Market Timing Brief™ for the 11-18-2016 Close: Trump’s Fiscal Plans are “Christmas in November” for the Stock Market. Bonds Dive and Gold on Support.

Posted on November 20, 2016 by David Durand

A Market Timing Report based on the 11-18-2016 Close, published Sunday November 20th, 2016

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

1.  SP500 Index:  You see in my title this week exactly where new stock market investment will arise.  People buy things that are going up and sell things that are going down in general. I expect further highs in sentiment over the next few weeks (see below).  There will be market timing dips along the way that should be bought, not sold.  The economy must respond for all this to come to fruition, but a strong stock market helps spending.  Fiscal stimulus adds jobs and increases spending.  The Fed finally has something solid to raise rates against (or will within a year or less as Trump policies are enacted post 2016 Election), so it will hike rates in December.

We are back up again, now testing the prior SP500 Index market timing high.  Along this path, I was Bullish and 100% invested, adding back 5% exposure on Nov. 1st to 100% equity exposure vs. my usual maximum exposure, as I like to put it.  The reason I do that is so you can adjust it to your age and desired level of risk/opportunity.  This is NOT where you add more unless you own nothing.  If you buy a breakout, that breakout may fail, but you can sell a reversal.  And you can rebuy it if that reversal is a fake-out itself.  Does that sound hard?  It’s hard to do emotionally for 95% of investors, but this site is for the 5% left.  It is for the 5% that believe in making money without taking extreme risks, but also in preserving capital.  Discipline is the only way out of fear and loss of opportunity.

SP500 Large Cap Index (click chart to enlarge; SPX, SPY):

sp500-index-spx-market-timing-chart-2016-11-18-close

Trump rally testing a Top!

Keep up-to-date during the week at Twitter and StockTwits, where a combined 21,732 people are joining in…

Twitter® Follow Me on Twitter®.  Follow Me on StockTwits®).

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +20.08%, was WAY up from the prior week, which was only at +9.6%.  That was the best sentiment reading since the +20.4% spread reported on 11-05-2015 (for the poll closing at 12 am).  There is room for more conversion toward Bullishness as a 30% spread toward Bulls is not uncommon in a strong Bull market.

Last week I told you there was room to move to 20-30%.  The last higher surge of sentiment than the 11-05 number occurred with the 2-19-2015 report date’s surge to +29.1%.  The next highest was on 11-04-2014 to +37.6%.  See the recent pattern?  November surges.  In 2013 there was an October surge to 31.6% and then a December surge to +36.5% at the Dec. 26th report.

I expect this sentiment surge to continue at least to the 29% level from here.  Trump Fiscal stimulus is on the way, which is like “Christmas for the Markets.” 

The percentage of “Neutrals” is far BELOW 40% this week (above 40% Neutrals is Bullish on a market timing basis for higher prices out 6 months from today per AAII studies of their statistics).  I think that means that we should expect another dip or two in the next 6 months.  These may be more shallow than before.

Thurs. 12 am close to poll Bulls               46.65% Neutrals 26.77% Bears      26.57%

2.  U.S. Small Caps: They are at a new post-election market timing high and at an all time high.  They have the benefits of increased U.S. growth to come from the Trump Fiscal Stimulus Plan, as well as insulation from trade war fears and U.S. dollar strength.  Due to the lack of GAAP trailing 12 month earnings on the part of small caps (see HERE), we’ll stick with U.S. midcap stocks for now along with large cap exposure.  Follow my Twitter/StockTwits feeds to see what my new buys are this week or next. 

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

iwm-russell-2000-etf-market-timing-chart-2016-11-18-close

New highs for small caps. Growth and trade war protection.

3. Gold: Gold is on its knees post-Trump’s election, because the market expects higher growth and inflation, but APPARENTLY it expects the Fed to stay ahead of inflation, creating positive real rates of return for the markets.  See my prior article by Googling “When Does Gold Shine.”  It explains when gold works and when it does not.  We may be letting go of some gold exposure, IF the current support is breached as a market timing call.  I don’t recommend super-tight stops, because the market makers will often come in and trigger then and then bring the market back up higher. 

Gold ETF (click chart to enlarge the chart; GLD):

gld-etf-market-timing-chart-2016-11-18-close

Gold is on its knees. Preserve profits if it breaks.

4. U.S. 10 Year Treasury Note Yield (TNX): Rates have shot up as discussed last week.  Same story this week.  They could go still higher.  They are getting ahead of the economy at this point, but it’s a tough call to bet against the efficacy of the Trump fiscal stimulus.

It also appears that the market believes Trump’s policies will be inflationary. HOW inflationary is the question.  If rates stay ahead of inflation, then gold will do poorly.  Higher rates with higher inflation is part of a recovering economy.  Note that the Fed is already behind in normalizing rates vs. the usual path after an economic turn-down.  The other point though is that this recovery is the worst one since the Great Depression.  Interest rates will have their dips from here, but I expect higher rates to prevail over time as our national debt grows.  The key for fiscal spending is that it can help if it’s directed toward increasing the productivity of the economy, as I’ve mentioned and as Dr. Yellen of the Federal Reserve explained this past week.  Some will be, but some won’t.  The balance will feed into interest rates.

U.S. 10 Year Treasury Note Yield (SHOULD Say 11-18-2016 Close; click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2016-11-18-close

Rates shoot up on expectations of growth and inflation.

 

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

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the January 1st issue.  Note that if you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website for more general investing knowledge at:

Sun and Storm Investing™

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.

Copyright © 2016 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, mid-cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 11-11-2016 Close: Stocks Slump then Rally on Trump Win. Gold Rallies then Slumps as Interest Rates Soar.

Posted on November 13, 2016 by David Durand

A Market Timing Report based on the 11-11-2016 Close, published Sunday November 13th, 2016

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

1.  SP500 Index: Trump won the 2016 Election. The nation must now deal with that fact and cooperate with him where they agree for us to move forward.  All politics aside, what is happening so far?  Realize that “so far” does not mean it predicts what will happen next week; it simply means what the market has done since it knew of or suspected the Trump win.  I’ll tell you the “Moral of the Investment Story” at the end…

Stocks: Went up strongly (mostly) after an overnight stock futures swoon of over 5%.  That was after a previous dip, so the “Trump Dip” did happen as expected.  But it was fast and furious.  Yes, market timing that was not easy.  Now the market believes in higher growth AND inflation under President Elect Trump.

The big winners longer term (with some caveats) are likely:

A. Construction related stocks: Infrastructure repair and wall building.  This may be one of the best bets.  Both parties want the infrastructure part.  The wall is another thing, but the Democrats may not oppose it.  Caterpillar (CAT) soared on Wednesday but came off the prior low with some increase in volume on the Friday before the election.

