Market Timing Brief for the 2-27-2015 Close: SP500 Index Breakout Still Intact. Gold’s A Buy. Rates Should Move Down. Will They?

Posted on March 1, 2015 by David Durand

A Market Timing Report based on the 2-27-2015 Close, published Sunday March 1st, 2015

I’m continuing with the terse comment format this week.  The rest is on Twitter®/StockTwits®.

The SPX has maintained its prior breakout.  See the purple line?  That line is an upward wedge line that was previously broken.  We must rise above that level to void it as a technical landmark.  The bullish argument is that the market has broken out to new highs, and we’d have to fall below the prior breakout at 2093.55 to void it.

SP500 Index (SPX, SPY; click the chart to enlarge it):

sp500-index-market-timing-chart-2015-02-27-close

SPX keeps its breakout.

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

Small caps have had a clean breakout.  They must hold it.  The valuation of the RUT is stretched almost to where it was a year ago (per Wall Street Journal stats).

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

rut-small-cap-russell-2000-index-market-timing-chart-2015-02-27-close

Small caps also have an intact breakout.

Gold appears to have found a base.  Buying here with a stop would be a reasonable trade set-up.  Given the massive money printing happening all over the world, gold should hold up for the time being.

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

gld-gold-etf-market-timing-chart-2015-02-27-close

Has gold found a base? Probably.

Please Click the TNX Chart to enlarge it (see related ETFs, TLT, TBT and UBT): Rates could be falling again.  There are those who believe that the Federal Reserve will raise rates a bit simply to come off the near zero level.  Rates abroad will continue to pressure U.S. rates to the downside.

tnx-10-year-treasury-note-market-timing-chart-2015-02-27-close

Rates should fall. Will they?

CONCLUSIONS: The U.S. stock market breakouts are intact.  Gold is a decent trade from here using a stop.  The recent Fed speeches are all aligned with a more dovish Fed policy despite their threat of moving the Fed Funds rate off zero.

I cover foreign markets on social media (see links above) and in my montly newsletter.  Note that the newsletter is now closed again to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the April. 4th issue.  If you join and don’t read the newsletter, you will be deleted.  I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website 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 © 2015 By Wall Street Sun and Storm Report, LLC All rights reserved.

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

Market Timing Brief for the 2-20-2015 Close: SP500 Breaks Out (AGAIN, Day 1). Gold Breaks Support. Rates Spike EVEN Further.

Posted on February 22, 2015 by David Durand

A Market Timing Report based on the 2-20-2015 Close, published Sunday February 22nd, 2015

UPDATE 2-23-2015 @ 11 am: What do you follow this week as Dr. Yellen testifies on Tues at 10 am and again in the House at 10 am on Weds? 

Follow interest rates.  Note the strong positive correlation between rates and the SP500 recently.  If what she says drives rates lower, look for stocks to pull back a bit and at least go sideways within a range (dipping toward the lower end of the range at first). 

If she implies that the Fed is on auto-pilot and will raise rates despite worldwide deflation, the market will continue higher.  That is what this chart indicates:

spy-vs-tnx-positive-correlation-market-timing-2015-02-23-1110am

What will drive stocks down significantly?  A recession brought on by the Fed continuing to raise rates despite a slowing world economy.

 And now on to this Sunday’s charts:

I’m continuing with the terse comment format this week.  Should save both you and me time and get us to the point much faster!  The rest is on Twitter®/StockTwits®.

The SPX is again at a new high.  Sentiment, as mentioned on Twitter, is stretched, but it’s just one parameter we follow, in this case, a bit of a warning not to be overextended in exposure here.  That said, there is plenty of room to the upside in terms of the technicals.  There has been a long consolidation preceding the lastest two breakouts.  The top yellow channel line is currently at about 2174.

SP500 Index (SPX, SPY; click the chart to enlarge it):

sp500-index-market-timing-chart-2015-02-20-close

New highs! Are investors tapped out?

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

Small caps also made a new high.  Sound like a re-run of last week?  Because it is.  

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

rut-small-cap-russell-2000-index-market-timing-chart-2015-02-20-close

New highs in small caps too.

Gold took another hit, and some sort of higher low must be found soon.  The rally from the prior base could continue provided that rates pull back (see both charts below).  Fear has been falling of late, so gold falls and rates rise as U.S. Treasuries are less favored.

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

gld-gold-etf-market-timing-chart-2015-02-20-close

Gold is falling as rates rise.

