A Market Timing Report based on the 5-27-2016 Close, published Monday May 30, 2016
I deliver focused comments on the markets. These are supplemented with “Tweets/StockTwits” (see links below).
1. SP500 Index: The first revision of Q1 GDP was a bit better at 0.8% than the prior reading of 0.5%. Next week we get the employment numbers.
Since the Fed says it’s “data dependent,” the current bias toward raising rates perhaps as early as June may prevail if the employment figures are very strong. A big disappointment could find the Fed speak shifting back to dovishness. I believe that a “muddle through economic scenario” will be rewarded with gradually higher stock prices.
SP500 Large Cap Index (click chart to enlarge; SPX, SPY):
SP500 Index making further progress above the prior down trend line (in yellow).
Survey Says! Sentiment this week among individual investors (AAII.com) showed a Bull minus Bear percentage spread at -11.6% this past Wednesday (Bulls 17.8% and Bears 29.4% with Neutrals a Bullish 52.9%; Neutral Scores > 40 are Bullish for markets rising 6 months out.). The 52.9% Neutral Score is extraordinarily high.
Please keep up to date at Twitter and StockTwits: See my messages on Twitter® Follow Me on Twitter®. Follow Me on StockTwits®).
2. As I did last week, let me say every week until we see a break that the U.S. Small caps are STILL above the 1040.47 level that for me defines a Bear market transition point. The small caps have nearly recovered to the prior April high. Not bad for a “go away in May” crowd.
Russell 2000 U.S. Small Cap Index (click chart to enlarge; RUT, IWM):
Small caps recovering to the April high.
3. Gold: Gold has suffered as predicted under the pressure of the U.S. dollar’s strength. The red line is a line in the sand for gold Bulls.
Gold ETF (click chart to enlarge the chart; GLD):
Gold needs to find support very soon. The US dollar strength has been taking a toll.
4. U.S. 10 Year Treasury Note Yield (TNX): Rates remain in a triangle despite the fear of Fed hikes. I believe they will persist at low levels until the current economic weakness passes.
U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):
Rates caught in a triangle.
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