A Market Timing Report based on the 2-19-2016 Close, published Sunday February 21st, 2016

I deliver focused comments on the markets.  These are supplemented with “Tweets/StockTwits” (see links below).

1.  SP500 Index: This week the negative spread of the Bull% – Bear% of AAII.com Individual Investor Sentiment fell below the -25% level that would have been required to create the second “Sentiment Shock” that I defined here: “SENTIMENT SHOCK™”.  The spread was only -10.2% to be exact.  We are now waiting to see whether the shock that hit the market during the two week period beginning with 1-13-2016 will give rise to yet another shock.

The last bounce has been weak.

The bounce off the lows has been weak, and I’ve taken some exposure off, right or wrong.  I suspect there needs to be more retesting of the prior lows at the minimum.  In the meantime, please keep up to date at Twitter and StockTwits: See my messages on Twitter® Follow Me on Twitter®.   Follow Me on StockTwits®).

2. “U.S. Small caps failed to scale 1040 at the end of January, and remain in a Bear market.”  Still true today.  Stay away.

Russell 2000 U.S. Small Cap Index (click chart to enlarge; RUT, IWM):

Small caps hesitate along with large caps.

3. Gold: Rally still continues. I bought some more gold, adding a trading position to my long term buy and hold position.  Entering here is a bit risky (I hope you entered lower when I said to “buy some damn gold”) as the rise of gold has been rapid and is subject to a greater pullback; however, I believe the rally will be sustained based on US dollar weakness to come.  I believe that the only way out of the U.S. profit recession is to have the US dollar come down and it will, because it must (per the Fed’s goals in life). Dollar down, gold up.   If that does NOT occur, don’t expect much from gold unless there is financial panic in which case both tend to rally.

Gold ETF (click chart to enlarge; GLD):

Gold rally is stretched, but dollar looks like it’s peaked.

4. U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):  Rates are moving back down due to the impending round in the currency war that is about to start.  The Fed will have to back off from hiking rates and let the US dollar weaken once again to cause U.S. sales abroad to rise, earnings to rise and GDP to perk back up. If the Fed raises rates, they will drive the dollar up and commit U.S. economic suicide if they do not then relent.

Rates drift back down.

Stay with me throughout the week for the LATEST via the links to Twitter/StockTwits above.  Feel free to comment, retweet etc. to spread the word.

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Standard Disclaimer: It’s your money and your decision as to how to invest it.

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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