Rates went higher on falling fear as Europe seems less tainted by Greece (at least for the 4 months they bought).  However, Russia is still causing distress in Eastern Ukraine.  Can Russia stand another round of sanctions?  There is clearly room on a technical basis for a rise in the 10 Year to the 200 day moving average (white line), this despite the pull in the other direction due to the fact that U.S. rates can fall far before they catch up to Europe and Japan.

Please Click the TNX Chart to enlarge it (see related ETFs, TLT, TBT and UBT):

tnx-10-year-treasury-note-market-timing-chart-2015-02-20-close

Rates rise as fear falls.

CONCLUSIONS: We have two BRAND new RE-breakouts in U.S. stocks to talk about this week, the SPX and the RUT.  Day 1 over a consolidation is not enough to say it will stick, but it’s an amazing feat, considering the backdrop of declining Q1 Earnings to come.  Gold needs to find a higher low fast and that will happen only if interest rates fall again.  The Federal Reserve revealed in its minutes this week that they are not going to raise rates too soon, as that would be detrimental to the progress to date.  That stance means rates should fall from here or perhaps from the next higher level seen on this week’s chart.

I cover foreign markets on social media (see links above) and in my montly newsletter.  Note that the newsletter is now closed again to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the April. 4th issue.  If you join and don’t read the newsletter, you will be deleted.  I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website 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 © 2015 By Wall Street Sun and Storm Report, LLC All rights reserved.

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

Market Timing Brief for the 2-13-2015 Close: SP500 Breaks Out (Day 1). Gold Vacillates Near Support. Rates Spike Further.

Posted on February 17, 2015 by David Durand

A Market Timing Report based on the 2-13-2015 Close, published Sunday February 16th, 2015

UPDATE 2-17-2015: Look at the strong gold vs. TLT (20+ Year Treasuries) correlation.  What I believe is that this is a “risk off” situation now, so an increase in risk (e.g. Greece possibly) could change this in a big way.  If it does NOT occur, there could be still more downside.

gld-vs-tlt-correlation-since-2014-12-to-2015-02-17-close

Gold has been highly correlated with the 10 Year Treasury since December. TLT vastly outperformed GLD in 2014.

The charts speak for themselves, but do see the charts and the brief comments and also the conclusions at the base.  The rest is on Twitter®/StockTwits®.

The SPX is at a new high.  New highs need confirmation, often 3 days or so and can STILL reverse from a “marginal new high.”  So let’s pay attention.

SP500 Index (SPX, SPY; click the chart to enlarge it):

sp500-index-market-timing-chart-2015-02-13-close

SP500 Day 1 of Brand New Breakout.

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

Small caps also made a new high.  Brand new. But will the Russell 2000 hold its gains and run up again?  More on that later.

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

rut-small-cap-russell-2000-index-market-timing-chart-2015-02-13-close

Small caps at new all time high. Day 1.

Gold must hold up at about this level or the rally will be essentially over.

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

gld-gold-etf-market-timing-chart-2015-02-13-close

Gold is vacillating around support. Must hold about here.

Rates need to stop about here or the picture changes much more dramatically.  The world is pretending that the destruction of other currencies somehow also drags down the U.S. dollar and causes rates to rise.  Is that because the Fed will have to do more QE or some other mechanism?  No one knows that for sure.  Follow the chart.

Please Click the TNX Chart to enlarge it (NOTE: This is a weekly chart):

tnx-10-year-treasury-note-market-timing-chart-2015-02-13-close

Rates need to hold here too or the Bond Bulls lose significant ground.

CONCLUSIONS: We have two new breakouts in U.S. stocks to talk about here, the SPX and the RUT.  Day 1 is not enough, but it’s amazing stocks have done this despite falling earnings estimates in Q1. Yes, shrinking earnings (see Twitter from Friday)!  This is bad news for the Bulls as the economy has slowed more than expected.  This earnings shortfall could drive a pullback in stocks. 

Why are stocks still moving up?  The markets think all this slowing will help stocks when the Fed puts off its desire to raise rates.  But without additional QE, that won’t do a thing.  The world is deflating, which slows sales as customers wait for lower prices.  Consumers did NOT spend their “gas money” as CNBC reported.  They saved it and spent it on things not measured in the consumption numbers like rent and medical care (higher premiums under Obamacare). 

This would be the perfect place for rates to reverse down, gold up, and stocks back down.  If that does not happen, you could see another entire leg in the current directions in all of these markets.  Given the weakness in consumption, that would make no sense, but markets sometimes behave in non-nonsensical ways.

