Market Timing Brief for the 11-28-2014 Close: SP500 Index Top with Small Caps Leading Down? Will Gold Hold the Channel? Rates Plummet Again.

A Market Timing Report based on the 11-28-2014 Close, published Sunday November 29th, 2014

12-01-2014 Close: The gold rally after capitulation selling in the overseas market last night looks real today.  Volume is increasing with price as you see in the chart below (click to enlarge the chart; NOTE ON CHART SHOULD READ 12-01-2014!):


No guarantees, but this rally is looking real due to the rising volume on up days.

…continuing now with this week’s issue published 11-29-2014:

The SP500 Index faltered a bit on Friday and the Russell 2000 Index actually retopped at a lower high and began to fall.  Markets can go up a long time in a grinding fashion, but there are some limits based on expectations of the strength of the world economy.  Could the SP500 simply move higher?  Yes, up to the yellow channel line in the chart below.  The question on Monday will be whether sales were strong enough to get us to a happy Q4 GDP.  My hypothesis, which may not hold true, is that the Russell 2000 Index must make a new recent high before the SPX hits the top of the channel.

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


Will it make it to the top yellow channel line or fall with the small caps?

The U.S. Small Caps (RUT, IWM):  Russell 2000 U.S. Small Cap Chart (click the chart to enlarge it):


Small caps are falling already.

The AAII sentiment Bull – Bear Spread is 31.3% this week up from 25.3% last week.  If you have not seen the possible outcomes given this sentiment level, you can read it here: AAII Survey Says!

To find out what I’m going, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

The Gold ETF Chart (GLD; click to enlarge the chart): Gold fell due to one major event, namely, the OPEC decision to allow oil prices to tank further.  This may seem good short term for U.S. consumers, but their intention is clearly to put oil shale businesses out of business in the U.S. and some speculate to hurt the Russians and Iranians as well who are supportive of Syria’s Assad.  It hurts U.S. employment in the energy industry.  Lower oil prices also mean lower prices for many goods, and hence deflation, which is not what the world needs right now according to every Central Banker who breathes oxygen.  They want growth with mild inflation.

Gold needs to hold the lower end of the channel.

The 10 Year Treasury interest rate (TNX, tracked by TLT if Bullish; TBT if Bearish): I was correct about rates falling sharply again.  They did just that as oil and gold fell as the chart shows and we’re making money on TLT.

Please Click the TNX Chart to enlarge it:


Rates plummeting again.

SUMMARY: Small caps have topped a 3rd time.  If they can recover and bounce to new recent highs, the SPX will have a shot at the top channel line shown above.  If not, expect at least a mild pullback in U.S. stocks. Gold must hold the lower trend line or the damage could continue to new lows even below the bottom red line. 

Rates are falling and probably will retest the last low as I predicted weeks ago.  It makes sense in the face of deflation that rates must fall.  We have deflationary pressures despite massive money printing operations worldwide.  Will more money printing fix this?  Doubt it.  Be prepared with an investment plan when things go south.

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