A Market Timing Report based on the 6-19-2015 Close, published Sunday June 21st, 2015
I deliver focused comments on the markets. These are supplemented with “Tweets/StockTwits” (see links below).
UPDATE 6-28-2015 (10:58 p.m.): The U.S. future markets are down 1.23% or so vs. fair value per CNBC.com due to failure of the Greek government to work out a deal with the Eurozone and IMF, which will lead to a Greek default. The Europeans will have to clean this up within a few hours on Monday morning or the SP500 will be testing one of the lower red lines on the chart below:
The Russell 2000 is back testing the last breakout line on the chart below, and is down 1.13% vs. fair value per CNBC.com. Gold is testing a higher low on the chart, and bounced a bit to $1182/oz. on Greece, and rates re-topped last week but fell after the Greek news. The U.S. 10 Year Treasury is at 2.3206% per CNBC.com at the moment. This too shall pass, so be prepared to buy more at better prices, unless the Europeans clean it up before we are fully awake. Greece will hurt the Euro longer term, but commerce won’t stop because of it. The Euro is selling off further: Read More
There will be a new monthly issue out next weekend, available only to those who subscribe at the link below…for loyal subscribers only. ; )
…And now back to my summary from last week, which still gives you the lay of the land for the U.S.
Please read my Twitter comments to the right.
1. The Fed became more dovish during their meeting this week. Because of that the Fed will likely raise rates in December, not in September as many are guessing. They will not raise in September, because earnings look lousy through the end of the year. They may not wait until 2016, simply to save face. The Fed has raised rates simply by scaring the market and then not raising them. Very cute.
2. The Fed will then only raise rates once or twice and stop. More would tank the economy. Earnings will be awful through the end of the year.
3. Inflation will be tame, so although gold will hold up based on central banking abuses, it will not go to the moon either. We keep gold as currency insurance only at the moment. Real rates have to fall further for gold to flourish. As rates decline, gold should benefit if you are trading it and willing to sell higher.
4. Rates will continue down a bit, but they will also remain range bound, due to the Fed’s insistence that the economy is recovering. We’ll probably do better trading the range than simply holding Treasuries into 2016. Beyond that, no one knows and if they say they know, ignore them. They are liars. It’s ALL guesswork, even what I just wrote. Short term guesses are generally more valuable than long term guesses. Long term guesses cause market players to do stupid things like “sell everything now!” The newsletters that preach those things are users who simply seek to make money off of the average investor’s fears.
5. Please read my comments from the update under last week’s blog post. The SPX is now below the green line and the small caps are still levitated. The Russell 2000 must reverse at the high as well for the market to go into a steeper pullback.
SP500 Index Chart (SPX, SPY): (Please click to enlarge it)
Russell 2000 U.S. Small Cap Index (RUT, IWM; click to enlarge): If they don’t break, large caps will recover to new highs as well.
Gold ETF (GLD): Holding as currency insurance only. No trade currently.
U.S. 10 Year Treasury Note (TNX,TYX,TLT,TBF): Treasuries did get a further bid based on Fed dovishness this week. Good news for the housing market.
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