I cover foreign markets on social media (see links above) and in my montly newsletter.  Note that the newsletter is now closed again to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the April. 4th issue.  If you join and don’t read the newsletter, you will be deleted.  I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website 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 © 2015 By Wall Street Sun and Storm Report, LLC All rights reserved.

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

Market Timing Brief for the 2-06-2015 Close: The SP500 Fails a Breakout as Sentiment Falls. Gold Eases. Rates Spike to Resistance.

Posted on February 8, 2015 by David Durand

A Market Timing Report based on the 2-06-2015 Close, published Sunday February 8th, 2015

The SP500 Index failed to hold onto a breakout that occurred after a positive employment report showed that non-farm jobs were at 257,000 vs. 230,000 expectations.  The market reacted negatively, because the market believes that the Fed is more likely to raise rates by June or July.  What the market is not registering is that, in the past, as interest rates were raised by the Fed during a recovery, the stock market did just fine until the arrival of the next recession. 

Why the slight pullback in stocks then?  Beyond the looming Greek debt problem following their election, the U.S. bond market has been believing that deflation worldwide is the issue and that the Fed would not move in summer or at least the rate increase would be no more than symbolic in terms of its effects, because the economy was strong enough to withstand any minor rate increase.  But interest rates spiked on Friday, which would seem to reflect a different belief, namely, the Fed is going to ignore world conditions and raise rates in the face of worldwide deflation, driving up even longer term (10 year and longer) rates.

You can see the SPX pulled back from that top aqua line which represents the two January highs.  Why is it useful to know this?  Because this is NOT the place I would suggest buying, because it’s closer to a top of the range than the bottom of one.  The pullback could be back to about 1988 or to the December low perhaps.  Sentiment is another reason to wait as I’ll get to, but first look at the chart below.

SP500 Index (SPX, SPY; click the chart to enlarge it):

sp500-index-market-timing-chart-2014-02-06-close

SP500 fails a breakout out of the recent range.

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

My concern about market sentiment is that gains in sentiment are not holding.  This is a negative in my view and a reason not to be overexposed to stocks here.  It’s possible that the October lows could be retested from here, given the spike in volatility and triple top on the daily chart above with a failed breakout to go with the sentiment problem.  As mentioned above, I would not at all be surprised by a drop to the Dec. low at a minimum.

Volatility has spiked to a value above the early 2007 high, and we all remember what started in 2007, a Bear market.   I am not claiming a Bear is around the corner, but I am saying that we may be part way into a bigger pullback.  Volatility clearly has room to rise to the high 30’s to low 40’s from here if Greece blows up in Europe and that destabilizes the banking system as an example.  Look back at the VIX chart in 2007 and you’ll see that volatility spiked earlier in the year, and then calmed down.  That was followed by a massive spike in August 2007 with the first significant sell-off for the SP500.  Remember that sentiment is only one parameter that we follow here and price is the final arbiter of the Bullishness or Bearishness of markets.

As for U.S. small caps, unlike the large caps, they have not broken back below their recent breakout above the prior range.  This may give us a hint that large caps could hold up at the 50 day moving average, as long as small caps stay above that top aqua line.

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

rut-small-cap-russell-2000-index-market-timing-chart-2015-02-06-close

Small caps are still above the most recent range.

Gold eased back to support of the 50 day moving average as interest rates spiked on Friday on the U.S. jobs report.  

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

gld-gold-etf-market-timing-chart-2015-02-06-close

Gold eases back to just above the 50 day moving average.

Gold has been rallying in dollar terms because 1. there was a currency panic going on in Europe and Japan, which drove organic gold buying.  2. The upward pressure of the U.S. dollar was less than #1 (U.S. dollar up normally means gold down unless there is counteracting organic buying).  Now panic is subsiding, which makes gold less attractive as an organic purchase and the U.S dollar was still strong on Friday based on the strong employment report.  Healthier economies will have higher interest rates.  Higher interest rates attract investment in the given currency.

The 10 Year Treasury interest rate (TNX, tracked by TLT if Bullish; TBT if Bearish):  Rates spiked to first resistance.  Perhaps they climb to and fail at the 50 day moving average.  My belief is that long term rates will stay contained if the Fed is raising the short term Fed funds rates.  Worldwide deflation is the current issue, not inflation.

Please Click the TNX Chart to enlarge it (NOTE: This is a weekly chart):

tnx-10-year-treasury-note-market-timing-chart-2015-02-06-close

Rates spike to nearby resistance.