B. Healthcare (XLV) and Biotech stocks (IBB): Drug stocks picked their winner Monday (XLV).  Other health stocks took off then too.  Look at the climb in Humana (HUM) on Monday.  I won’t chart it here, but look at it.  Investors were already betting on a Trump win on Monday.  Biotech (IBB): There was a bounce from support on Monday, but the big reaction came on Weds.  One catch for these two classes of stocks is that Trump wants to negotiate prices to keep costs of his new version of Obamacare down.  Let’s call it “TrumpCare.”  Follow the market timing charts, not the pundits, or you could lose big money on drug and biotech stocks!  See the ‘Moral of the Investment Story” below to be clear on this.

C. Financial Stocks (XLF): A few traders knew on Monday, but the huge reaction came on Weds. when Trump’s win was known.  Bank regulations are likely to be repealed to an extent that will help the financials. Clinton had declared war on the banks with Elizabeth Warren, so there is big potential relief there for that industry.

D. Defense: Aerospace and Defense Stocks (ITA): Rallied big, but not until Weds.  The twist here, which could hurt them and counteract some increased in spending is the cuts Trump may make to helping our allies. The market believes they are winners so far.

E. Small Caps (IWM):  Last but not least, small caps love the idea of U.S. based growth (America First slogan of Trump), as they would be less directly effected by a trade war, and benefit from an American economic boom.  Mid-caps are still my preference vs. small.  over time, mid-caps tend to outperform both large and small cap stocks at least in recent years.  They are more likely to survive another downturn. They are also outperforming large caps after the Trump win, although small caps have had a bigger bounce than mid-caps.

Not Really Winners:

A. Energy Stocks (XLE): Not really winners, but not losers either.  They are about where they started on Tuesday before the results were known, but up slightly off the prior base. They are helped by less regulation and more land to drill and frack, but not helped by increased supply.  My advice is to follow the ETF market timing charts, not “guru opinions” on what they will do!

B. REITS (a bit worse) and Housing (a bit better): VNQ and ITB did not react that well to the Trump win, but VNQ went down a bit and ITB went up a bit.  Higher interest rates don’t help either industry, but job growth can help housing.  A more vibrant economy can help REITs.

Losers:

A. Utilities: Fell on the news.  Higher growth means higher rates and more competition with utility stocks for yield. The fall here was much more than for REITs which is interesting.  Once again, follow the charts, not some complex argument as to why they should go up or down. 

B. Gold and mining stocks: GLD initially rallied when the market started out nervous about Trump but after hearing the conciliatory speech from Clinton, the markets turned to what I’ll call the “Trump GDP Growth Cycle.”  Read more to learn how growth hurts gold: HERE

Silver held up well at first and then on Friday tanked over 6%.

What’s the counter-argument?  If Trump’s government tax-cuts and spending on the wall etc. does not drive up interest rates as fast as inflation, real interest rates can then be negative and gold does well (read more at above link).

The summary for gold’s prospects is that it is an unknown.  We must follow the market’s decision.  I advised protecting profits last week and if you have not done so, consider selling if the April to June lows are violated, but ONLY if you are willing to buy it back on a recovery.  See the 3rd chart below.

C. Treasuries and Bonds: Both TLT (Treasuries, long dated maturities) and LQD (corporate bonds) fell.  Higher growth means higher interest rates, means trouble for bonds. 

The catch for all this is that the economy must turn around, or the numbers could drive stocks down prior to a rescue by Trump’s policies which could take many months to enact.  Also, the Federal Reserve wants to raise rates in December, which may be a virtual lock barring horrible economic numbers.  That could further upset the stock markets.

Please review the charts below, so you know where we stand…

SP500 Large Cap Index (click chart to enlarge; SPX, SPY):

sp500-index-spx-market-timing-chart-2016-11-11-close

Stocks like the Trump win.

Keep up-to-date during the week at Twitter and StockTwits, where a combined 21,552 people are joining in…

Twitter® Follow Me on Twitter®.  Follow Me on StockTwits®).

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of +9.56%, was up from the prior week, which was about the same magnitude in the opposite direction.  The market recruited more neutrals to Bullishness than it did Bears.  There is room for more conversion toward Bullishness as a 20-30% spread toward Bulls is not uncommon in a strong Bull market.  The percentage of “Neutrals” is BELOW 40% this week (above 40% Neutrals is Bullish on a market timing basis for higher prices out 6 months from today per AAII studies of their statistics).  I said last week that investors were expecting a turnaround from “pre-election jitters,” and they got it.

Thurs. 12 am close to poll Bulls               38.89% Neutrals 31.78% Bears      29.33%

2.  U.S. Small Caps: See above.  They are leading post-Trump.

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

iwm-russell-2000-etf-market-timing-chart-2016-11-11-close

Small caps zoom post-Trump.

3. Gold: Good growth is bad for gold (see above). If we get bad growth with high inflation, gold wins.  Hard call, so follow the market timing chart!

Gold ETF (click chart to enlarge the chart; GLD):

gld-etf-market-timing-chart-2016-11-11-close

Gold drops on Trump after brief fake-out bounce when stocks initially fell a bit.

4. U.S. 10 Year Treasury Note Yield (TNX): The economy is still slowing…or was.  Now the market may anticipate the future being higher rates and higher growth (read above under Treasuries/Bonds). If the numbers dive in the coming weeks, rates may come back down.  This is a hard call, but the bias for rates may be up from here if the Trump growth plan works over the short term (first 1-2 years).  (Moral of the Investing Story just below this chart)

U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2016-11-11-close

Rates soar on Trump inflation expectations and higher rates.

The Moral of the Investment Story is… follow the charts on all of these “Trump Trades,” because some are complex and the final outcome may be different from the initial expectations as he shifts his policies.  As an example, I suspect that the net effect of Obamacare on drug stocks will be negative over the longer term as he and Congress seek to control health care costs in the new TrumpCare system.  Same problems, different President. 

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

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the January 1st issue.  Note that if you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website for more general investing knowledge at:

Sun and Storm Investing™

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.

Copyright © 2016 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, mid-cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 11-04-2016 Close: SP500 Index Slips Even More, Breaking the Base. Gold Gains as Rates Fall on Weak Employment.

Posted on November 6, 2016 by David Durand

A Market Timing Report based on the 11-04-2016 Close, published Sunday November 6th, 2016

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

1.  SP500 Index: On Tuesday, the market broke through the prior low of the recent “Vibrational Range” I’ve been pointing out.  That is a significant market timing event, though it’s in proximity to the election.  Both large and small caps are now flirting with their 200 day moving average.  Further gains in the U.S. election polls by Trump has led to more market losses into the end of last week.

