A Market Timing Report based on the 12-31-2015 Close, published Sunday January 3rd, 2016
I deliver focused comments on the markets. These are supplemented with “Tweets/StockTwits” (see links below).
Happy New Year to you all! Let’s make this a great year whatever the market throws our way.
1. SP500 Index: Last week I said: “Now would be a perfect time on the chart for the Bears to reassert themselves.” It took a while, but finally on New Year’s Eve, the market marked a FOURTH failure vs. the top green line shown in the chart below. The Bulls will have to come up with a solid employment report on January 8th and great fourth quarter earnings to follow that or this market will test still lower. The next downside targets are marked on the chart. I am expecting more downside. Things change quickly, so please keep in touch via Twitter and/or StockTwits using the links just below…
Keep up to date at Twitter and StockTwits: See my messages on Twitter® Follow Me on Twitter®. Follow Me on StockTwits®).
SP500 Index Chart (click to enlarge; SPX, SPY):
SP500 Fails for a Fourth Time
2. U.S. Small caps did in fact turn over as suspected last week.
Russell 2000 U.S. Small Cap Index (RUT, IWM; click to enlarge):
Small caps slipping again.
3. Gold (once again!) is lingering BELOW prior major support. With the Fed planning rate hikes into a deflationary environment, gold will likely continue to languish, short of a financial panic. The dollar will continue to strengthen as long as the Fed stays on their current course.
Gold ETF (GLD; click to enlarge):
Gold consolidating below prior major support – STILL!
4. U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF): Also correct from last week: “Rates are about mid-range and are not likely to rise much while the Federal Reserve is raising rates, unless inflation does actually show up.” You can safely hold bonds and Treasuries for a while as long as the Fed remains relatively hawkish vs. the rest of the world. Junk bonds are another story if the Fed succeeds in tipping the U.S. economy into a recession. Rates have fallen from the initial spike when the Fed hiked the Fed Funds rate by 0.25%. That’s what we expected.
If you see rates rise above that 12-16 level, start paying attention. If the Federal Reserve keeps going with their current view/actions, long rates will continue to stay stable and will likely fall somewhat. If they cause a recession, rates will fall harder.
Rates push down again with stocks selling off.
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I thank Worden Brothers for the charting system I use to post these charts. If you want to know more about the charting system I use every day, go to my “Other Resources” page here: Other Resources It makes it much easier to follow along with me if you can see the charts and manipulate them on your own computer. It’s a great investment to have an excellent charting system. Check it out with a free trial at the link above.
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