CONCLUSIONS: The SP500 (SPX, SPY) needs to almost immediately rally to avoid falling to the base of the prior range.  Gold must hold here or the rally will vanish.  I suppose it could fall to the top red line in the chart above and survive, but the odds of a continued rally diminish if it does.  Rate could stop here, but it’s possible that they will rise to the 50 day moving average before resuming their decline.  Sentiment (see discussion above) concerns me the most particularly given the failed SPX breakout on Friday and issues looming over Greece for the European Union. 

This may not be the point at which to lower stock exposures from your usual allocation, but it would be reasonable to trim overexposure to U.S. stocks in my view.  As long as Central Banks remain accommodative, the markets are likely to find support higher rather than lower, that is, until the next recession rears its head.

I cover foreign markets on social media (see links above) and in my montly newsletter.  Note that the newsletter is now closed again to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the April. 4th issue.  If you join and don’t read the newsletter, you will be deleted.  I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website 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 © 2015 By Wall Street Sun and Storm Report, LLC All rights reserved.

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

Market Timing Brief for the 1-30-2015 Close: Stocks Fall. Gold Back In Rally Mode with Crashing Yields.

Posted on February 1, 2015 by David Durand

A Market Timing Report based on the 1-30-2015 Close, published Sunday February 1st, 2015

The SP500 Index fell on Friday after comments by the Fed’s Bullard, currently a non-voting Fed governor, to Bloomberg, that the Fed would raise interest rates by June or July due to strengthening of the U.S. economy.  The Fed does not really believe that the U.S. economy is going to continue to slow even though Friday’s first Q4 GDP reading was only +2.6% vs. the expected per Bloomberg News of +2.2-3.5% with a consensus of +3.2% (year over year seasonally adjusted rate of GDP growth).  The market is afraid that the Fed will raise rates too aggressively and shut off the stock market rally and slow the economy as well.

I asked Brian Sullivan through Twitter to ask Bill Gross (the “Bond King”), whom he was interviewing just after the Fed FOMC decision on rates, whether he thought there was an economic need to raise rates beyond the symbolic one mentioned initially by Gross.  He mentions me by name (at about 5:15 into the segment; and yes, I did a double take at that moment) as he asks Bill Gross my question here:

Bill Gross Interview by Brian Sullivan on CNBC. 

My question was rhetorical of course, as Bill acknowledged in his answer.  As I discuss below, cheap money can begin to damage the economy at a certain point.

SP500 Index (SPX, SPY; click the chart to enlarge it):

sp500-index-market-timing-chart-2014-01-30-close

Stocks fall back to support.

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

As for U.S. small caps, they are weakening (check the futures here at CNBC.com; although I prefer the mobile app).  The futures can change hourly, so check for the latest data.  A breach of the prior recent lows will set up a head and shoulders break and a target near the October low, which is a significant discount to today’s pricing.  For the Bulls to win on this pullback, it looks as though the 200 day moving average or thereabouts will have to hold as a low.  The December low offers the last ditch support as it does for the SP500 Index as well.

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

rut-small-cap-russell-2000-index-market-timing-chart-2015-01-30-close

Small caps also falling back to support.

Gold has resumed its rally thanks to the increasing likelihood of negative real interest rates (earning less than inflation on government debt) for the foreseeable future.   Why is this?  Because central banks around the world are buying back their own debt to artificially keep rates low while inflation continues to fall.  Gold investors are betting that inflation picks up again despite worldwide disinflation and outright deflation in some countries.   It’s the central banks against the slowing world economy that already has too much product on its hands, driving down prices.  Even if you can’t predict what the inflation rate will be in one year (hint: no one can), you can still participate in the gold rally, while it’s occurring.

What is the danger of the money printing?  When the money printed does not go into a productive and innovative economy, it is a waste. What is produced may be simply more of the same thing being produced elsewhere adding to supply and driving down prices.  So the net effect of cheap money through low interest rates  in non-productive/non-innovative economies should be even MORE DEFLATION, not the inflation they are expecting to create.  (Why do they want inflation?  Because they are in debt and debtors always want inflation to be high to drive down the cost of their debt in current dollars.  It makes it easier for them to pay off their debt.)

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

gld-gold-etf-market-timing-chart-2015-01-23-close

Gold breaks out.

