Market Timing Brief for the 9-19-2014 Close: Stocks Still Poised to Pull Back. Gold Headed to Bottom. Rates Falling Again?

A Market Timing Report based on the 9-19-2014 Close, published Sunday September 21, 2014

The SP500 Index is still slipping, as often happens near tops.  Tops sometimes are revisited.  The SP500 bounced up to the prior high and failed to break out.  Some hugely positive turn of international events could potentially spark a further rally to new highs, though unlikely, and given the tide of signs of economic slowing throughout the world, stocks may decide to at least take a breather until Europe and Japan find some reasonable footing and U.S. growth re-accelerates.  U.S. multinationals are exposed.

We took a bit off near the top in our model portfolio and will wait for a further pullback to reinvest it, or a higher high, which I clearly see as less likely to preceed at least a pullback of a few percent. (Don’t be too distracted by the big volume strike on Friday, as it was Quadruple Witching Day in the options market.)

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SP500 Index (SPX, SPY; click the chart to enlarge it):


A Failed Breakout and Space to Fall.

Meanwhile, this week investor sentiment turned a bit too positive (learn what the downside risk is; this is an update from this past Thursday):  Survey Says! What About Investor Sentiment?

The U.S. Small Cap Chart (RUT, IWM):

U.S. Small Caps looked like they could reverse UP again (despite my warnings about valuation) and yet by Friday, they were headed down again (click the chart to enlarge it).


Small caps failed to gain traction.

Gold:  GLD, the gold ETF, has now broken two levels of support.  It could head down toward the major low you see on the chart, but that could be interrupted if rates keep falling from their recent high and drag the dollar down with them.  Dollar down, gold up.

The Gold ETF Chart (GLD; click to enlarge the chart):


Gold dives. The thing that can save it is a dollar reversal with rates.

The 10 Year Treasury interest rate (TNX, tracked by TLT if Bullish; TBT if Bearish; click the chart to enlarge it): Rates falling again can drive the US Dollar down and gold UP.


Rates ready to fall again?

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I thank Worden Brothers for the charting 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.  It’s a great investment to have an excellent charting system.  Check it out with a free trial at the link above.

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