A Market Timing Report based on the 11-27-2015 Close, published Sunday Nov. 29th, 2015
I deliver focused comments on the markets. These are supplemented with “Tweets/StockTwits” (see links below).
I trust you had a wonderful Thanksgiving! The markets will be back at it on Monday, so here are some brief comments about the markets to catch you back up to my current thinking…
1. SP500 Index: Up and stuck. Perhaps the market is waiting to see what U.S. holiday sales will look like. The market is currently about mid-range, so it’s not a good place to add either longs or shorts. If this bounce reverses at a lower high than the top of the wedge, the market will behave badly.
SP500 Index Chart (click to enlarge; SPX, SPY):
2. U.S. Small caps have outperformed large caps since the 2009 low, but have underperformed since the August low. Investors are eyeing the door as the Federal Reserve has decided to raise rates in December, except of course, that they remain “data dependent.” The data meanwhile are strong enough that the expectation for a Federal Reserve rate hike has gone up to 78% per the CME Group.
Russell 2000 U.S. Small Cap Index (RUT, IWM; click to enlarge):
3. Gold has finally broken down to a brand new low since the high in 2011. This is what we expected. The economic recovery scenario with rising rates is the one that will be most harmful to gold’s intermediate term prospects.
Gold ETF (GLD; click to enlarge):
4. U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF): Rates shown on the weekly chart below continue to slide despite the Fed threat of a hike or two. This is because raising rates into deflation will just produce more of the same and bond yields will stay low. NOTE: the chart says 11-20, but in fact represents the 11-27-2015 close.
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