The 10 Year Treasury interest rate (TNX, tracked by TLT if Bullish; TBT if Bearish):  Treasuries continued to rally predicting further deflation despite comments by the Fed to the contrary.  Having exposure to TLT or bonds including municipals has payed off well as a hedge against stocks for just over a year.  The Russell 2000 small caps are now back below where they were at the close on 1-15-2014.

Please Click the TNX Chart to enlarge it (NOTE: This is a weekly chart):

tnx-10-year-treasury-note-market-timing-chart-2015-01-30-close

Rates continue to plummet.

CONCLUSIONS: Breaking the Dec. lows would be very negative for both large and small cap U.S. stocks.  Gold is rallying and is back on as a trade for now.  We hold a long term gold position as well, just as we hold U.S. dollars.  Treasuries are signalling more trouble ahead in the way of deflation and worldwide slowing.  Cheap money can be the CAUSE of trouble for the world’s economy as discussed.  Central banks are trying to abolish the economic cycle and history says that is a losing proposition.

I cover foreign markets on social media (see links above) and in my newsletter.  Note that the newsletter is now closed again to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the April. 4th issue.  If you join and don’t read the newsletter, you will be deleted.  I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website 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 © 2015 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, gold, investment, large cap stocks, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , , , | 1 Comment

Market Timing Brief for the 1-23-2015 Close: SP500 Makes Progress. Gold Ramps. Rates Flat.

Posted on January 24, 2015 by David Durand

A Market Timing Report based on the 1-23-2015 Close, published Monday January 24th, 2015

UPDATE 1-27-2015 11:34 am: SPX bounce is happening at this 15 min chart support line shown in this chart of SPY.  See Twitter/StockTwits for more.  I think we can easily break this line barring extreme Fed dovishness tomorrow and test 1988-2015:

sp500-index-market-timing-chart-15 min-2014-01-27-1134am

Bouncing from 15 min support.

And now for the report from Sunday night and the updated charts:

The S&P 500 Index (SPX, SPY) continued its bounce this week with the ECB leak and final announcement of ECB QE 1.  The ECB will buy sovereign and corporate debt in the amount of 60 Billion Euros per month out to Sept. 2016.  This was enough to inspire a further rally off the double bottom pointed out last week.  We will stay with this trend.  What has worked is staying with the up trend, and until that changes, it’s the place to be.

SP500 Index (SPX, SPY; click the chart to enlarge it):

sp500-index-market-timing-chart-2014-01-23-close

SP500 Makes More Progress to Upside

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

As for U.S. small caps, they are stalled below prior resistance, but back above the 50 day moving average. 

Russell 2000 U.S. Small Cap Chart (click the chart to enlarge it):

rut-small-cap-russell-2000-index-market-timing-chart-2015-01-23-close

In the middle of the recent range.

Gold 

Gold had another good week based on the ECB’s Euro printing plans unveiled this week.

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

gld-gold-etf-market-timing-chart-2015-01-23-close

Gold breaks out.

The 10 Year Treasury interest rate (TNX, tracked by TLT if Bullish; TBT if Bearish): Rates appeared to be moving up a bit but the rally failed.  Evidently, the Treasury market sees further deflation coming.

Please Click the TNX Chart to enlarge it:

tnx-10-year-treasury-note-market-timing-chart-2015-01-23-close

Rates fail to break out to upside.

The fall in WTI oil prices is feeding the deflationary trend and there is no oil rally in sight.  Just a consolidation at a lower level (WTI Crude Oil, OIL):

xoil-wti-crude-oil-2015-01-23-close

Light sweet crude with no rally at this new low.

I cover foreign markets on social media (see links above) and in my newsletter.  Note that the newsletter is now closed again to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the April. 4th issue.  If you join and don’t read the newsletter, you will be deleted.  I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website 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 © 2015 By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Bonds, gold, investment, large cap stocks, oil prices, S&P 500 Index, small cap stocks, Treasuries | Tagged , , , , , , , , , , , , , , , , | Leave a comment

Market Timing Brief for the 1-16-2015 Close: SP500 Forms Higher Low. Gold Breaks Out to Top of Channel. Rates Keep Falling.

Posted on January 19, 2015 by David Durand

A Market Timing Report based on the 1-16-2015 Close, published Monday January 19th, 2015

The S&P 500 Index (SPX, SPY) has bounced from a higher double bottom, but the bounce is just barely above (< 1 pt) a prior resistance level.  The close was also below the high of the prior day, which is a sign of weakness in a bounce.  The encouraging volatility picture is the formation of a lower double top in the VIX, and there is plenty of room to the downside (which means upside for SPX).  The buying point this week was 1992 at the double bottom.  Where are we now?  Basically in the middle of a range, which is not such a great buying point unless you have no exposure.