Like it or not, the stock market wants Clinton, even with the Clinton email scandal.  This too will pass, even if Trump wins, but I believe the markets will sell off in response to a Trump win (correct to 10% from the last high) and then recover as they realize that the GOP House is not going to let Trump run wild and get all he wants.  That is why the stock market has fallen for numerous days in a row.  Remember there may also be trepidation about a clean Republican sweep.  Fiscally however, Congress would block hyper-spending plans by a President Trump.  Both Trump and Clinton have big spending plans.  Trump has tax cut plans that have never worked to lower deficits.  They did not work under Reagan and did not work under G.W. Bush.  They stimulate growth, but have a huge cost in deficits, over 3 Trillion in the case of Reagan.  Some may not like to hear that, but I strongly favor balancing the budget.  Tax cuts for the wealthy, if overdone, don’t help in that regard.

What the market wants least is a clean sweep by Clinton and the Democrats with joint wins of the Presidency AND both the House and the Senate.  That won’t happen at least in the House, and it appears that due to further gains by Trump will help Republicans keep the Senate too.

The market will respond positively to a Clinton win if it occurs in the context of a GOP Congress, but still faces economic slowing over the intermediate term (employment weakening again this week), so we may want to lighten up at the next major high.

SP500 Large Cap Index (click chart to enlarge; SPX, SPY):

sp500-index-spx-market-timing-chart-2016-11-04-close

Stock slide continues on Trump gains.

Keep up to date during the week at Twitter and StockTwits, where a combined 21,369 people are joining in…here:

Twitter® Follow Me on Twitter®.  Follow Me on StockTwits®).

Survey Says!  Sentiment of individual investors (AAII.com) showed a Bull minus Bear percentage spread of -10.68, was little changed from the prior week.  The percentage of “Neutrals” is ABOVE 40% this week (above 40% Neutrals is Bullish on a market timing basis for higher prices out 6 months from today per AAII studies of their statistics).  The fact that Bearishness did not go up despite the market’s breakdown through the base of the prior consolidation on Tuesday says that investors may be expecting a turnaround from the pre-election jitters.

11-03-16 12 am close to poll Bulls               23.64% Neutrals 42.05% Bears      34.32%

2.  U.S. Small Caps: Small caps had signaled a weak market last week when they broke down through the base (aqua line) sending off market timing flares.  The slide continued this week.  We are staying clear of small cap risk (usually about twice the risk of large caps) for now.  They will bounce more should Clinton win however.

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

iwm-russell-2000-etf-market-timing-chart-2016-11-04-close

Small cap stocks testing the 200 day moving average.

3. Gold: We got that market timing breakout above 121.59 and the gains will continue should Trump be elected and there will be a fall on a Clinton win in the U.S. Election initially until the world learns that U.S. interest rates must come down even as the Fed is itching for rate hikes.  Intermediate term, I believe gold is a very good hedge.  When we see strong economic recovery, that will change things.  If you are overexposed to gold, taking some profits ahead of Tuesday’s election results may be reasonable, but it is a hedge against a Trump win over the short term.  UPDATE 11-10-2016: It turned out that the “short term” lasted just a few hours in the premarket and in the futures trading the night of the election. See my recent messages on social media to keep up. Strong economic growth under Trump could damage gold further, unless he generates excessive inflation via spending and tax cuts.

Gold ETF (click chart to enlarge the chart; GLD):

gld-etf-market-timing-chart-2016-11-04-close

Gold benefits from Trump fears.

4. U.S. 10 Year Treasury Note Yield (TNX): Rates were falling a bit more on Friday after weak employment numbers (see my Twitter/StockTwits comments at the above links).  Rates will go still lower if the economy continues to slow.  We need to be vigilant in following economic data and not buy into any political rhetoric about how strong or weak it is.  We should examine the evidence and the bulk of current data says we are late in the economic cycle.  Stay tuned this week via social media (see the links above), and we’ll get through the election together, and beyond..

I would increase in a step-wise fashion should you agree, not decrease, exposure to longer term debt over the near term.  Plan on pivoting out of that exposure when we see a real economic recovery out of the current pattern of slowing.

U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2016-11-04-close

Rates pull back on weak unemployment.

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

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the January 1st issue.  Note that if you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website for more general investing knowledge at:

Sun and Storm Investing™

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.

Copyright © 2016 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, mid-cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 10-28-2016 Close (11-01-2016 GLD Trade Update): SP500 Index Slips On Clinton Email News, GDP Report. Gold Stronger Despite Rising Interest Rates.

Posted on October 30, 2016 by David Durand

A Market Timing Report based on the 10-28-2016 Close, published Sunday October 30th, 2016 – Updated 10-31-2016 and 11-01-2016

UPDATE 11-20-2016 11:16 am: Protect short term trading profits here.  Could sell a bit and rebuy retracement from here or hold if you are not a trader.  Gold is extended at the moment.  Remember that the intermediate term should still be UP as the Fed will have to pivot to more dovish whether it hikes in December or not.  See chart on StockTwits/Twitter posted just now.

11-01-2016  How is the GLD Trade Working?

I outlined this trade yesterday, to buy a breakout above 121.59 as noted just above the GLD chart posted in the Sunday report (scroll down).  The follow through today was strong, and we’ll see if this holds up.  I would plan on keeping at least a small part of your profits should GLD pull back and retest this breakout.  I am keeping a strong core GLD position in light of the Central Bank shenanigans that are going on worldwide. Gold is a form of currency protection. 

gld-etf-market-timing-chart-2016-11-01-956am

GLD trade on breakoout is working thus far.

And now for this week’s market timing brief…

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

1.  SP500 Index: First, we’ll consider the GDP data out this week and then get on to the Clinton email shocker. Market timing is thrown for a loop when big wrenches are thrown into the charts.

The first estimate of third quarter U.S. GDP came out on Friday morning and initially received a favorable reaction until it was realized that there was weakness beneath the headline.  That included talk of how soybean sales had goosed the export number and how inventory building also falsely raised the GDP number.  Building inventories while consumption falls is not a recipe for corporate profits. Personal consumption was in fact down from 4.3 to 2.1 the previous quarter.  Here are the raw numbers for the data lovers: GDP data.

First let’s look at the quarterly GDP data.  Remember that real GDP (headline figure quoted as 2.9%) is the seasonally adjusted annualized rate of growth predicted from growth during the third quarter.  It’s an attempt to answer the question “What would the growth rate be for the coming year given the growth in the economy this past quarter?”  This graph, based on questionable inputs noted above, says the growth of the economy has picked up.

