A Market Timing Report based on the 8-21-2015 Close, published Sunday August 23rd, 2015
I deliver focused comments on the markets. These are supplemented with “Tweets/StockTwits” (see links below).
1. The SP500 Index is falling in the futures markets tonight. Support has been broken yet again. The 1821 October 2014 low is a potential target, although the market is already very oversold and a bounce could happen sooner than that. The Fed may make some sort of definitive comment about holding off with rate increases due to the slowing world economic data. The implied open per CNBC is at a nasty 1932 (it’s even lower as I am finishing this post…but once a market is oversold it becomes hypersensitive to good news, so this is not where you start shorting a market).
2. Small caps are down about 2% in the futures markets late Sunday evening per CNBC bringing the open to about 1134. Things could change by tomorrow morning, but this market appears to want to extract more blood prior to rallying.
Russell 2000 U.S. Small Cap Index (RUT, IWM; click to enlarge):
3. Gold has reversed a major break on increasing volume. Owning something that is working while stocks are not working is what diversification is all about. Gold is benefiting from the dollar weakness I predicted along with falling yields (see prior post on when gold shines if you haven’t read it).
Gold ETF (GLD):
4. Treasury yields
U.S. 10 Year Treasury Note (TNX,TYX,TLT,TBF): The 10 year Treasury has been a good hedge against falling stocks. I took off some exposure, perhaps a bit early as stocks appeared oversold. We’ll look to add back exposure on a stock market bounce, but if we cannot, we’ll have our core position and some extra cash as well.
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