A Market Timing Report based on the 2-13-2015 Close, published Sunday February 16th, 2015

UPDATE 2-17-2015: Look at the strong gold vs. TLT (20+ Year Treasuries) correlation.  What I believe is that this is a “risk off” situation now, so an increase in risk (e.g. Greece possibly) could change this in a big way.  If it does NOT occur, there could be still more downside.

Gold has been highly correlated with the 10 Year Treasury since December. TLT vastly outperformed GLD in 2014.

The charts speak for themselves, but do see the charts and the brief comments and also the conclusions at the base.  The rest is on Twitter®/StockTwits®.

The SPX is at a new high.  New highs need confirmation, often 3 days or so and can STILL reverse from a “marginal new high.”  So let’s pay attention.

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

SP500 Day 1 of Brand New Breakout.

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Small caps also made a new high.  Brand new. But will the Russell 2000 hold its gains and run up again?  More on that later.

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

Small caps at new all time high. Day 1.

Gold must hold up at about this level or the rally will be essentially over.

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

Gold is vacillating around support. Must hold about here.

Rates need to stop about here or the picture changes much more dramatically.  The world is pretending that the destruction of other currencies somehow also drags down the U.S. dollar and causes rates to rise.  Is that because the Fed will have to do more QE or some other mechanism?  No one knows that for sure.  Follow the chart.

Please Click the TNX Chart to enlarge it (NOTE: This is a weekly chart):

Rates need to hold here too or the Bond Bulls lose significant ground.

CONCLUSIONS: We have two new breakouts in U.S. stocks to talk about here, the SPX and the RUT.  Day 1 is not enough, but it’s amazing stocks have done this despite falling earnings estimates in Q1. Yes, shrinking earnings (see Twitter from Friday)!  This is bad news for the Bulls as the economy has slowed more than expected.  This earnings shortfall could drive a pullback in stocks. 

Why are stocks still moving up?  The markets think all this slowing will help stocks when the Fed puts off its desire to raise rates.  But without additional QE, that won’t do a thing.  The world is deflating, which slows sales as customers wait for lower prices.  Consumers did NOT spend their “gas money” as CNBC reported.  They saved it and spent it on things not measured in the consumption numbers like rent and medical care (higher premiums under Obamacare). 

This would be the perfect place for rates to reverse down, gold up, and stocks back down.  If that does not happen, you could see another entire leg in the current directions in all of these markets.  Given the weakness in consumption, that would make no sense, but markets sometimes behave in non-nonsensical ways.

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