2016-10-28-3rd-q-2016-gdp-qoq-gdp3q16_adv_chart

Headline GDP number (SAAR; see text above)


What about the Year over Year data?  My message on StockTwits  included a link to the year over year GDP data: HERE.  There was a blip up from 1.3% Year over Year GDP growth to a 1.5% rates of Year over Year GDP growth, which Bulls could say shows some promise of more.  Bears would point to how close it was to the last number and the softness of the third quarter number just released.  Take your pick.  My take is that the economy, although growing slowly, is still growing and not necessarily headed into recession.

Given the slow growth rate, the Fed will only make things worse by raising rates, but it appears they are willing to make their second policy error since the last one in Dec. 2015.  It’s an annual tradition now.  That will further slow the economy incrementally though perhaps not fatally, the Bulls may argue, but there are other signs in the economic data that point to further economic slowing in which case ANY further rate hikes would be ill advised.

Should rates be higher?  Yes, but now that we’re here, what we should expect from the Federal Reserve is internal consistency with what they claim their goals are.

What else happened on Friday was the second version of the Clinton email investigation, when Comey sent a letter to Congress saying that his finding new emails linked to Clinton on Anthony Weiner’s laptop meant they had to investigate them, but did not know what they’d find…just 10 days before the election.  The 1 minute chart I published on StockTwits was publicized Friday night shows just how the market reacted to the email announcement and can be seen HERE.

The market took less than 5 minutes to react to the tweet from Congressman Jason Chaffetz (UT) who broke the news on Twitter.  Some said that there was earlier information on the Comey letter, but I have not yet confirmed it.  The stock market fell on the news, because as I’ve been saying for several weeks, the market wants a Clinton win but NOT a clean sweep of Congress, because it does not want a liberal agenda to be swept through Congress, and it does not want sweeping trade treaty re-negotiations and possible trade and tariff wars to follow.

Follow the election, because the market certainly is!

There is a warning sign from the end of the week as shown on the small cap chart, so after reviewing the SP500 Index chart, take a look at the small cap market timing chart…

SP500 Large Cap Index (click chart to enlarge; SPX, SPY):

sp500-index-spx-market-timing-chart-2016-10-28-close

Stocks sink to support after FBI letter sent to Congress.

Keep up to date during the week at Twitter and StockTwits, where a combined 21,226 people are joining in…here:

Twitter® Follow Me on Twitter®.  Follow Me on StockTwits®).

Survey Says!  Sentiment this week among individual investors (AAII.com) showed a Bull minus Bear percentage spread that was -9.32, or still somewhat Bearish in the midst of continuing worries about who will be our next President.  The percentage of “Neutrals” is just ABOVE 40% this week (above 40% Neutrals is Bullish on a market timing basis for higher prices out 6 months from today per AAII studies of their statistics).  The modest Bearishness is not as predictive as the neutrals are.  For that reason and others (some mentioned above), we will remain long stocks, but not overexposed to them.  We never make market timing decisions solely based upon sentiment, but are vigilant at the sentiment extremes.

10-27-16 12 am close to poll Bulls               24.75% Neutrals 41.18% Bears      34.07%

2.  U.S. Small Caps:

Small caps are indeed starting to break down on a market timing basis through an important support level.  There is a catch though, which I show you in the second chart below this.

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

iwm-russell-2000-etf-market-timing-chart-2016-10-28-close

Small caps bust through support.

How are Small caps doing vs. Mid and Large? 

U.S. Large Caps (SPY) vs. U.S. Mid Caps (IJH; white line) vs. Russell 2000 U.S. Small Caps  (IWM; green line; click chart to enlarge): Note that the small cap line (green) has further to fall to catch up to the other two indices, so that even though small caps have broken a support level, they have more gains to give up than do the mid and large caps.  I still favor large and mid cap stocks over the intermediate term.

spy-sp500-etf-market-timing-chart-vs-ijh-midcaps-vs-iwm-small-caps-2016-10-28-close

Small caps are still ahead post-Brexit, but they always fall more, rise more.

3. Gold: The dollar has been very slowly and slightly moving up with gold on a market timing basis, but after the GDP report, the US dollar fell and gold rose.  It’s always easier for gold to climb if the dollar is falling, and both tend to rise together mainly during panic.  The election uncertainty should give gold some upward tone.  Still, it tested and failed to rise through the yellow resistance line (121.59) shown.

Given the recent behavior around the number noted above in parentheses, I would consider a breakout above there to be a potential buy signal. Set a stop on new positions in case it turns into a fake out.

Gold ETF (click chart to enlarge the chart; GLD):

gld-etf-market-timing-chart-2016-10-28-close

Gold still has upward tone.

4. U.S. 10 Year Treasury Note Yield (TNX):

Rates have now reasserted the prior market timing breakout.  There is still fear that the Fed will raise rates at least in December.  They have a meeting that ends on Nov. 2nd, but there is no dog and pony show (news conference) until the December meeting.  They won’t want to raise rates a few days before an election.  They won’t change too much in their statement either in my opinion, or that could equally upset the markets.  Then we have the employment situation report on Friday at 8:30 am.  Check in this week with me on Twitter/StockTwits to keep up with the news.

U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2016-10-28-close

Fear of Fed hikes starting with December.

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

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the January 1st issue.  Note that if you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website for more general investing knowledge at:

Sun and Storm Investing™

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.

Copyright © 2016 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, mid-cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 10-21-2016 Close: Stocks Still Hesitating. Interest Rates Reverse Lower with Gold Beginning Up Trend.

Posted on October 23, 2016 by David Durand

A Market Timing Report based on the 10-21-2016 Close, published Sunday October 24th, 2016

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

1.  SP500 Index: The big number this week is the first estimate of US 3rd Quarter GDP on Friday, October 28th (please read more on this in my update to last week’s post – link to the upper right).  It could “spook” the markets if it radically disappoints.  Earnings are mixed thus far with some strong results coming from Microsoft and Netflix among others.  This week will be very busy with Earnings Reports.  We can say from the market timing chart that the market is not overly impressed by earnings reports, especially with the background of election jitters.

SP500 Large Cap Index (click chart to enlarge; SPX, SPY):

sp500-index-spx-market-timing-chart-2016-10-21-close

Markets still waiting for election results.

Keep up to date during the week at Twitter and StockTwits, where a combined 21,063 people are joining in. Thank you for your interest! 

Twitter® Follow Me on Twitter®.  Follow Me on StockTwits®).

Survey Says!  Sentiment this week among individual investors (AAII.com) showed a Bull minus Bear percentage spread that was -14.08, or moderately Bearish in the midst of continued election results uncertainty.  The percentage of “Neutrals” is just below 40% this week (above 40% Neutrals is Bullish on a market timing basis for higher prices out 6 months from today per AAII studies of their statistics).  This degree of Bearishness can worsen further as extremes often hit 20-30% in the Bull minus Bear percentage spread.

