Additional Comments and Two More Market Timing Charts:

1. Due to the level of sentiment we saw last week, (Access it here:  Subscription to My Newsletter and access to My Latest Comments/Strategy  I’ll send you back the password to the access page and the weekly newsletter in the same email), the market could make a marginal new high, even ascending to that upper channel and then fail and fall below the last breakout.

2. Gold is NOT in a good buying position.  The trend is still down, so we’re standing aside.  We’ll buy higher if needed, but this pullback as described in the video has been too much.  I did not sell my longer term position in which I’ve already sold my principle (riding profits).  This refers to my trading position.

3. Interest rates falling to new recent lows through major support is striking (TNX, TLT, TBT).  This is NOT what nearly everyone was expecting after the taper program began, but I explained why it may be happening in the video.

4. Small caps (RUT, IWM) did NOT rally with the SP500 Index on Friday and I shorted the Russell 2000 Index on Friday as mentioned on Twitter (you can short directly if you have 50K to do it with or use the inverse 1X or more ETFs.  I personally stick to the 1X negative ETFs; it’s a hedge, not wild speculation).   I realize that shorting, regardless of the vehicle, is not for everyone, and it can be tricky shorting down trends as the bounces can be painful when they occur unannounced, but if it does not work, it’s just a partial hedge against a sell off.  Since small caps are still selling off, it’s a reasonable position to take.

Take a look at the under-performance in small caps vs. large both very recently (yes, Friday’s decline is subtle on the chart, but the Russell 2000 (yellow line) was headed down while SPX (main plot) was headed up a bit on Friday as you see) and since earlier in the year, it’s been even worse and quite obvious as the second ™chart shows.  Since the small caps have been under-performing since earlier this year, the first sign of trouble we saw on Friday could be the beginning of the next down move.

Small caps (yellow) were down 0.49% on Friday vs. + 0.16% for the Large Caps:

SP500 Index vs. Small caps (Russell 2000 Index) showing Small Caps going down while Large Caps rally.  Yes, it’s subtle on the chart, but they were headed in opposite directions on Friday.

Since 1-15-2014, Large Caps (main plot) vs. Small Caps (yellow line):

Small Caps have been under-performing Large Caps.

I have a brand new monthly issue out today, so be sure to sign up for the free market timing newsletter using the link just under the video.

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

I also comment regularly on Twitter.   Look for updates this week as needed via Twitter. Follow Me on Twitter

I thank Worden Brothers for the chart system I use to post these charts.  If you want to know more about the charting system I use every day, go to my “Other Resources” page here:  Other Resources   It makes it much easier to follow along with me if you can see the charts and manipulate them on your own computer, so it’s a great investment to have an excellent charting system.

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