A Market Timing Report based on the 7-10-2015 Close, published Sunday July 12th, 2015
I deliver focused comments on the markets. These are supplemented with “Tweets/StockTwits” (see links below).
1. The Greece “resolution” looks messy, meaning billions of dollars messy for Euroland. The latest report @CNBC said that the Euro zone leaders are close to a compromise deal with Greece. U.S. futures are down only a bit now (SPX -0.31% vs. fair value per CNBC.com at 11:05 pm ET). We made a purchase on Thursday July 9th. Do your best to buy lower, and sell higher in this period of higher volatility. Do not chase!
2. U.S. corporate earnings are expected to be weak and continue this week in earnest. Now we see if forward numbers weaken as well. Those with weak guidance will suffer big moves down in this higher volatility market.
3. Gold came off its low on a successful test. It is stuck in a range for reasons discussed in detail in the past few weeks.
4. Rates should be coming down (not bouncing UP) a bit with a Fed now due to delay a rate increase to the “end of the year” per Dr. Yellen. Per the futures market, it will be the first quarter of 2016. Either way, the Treasury market seems to require further convincing that rates can stay below 2.5% for a significant period of time, as noted by the bounce in rates at the end of the week.
Now given that summary, view the charts below, and get ready for more volatility…
The Current SP500 Index Chart (SPX, SPX; click to enlarge): A wide consolidation range.
Russell 2000 U.S. Small Cap Index (RUT, IWM; click to enlarge): Note the stronger response of small cap stocks vs. large. A higher low is forming.
Gold ETF (GLD): Holding as currency insurance only. No trade at the moment (see comment above).
U.S. 10 Year Treasury Note (TNX,TYX,TLT,TBF): Bouncing in what is likely a false belief in a hawkish Fed.
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