10-19-16 12 am close to poll Bulls               23.74% Neutrals 38.45% Bears      37.82%

Interestingly, we were at about the same negative sentiment level back in 2012 at this point in the election season.  We were at -15.9% on Oct. 18th, 2012.  Back in 2008, on Oct. 15th, sentiment was at +1.2%, but that was in the midst of the Great Recession and it had swung to -29.4% on 10-08-2008 and went more negative to -32.8% on Nov. 19.2008 after the election. 

This time around, we know what we are going to get roughly with each candidate.  As I’ve said, like it or not, the stock market favors Clinton, so a Trump victory would be expected to cause the most upset to stock market investors, despite the fact that Trump has said he’ll do some things that would help companies tremendously, such as lowering the corporate tax rate to 15%.

2.  U.S. Small Caps:

Small caps have tracked large caps very closely since the Sept. high, but I expect them to be more vulnerable as the economy shows signs of slowing.  Have a look at where they are…

Midcaps have very slightly underperformed, but are better valued than are small caps.  All categories are testing an important low.  A close below these lows would bring on additional significant damage.

spy-sp500-etf-market-timing-chart-vs-ijh-midcaps-vs-iwm-small-caps-2016-10-21-close

Large, mid and small caps are tracking fairly closely from last high.

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

iwm-russell-2000-etf-market-timing-chart-2016-10-21-close

Small caps are near a significant low.

3. Gold: The dollar has kept moving up and the first time it rallied, gold fell (see the move I marked with the magenta line, but this last dollar rally leg is finding gold (orange line) RISING in price, which I marked with the yellow ——— line.  That may mean that the higher rates the Fed is threatening are enticing dollar buying, but not everyone is “buying” that the dollar is the place to go, and gold is benefiting a bit.  This is a VERY early trend (dollar up AND gold up), so we’ll have to see if it continues next week.  “Gold up and dollar up” is NOT a good combination generally and often relates to panic in overseas markets.

Here is the comparison chart first, then I’ll show you the GLD chart:

uup-us-dollar-vs-gld-etf-market-timing-chart-chart-2016-10-21-close

Dollar up gold down at first but now it’s dollar up AND gold up.

Gold buying in other currencies helps most when it’s being bought in several major currencies, as explained HERE.

Gold ETF (click chart to enlarge the chart; GLD):

gld-etf-market-timing-chart-15-min-chart-2016-10-21-close

Gold easing UP a bit. A very early up trend.

4. U.S. 10 Year Treasury Note Yield (TNX):

Rates have now reversed the prior breakout.  I expect them to fall further as the Fed is forced to back off of their assumed December rate hike.  If they make a policy error and do HIKE in fact, they will likely have to reverse the error in short order.  There is no chart that helps us predict Fed errors. 

Remember I am not talking about what I would have done had I been running the Fed.  “Fed errors” refer to their internal inconsistency.  They claim to be data dependent, but don’t seem to see that the economic cycle is starting to reverse.  The consumer will find out many months later. 

If the market in fact believes the Fed’s intention to continue to raise rates, the breakdown in the breakout I’ve shown you below should be immediately reserved next week.  This COULD happen if GDP surprises to the upside. The Atlanta Fed is currently predicting Q3 GDP to be 2.0%, down from their early Aug. estimate of 3.6%.  They are well below other forecasts, so the market could be disappointed on Friday.

U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2016-10-21-close

Breakout reversed and rates falling again. We’ll see if it continues into and past the GDP number out Friday.

Be sure to check StockTwits/Twitter as well, as I’m about to post a chart showing the relative performance of indices from around the world.  Find out what the winning market is since the SPY high of 219.60.

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

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the January 1st issue.  Note that if you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website for more general investing knowledge at:

Sun and Storm Investing™

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.

Copyright © 2016 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 10-14-2016 Close (UPDATE 10-21-2016 of SP500 Index): Stocks Hesitate within Range. Gold Held Back by “FedSpeak” with Rising Rates as USD Breaks Out.

Posted on October 16, 2016 by David Durand

A Market Timing Report based on the 10-14-2016 Close, published Sunday October 16th, 2016

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

UPDATE 10-21-2016: Election Vibes Continue – The yellow lines are the same lines shown in the chart just below this one.  We’ve tested the top and bottom of the range set up on September 12th!  It’s now October 21st! 

The BIG number coming is on October 28th, which is the government’s 1st estimate of 3rd Quarter Real GDP, which estimates the growth of the economy on a seasonally adjusted annualized basis for the coming year.  “Real” means adjusted for inflation, and some have claimed that the GDP deflator that makes this adjustment has been liberally “played with” by the Bureau of Economic Analysis, which is part of the Dept. of Commerce, which is of course, part of the Executive Branch of the U.S. government, which is lead by the President. 

Guess whether they want to see a falling GDP number just before the election.  Hint, hint…

Here is the 15 minute chart updated at 11:34 am, Friday.

spy-sp500-etf-market-timing-chart-2016-10-21-1134am

SPY in lower end of vibrational range.

Now continuing with this week’s issue…

1.  SP500 Index: Retail sales met expectations this past Friday at +0.6% month over month, but were up only 0.3% minus auto and gas sales.  The banks beat earnings expectations on Friday, even the troubled Wells Fargo, but other companies may not do quite as well.

Overall, earnings per data company FactSet are expected to show a drop of 2.1–2.3% from a year ago as reported HERE.  This would be a long dry spell for rising earnings if it occurs; it would be the SIXTH quarterly drop in year/year earnings.  This is not a strong economy despite the Federal Reserve’s misunderstanding.  The Atlanta Fed has a GDP estimate up on their website that is 1.9% as of last Friday. That’s down from their 3.6% estimate at the beginning of August, a pretty big change.  I suspect it will come out even lower when we get the first official estimate on Oct. 28th.

SP500 Large Cap Index (click chart to enlarge; SPX, SPY):

sp500-index-spx-market-timing-chart-2016-10-14-close

SP500 Index stuck in the “Vibrational Range’ set up on 9-12-2016.

Keep up to date during the week at Twitter and StockTwits, where a combined 20,895 people are joining in. Thank you for your interest! 

Twitter® Follow Me on Twitter®.  Follow Me on StockTwits®).

Survey Says!  Sentiment this week among individual investors (AAII.com) showed a Bull minus Bear percentage spread that was -8.26, or mildly Bearish in the midst of the recent election uncertainty.  The percentage of “Neutrals” is still above 40% this week (above 40% Neutrals is Bullish on a market timing basis for higher prices out 6 months from today per AAII studies of their statistics).

10-13-16 12 am close to poll Bulls               25.47% Neutrals 40.80% Bears      33.73%

2.  U.S. Small Caps:

As I’ve said recently and repeatedly over the past several months, I prefer midcaps and large caps at this time, although they also are not cheap vs. their earnings, which have declined over the past year, as just discussed. 

My prior warning holds:  Be careful to exit your weak holdings for all market caps before earnings are reported.  They will be severely punished.

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

iwm-russell-2000-etf-market-timing-chart-2016-10-14-close

Small caps testing a low.

3. Gold: The dollar has maintained a breakout, which is trouble for gold denominated in US dollars.  It must hold the current price level, or we’ll drop to the April/June lows.  Rate hike fears mean a higher US dollar, which pressures gold priced in USD. Gold buying in other currencies can help out, but when it’s being bought in several major currencies, it does best, as explained HERE.

Gold ETF (click chart to enlarge the chart; GLD):

gld-etf-market-timing-chart-2016-10-14-close

Gold slump in face of higher rates.

4. U.S. 10 Year Treasury Note Yield (TNX):

The equation was explained above.  We have a rate breakout, a dollar breakout to go with it, and a breakdown in gold and stocks.  Rising rates only work in a more rapidly growing economy.  The Federal Reserve will likely have to reverse their rhetoric to dovish once again!  They are not even politicians, but they change their mind more often than politicians.  They are unelected misguided economists in control of the free world’s economy, along with the other misguided Central Bankers.

U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2016-10-14-close

10 Year Treasury Yield attempting a breakout.

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

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the January 1st issue.  Note that if you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website for more general investing knowledge at:

Sun and Storm Investing™

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.

Copyright © 2016 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 10-07-2016 Close (10-11-2016 SP500 Index Update): Stocks Drop Down Into Prior Range. Gold Pressured by Rising Rates But Rates Still Under Last High

Posted on October 9, 2016 by David Durand

A Market Timing Report based on the 10-07-2016 Close, published Sunday October 9th, 2016

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

UPDATE 10-11-2016: I posted on Twitter/StockTwits yesterday after the close that we’d “tapped the top of the range.”  That was a place to lighten up if you were a trader, but as I explain below, the overall Bull market is not yet done in my opinion.  This is ONE place you can add back some exposure, but save some powder in case there is another step down.  Note that the small caps have broken down below the immediate support they were at on Friday (see 3rd chart below)…  (label in 1st chart says “Vibrational Range”)

The following chart is for SPY, the SP500 Index ETF:

spy-sp500-etf-market-timing-chart-2016-10-11-226pm

Back to BOTTOM of range.

Continue reading about the set-up in the markets for this week…

1.  SP500 Index: SP500 Large Cap Index (click chart to enlarge; SPX, SPY):

The monthly employment report out this past Friday was less than what was expected.  I covered this on Twitter and StockTwits, so I won’t repeat it here (links below).  It’s weak enough at least to reflect prospects of slow U.S. economic growth going forward, and at worse, hinting that we’ll see a recession within a year or so.

Keep up to date at Twitter and StockTwits where a combined 20,644 people are joining in. Thank you for your interest! 

Twitter® Follow Me on Twitter®.  Follow Me on StockTwits®).

sp500-index-spx-market-timing-chart-2016-10-07-close

Stocks Slip On Increased Fear of Rate Hike

Survey Says!  Sentiment this week among individual investors (AAII.com) showed a Bull minus Bear percentage spread that was +0.89%, very neutral in the midst of the recent uncertainty.  The percentage of “Neutrals” is now above 40% (above 40% Neutrals is Bullish on a market timing basis for higher prices out 6 months from today per AAII studies of their statistics).

10-05-16 12 am close to poll Bulls               28.79% Neutrals 43.30% Bears      27.90%

2.  U.S. Small Caps: Overvalued at present.  We’ll stay away.  I prefer midcaps and large, although they also are not cheap vs. their earnings, which have declined over the past year.  Some say they are significantly overvalued. 

Earnings season will punish all stocks that lack or have weak growth in revenues and earnings. Be careful to exit your weak holdings before earnings are reported.  The “official earnings season” begins this Tuesday Oct. 11th with Aloca (AA).

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

iwm-russell-2000-etf-market-timing-chart-2016-10-07-close

Small caps testing base of recent range.

3. Gold: Gold is under pressure mainly because of rate fears, which will likely subside if earnings disappoint.  It certainly has been a big set-back for gold Bulls.  If earnings are in fact MUCH stronger than expected (as estimates are ALWAYS understated by companies, so they can generate surprises), expect more losses for gold as rate hikes into a slow world economy boost the US dollar and hurt gold in dollar terms.  See last week’s issue for a link to my “golden rules.”  Read my comment on rates below.  The next move in U.S. interest RATES will determine gold’s next near-term move.  That is because the next move in rates is going to move the US dollar.  The dollar is testing resistance as shown HERE!

Gold ETF (click chart to enlarge the chart; GLD):

gld-etf-market-timing-chart-2016-10-07-close

Gold suffers a fall due to interest rate fears.

4. U.S. 10 Year Treasury Note Yield (TNX): Rates are still below the recent high (aqua line in chart below).  If that is broken to the upside, you can expect GOLD to sell off harder.  Stocks may not like it either, as raising rates ONLY works when the economy is strengthening. 

U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2016-10-07-close

Rates rising on fears of Federal Reserve stupidity. Raising rates into an economic slowdown would qualify as stupidity, as it would be internally inconsistent with their objectives.

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

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the January 1st issue.  Note that if you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website for more general investing knowledge at:

Sun and Storm Investing™

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.

Copyright © 2016 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 9-30-2016 Close (GOLD UPDATE 10-04-2016): Stocks Moving Up Slowly. Gold Holding Above a Base. Rates Contained So Far.

Posted on October 2, 2016 by David Durand

A Market Timing Report based on the 9-30-2016 Close, published Sunday October 2nd, 2016

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

UPDATE: 10-04-2016 Gold Breaks Immediate Support

GLD, the gold ETF, broke immediate support this morning, but now is testing the prior breakout.  That has washed out some gains of course, but IF earnings come in and are unimpressive and IF employment underwhelms, gold may resume its rise.  I consider the main threat to gold to be the economy (see link below by second GLD chart below). Follow the economic recovery or the lack thereof.

gld-etf-market-timing-chart-2016-10-04

Gold testing prior breakout after a break of immediate support.

And now back to this week’s market timing issue…

1.  SP500 Index: You’ll see in the chart below that the SP500 Index is now just above the “Vibrational Range” that it was fighting with, and now is playing with the 50 day moving average. More progress is possible, but there are landmines ahead in the next 36 days.

I don’t expect great things until the election is over or when the market is sure of the winner, which looks like it will not be until November 8th, with a nuance I’ll get to momentarily.  Like it or not, the market expects and wants a Clinton win that represents the status quo and fears the trade restrictions Trump may impose on the U.S.  economy.  I expect the market to continue upward if the election appears to be going Clinton’s way.  At this point, she has a sizable Electoral Collage lead, and a Trump win would be a major upset.  You can make your own predictions HERE.

Earnings season, which will be on weak side begins with Alcoa (AA) on 10/10/2016 after market close just 8 calendar days away.  “Weakish” results are OK for the overall results as long as guidance is sufficiently optimistic for Q4.  Too weak and recession fears arise.  Make sure you exit any positions that are failing to make the revenue and earnings grade.  Consider re-deploying the exposure to an equivalent index fund if you want to keep your overall exposure to the market the same.

U.S. Employment numbers come out this Friday and could move the market down if they are too high.  The Bloomberg consensus is 168,000 jobs for September.  ADP Employment comes out Wednesday, and could inflect things early if too high.

SP500 Large Cap Index (click chart to enlarge; SPX, SPY):

sp500-index-spx-market-timing-chart-2016-09-30-close

Above prior vibrational range now fighting 50 day moving average.

Survey Says!  Sentiment this week among individual investors (AAII.com) showed a Bull minus Bear percentage spread that was -13.11%, in other words tilted toward Bearishness, but little changed from last week.  The percentage of “Neutrals” is now just below 40% (above 40% Neutrals is Bullish on a market timing basis for higher prices out 6 months from today per AAII studies of their statistics).

From last week as nothing changed meaningfully: This is again not an extreme.  Extremes occur at spreads of 20-30% toward Bearishness or more. Stay flexible, but above all, “Buy Fear, not Greed” as is one of our mottoes.

9-22-16 12 am close to poll Bulls               24.00% Neutrals 38.89% Bears      37.11%

Keep up to date at Twitter and StockTwits where a combined 20,360 people are joining in. Thank you for your interest! 

Twitter® Follow Me on Twitter®.  Follow Me on StockTwits®).

2.  U.S. Small Caps: Be sure to follow the advice above and jettison small cap stocks that won’t measure up this earnings season.

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

iwm-russell-2000-etf-market-timing-chart-2016-09-30-close

Small caps still holding up despite poor earnings over the past year, but we’ll see new results soon. Get ready. (see text)

3. Gold:  Gold is still holding above an important base.  I’ve covered this before, but the economy is a major key to gold’s near term success.  A hot economy means trouble for gold as the Federal Reserve will be raising rates to prevent inflation and if they are ahead of the curve, gold will fall. 

If the market starts to fear multiple rate hikes, despite softness of the economy, gold will suffer.  If the economy actually DOES pick up substantially and the Fed raises rates slowly, gold will also suffer. You can read more here if you have not: When Gold Shines

Gold ETF (click chart to enlarge the chart; GLD):

gld-etf-market-timing-chart-2016-09-30-close

Gold holding above a base, which must continue to hold!

 

4. U.S. 10 Year Treasury Note Yield (TNX): Rates have endured some upward pressure of late, but are still contained below the yellow triangle shown.  If employment disappoints this week, they will drop once again.

U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2016-09-30-close

Rates moved up a bit, but are still below the triangle.

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

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the January 1st issue.  Note that if you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website for more general investing knowledge at:

Sun and Storm Investing™

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.

Copyright © 2016 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 9-23-2016 Close: Stocks Testing Top of Recent “Vibrational Range.” Gold Bounces to Mid-Range as Rates Fall.

Posted on September 25, 2016 by David Durand

A Market Timing Report based on the 9-23-2016 Close, published Sunday September 25th, 2016

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

1.  SP500 Index: Stocks liked the Fed FOMC meeting statement (See my messages at StockTwits/Twitter via link below.  I won’t repeat them here.)  The Fed is keeping rates constant due to uncertainty that is showing up in economies worldwide and our weakness at home. 

Earnings season is the next challenge.  Some recent estimates say that SP500 Index profits for Q3 could come in at -2% while revenues will rise 2.6%  (there are typos in the article as you will see, but the same earnings number was quoted elsewhere).  Companies are selling a bit more, but at lower prices or with increased costs.

(NOTE: GDP Number out this week is the 3rd estimate of SECOND QUARTER GDP, not the Q3 number!  It should not change that much.  1.3% expected per Bloomberg News.  Q3 GDP comes out on Oct. 28th at 8:30 am )

In any case, the economy is still too weak for the Fed to raise interest rates despite the improvement in the employment figures.  Dr. Yellen mentioned in the “dog and pony show” at 2:30 pm Weds. that workers were being recruited from the “discouraged/not previously looking” pool, which provides some slack, although wages are finally rising, which could eventually trigger inflation.  The Fed will watch, but likely resist raising rates until corporate profits and revenues improve further.

The chart shows that we rose to the top of the prior “Vibrational Range.”  When investors become fearful, volatility spikes and then has to calm down.   The SPY closed within this range, while as you see, the SP500 Index itself closed right at the top of the “Vibrational Range” that was set up on Sept. 12th (aqua lines; see also the last issue to upper right!).  We bought near the bottom of this “Vibrational Range.”  Buy lower, not higher is our motto. 

I actually like this statement of one of our guiding principles best:

“Buy fear, not greed.”

SP500 Large Cap Index (click chart to enlarge; SPX, SPY):

sp500-index-spx-market-timing-chart-2016-09-23-close

Backtesting the top of the prior “Vibrational Range.”

Survey Says!  Sentiment this week among individual investors (AAII.com) showed a Bull minus Bear percentage spread that was -13.45%, in other words tilted toward Bearishness.  The percentage of “Neutrals” is AGAIN under 40% (above 40% Neutrals is Bullish on a market timing basis for higher prices out 6 months from today per AAII studies of their statistics).

This is again not an extreme. Extremes occur at spreads of 20-30% toward Bearishness or more. Stay flexible, but above all, buy low, NOT high. 

9-22-16 12 am close to poll Bulls               24.83% Neutrals 36.89% Bears      38.28%

Keep up to date at Twitter and StockTwits where a combined 20,094 people are joining in. Thank you for your interest! 

Twitter® Follow Me on Twitter®.  Follow Me on StockTwits®).

2.  U.S. Small Caps: Small caps recovered strongly from their dip prior to the Fed, but have yet to reach their prior high (green line).  There is further risk to small cap earnings for Q3 that is about to end (Sept. 30 for most companies), so let go of your dogs before they bite you with their “beta.” 

“Beta” is a measure of risk usually measured in the U.S. vs. the volatility of the SP500 Index.  A Beta of 2.0 means the stock or index is twice as volatile as the SP500 Index, for example.

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

rut-small-cap-index-market-timing-chart-2016-09-23-close

Small caps pull back off of new breakout.

3. Gold:  Gold made some gains off the lows…where we bought.  Stick to the discipline of buying low, and you’ll do it when others are in fear, rather than overthinking it.  There are times to step aside, and it’s not possible to get every move right, but remember that Bull markets tend to continue longer than investors expect.  Trends, when they are strong, and backed by macroeconomic arguments, tend to persist.

Gold ETF (click chart to enlarge the chart; GLD):

gld-etf-market-timing-chart-2016-09-23-close

Gold bounces from support post-Fed.

Before we get to Interest Rates and how they reacted to the Fed statement…

Note that ALTHOUGH my newsletter is now CLOSED to new subscriptions: You can Join the Wait List to Receive the Newsletter as a Loyal Subscriber, Opening again for the October 2nd issue.  Note that if you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

4. U.S. 10 Year Treasury Note Yield (TNX): Rates fell through key support AFTER the FOMC Federal Reserve statement. There’s still room to fall (meaning we make money on bonds/Treasuries), although the strongly Bullish investors out there expect the Fed to move as early as November.  I doubt the economic numbers will support that move.  I am following the break lower shown in the chart below.  I bought municipal bonds before the Fed announcement, anticipating dovish talk from Dr. Yellen, despite all the grandstanding of other FOMC board members.

U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2016-09-23-close

Treasuries rally after the Fed (meaning interest rates FELL).

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

Be sure to visit the website for more general investing knowledge at:

Sun and Storm Investing™

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.

Copyright © 2016 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief™ for the 9-16-2016 Close (9-21-2016 Post-Fed Update!): Stocks, Gold and Treasuries all Whip Around as Volatility Spikes Then Calms Slightly.

Posted on September 18, 2016 by David Durand

A Market Timing Report based on the 9-16-2016 Close, published Sunday September 18th, 2016

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

UPDATE for 9-21-2016: After the Fed Decision to Hold Rates Constant

The move today was positive, but we need even more from the Bulls to make this an important move.  The red line you see right above today’s close is the next challenge for the Bulls.  Will the markets wait for the 1st debate to make that move?

spy-sp500-etf-market-timing-chart-2016-09-21-close

SP500 Index rose within the vibrational range discussed below. Positive shift, but more is needed.

1.  SP500 Index: The U.S. markets initially reacted positively to Fed Governor Brainard’s comments on Monday, which leaned dovish, and then the Federal Reserve went into a quiet period ahead of their two day meeting for Tuesday and Wednesday. At that point market timing traders were frustrated as the market then decided it did not actually know what the Fed will do Wednesday and vibrated up and down wildly within a consolidation range.  No progress has been made except that we’re off the 9-9-2016 low. 

By Friday, volatility had calmed down a bit, but the catch is that volatility is still in an up trend.  We are clearly waiting for the final decision of the Federal Reserve.  Set your market timing clock to 2 pm Weds. and hang on until then!   Oddly and VERY unusually my “number of the day” which I called “the number of the afternoon” due the big spike in volatility, became the number of the day for FOUR days in a row, something that we rarely see.  The SPY “number of the week” was 213.25 by the way.

Be alert on Wednesday.  I’ll be live-Tweeting the Fed event starting at 2 pm on Weds.

SP500 Large Cap Index (click chart to enlarge; SPX, SPY):

sp500-index-spx-market-timing-chart-2016-09-16-close

SP500 Index vibrating with higher volatility within a range.

Survey Says!  Sentiment this week among individual investors (AAII.com) showed a Bull minus Bear percentage spread that was barely tilted toward the BEARS at -7.98%.  The percentage of “Neutrals” is back under 40% (above 40% Neutrals is Bullish on a market timing basis for higher prices out 6 months from today per AAII studies of their statistics).

This is still not an extreme.  Extreme Bearishness usually results in spreads of up to 20-30 or more in extreme circumstances and there is room for sentiment to move in either direction from here, so beyond knowing that, it’s not helpful at the moment. Recognizing that the selling may not be over is useful.  Stay flexible.

9-07-16 close to poll Bulls               27.94% Neutrals 36.14% Bears      35.92%

Keep up to date at Twitter and StockTwits where a combined 19.272 people are joining in. Thank you for your interest!  Twitter® Follow Me on Twitter®.   Follow Me on StockTwits®).

2.  U.S. Small Caps: Small caps rose to resistance after Federal Reserve Governor Brainard’s comments.  It is likely that stocks will be aimless, but possibly still volatile, prior to their final decision Weds. and what Dr. Yellen says in the 2:30 pm ET televised “dog and pony show” will also be important should there be any surprises. 

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

rut-small-cap-index-market-timing-chart-2016-09-16-close

Small Caps rose to resistance.

3. Gold:  Gold is under pressure due to the fear that the Federal Reserve could make a mistake (vs. their working belief system!) and hike rates into a slowing economy worldwide.  This is a good buying point if you believe the Fed will have to stand pat on rates.  If the Federal Reserve raises rates, the economy will slow further and gold will do even better though initially gold could take a further hit, so consider averaging into it here and be prepared to buy more if the Fed makes its second mistake.

Gold ETF (click chart to enlarge the chart; GLD):

gld-etf-market-timing-chart-2016-09-16-close

Gold under pressure due to belief that Fed could hike rates.

4. U.S. 10 Year Treasury Note Yield (TNX): Interest rates rose just a bit over the past 5 trading days within the same triangle I pointed out last week.  This may be a good point to ADD Treasuries, although there are plenty of investors betting against them, which has stretched them in their trading range to the upside.  The Federal Reserve decision will determine the next move in ALL the markets discussed.

U.S. 10 Year Treasury Note Yield (click chart to enlarge; TNX,TYX,TLT,TBF):

tnx-10-year-treasury-note-market-timing-chart-2016-09-16-close

Rates rise in the 2nd triangle. Interest rates should fall if the Fed does not raise rates Wednesday.

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

Be sure to visit the website for more general investing knowledge at:

Sun and Storm Investing™

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.

Note that the newsletter is now CLOSED to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the October 2nd issue. If you join and don’t read the newsletter, you will be deleted. Why? I don’t publish to non-readers as other newsletters do. I surround myself with committed people who value what we are doing. Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Copyright © 2016 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, federal reserve, gold, investment, investor sentiment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , | Leave a comment