SP500 Index (SPX, SPY; click the chart to enlarge it):

sp500-index-market-timing-chart-2014-01-16-close

Higher double bottom low formed is one step forward, but at resistance.

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

As for U.S. small caps, they looked much worse in 2014 for most of the year, but the index is still below the 50 day moving average, clearly not the best buying point.

The U.S. Small Caps (RUT, IWM):  Russell 2000 U.S. Small Cap Chart (click the chart to enlarge it):

rut-small-cap-russell-2000-index-market-timing-chart-2015-01-16-close

Friday’s gains did not overcome Thursday’s losses.

Gold is at the top of the prior channel on increased volume.  The volume is good, but it will need to keep moving up within a day or two and then we could see more serious gains.  Otherwise, it’s back down for another retest.  I think the concerted destruction of currencies around the globe in the face of deflation is making gold look good in comparison.  The strength of the U.S. dollar is the key problem for GLD, but not if gold is being used as a safe haven trade by the rest of the world.  Heavy gold buying abroad CAN overwhelm the weakness of gold in U.S. dollar terms due to dollar strength.  Buyers may be stepping up their buying in the U.S. too based on the belief that the Fed will have to come back with more easing of policy that will involve a higher risk of inflation.

The risk of owning gold here?  If the world economy starts to pick back up, gold will be less in demand.

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

gld-gold-etf-market-timing-chart-2015-01-16-close

Gold is at the top of the channel.

The 10 Year Treasury interest rate (TNX, tracked by TLT if Bullish; TBT if Bearish): Rates fell to a key support level, but there is clearly still room for a further decline in yields.

Please Click the TNX Chart to enlarge it:

tnx-10-year-treasury-note-market-timing-chart-2015-01-16-close

Rates caught one level of support, but there is still room for lower yields.

Finally, a note on China.  The Chinese market local “A shares” had a very bad day on Monday, down about 7.7%.  The Hong Kong listed stocks likely held up better than funds holding A shares like ASHR, and Chinese stocks are up about 1.85% in Tuesday’s market based on a report of 7.4% growth for 2014, slightly below that of 7.7% for 2013, so we’ll have to see where FXI (Hong Kong listed Chinese shares) lands by morning.  I think the fear about less stock buying on margin will pass and the economy will get the stimulus needed from the government, but it’s something we’ll have to monitor closely.

I cover foreign markets on social media (see links above) and in my newsletter.  Note that the newsletter is now closed again to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the April. 4th issue.  If you join and don’t read the newsletter, you will be deleted.  I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website 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 © 2015 By Wall Street Sun and Storm Report, LLC All rights reserved.

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

Market Timing Brief for the 1-09-2015 Close: Stocks Bounce and Falter. Gold Holding Up. Rates Crash Again.

Posted on January 10, 2015 by David Durand

A Market Timing Report based on the 1-09-2015 Close, published Saturday January 10th, 2015

The S&P 500 Index (SPX, SPY) bounced from a higher low on the Fed Governor Evans’ comment that it would be a “catastrophe” to raise rates with the rest of the world stuck in either low growth, near recession, or recession.  The pullback on Friday was within the bounds of the prior day, which was itself volatile to the upside.  That is called an “inside day.”  Interestingly, the SPY tested slightly below the range of the prior day, though it climbed back within the range by the close.  So far, that counts as a consolidation, so there is both upside and downside risk at this point.

What does this mean on a practical level?  It means that if you are Bullish, you can still buy, but if you are not sure that our economy won’t slow with the rest of the world, you would likely wait for lower prices to move more money into the market.  A slower economy means lower earnings, which in the end WOULD drag the market down.

SP500 Index (SPX, SPY; click the chart to enlarge it):

sp500-index-market-timing-chart-2014-01-09-close

SP500 bounces and consolidates. Not a great place to buy unless you are undoubtedly Bullish.

The economy produced 252,000 jobs last month, which is not bad at all, yet there are many who are predicting a slowing of U.S. GDP to perhaps 2% for the year, and that this job momentum is yesterday’s story unfolding.  If so, this could put a damper on returns.  The big wild card in the deflation scenario is that the fall of energy prices can spur economic growth, especially consumption.  On that basis, the theory is that XLP, or the sector representing representing the consumer staples companies of the SP500, does well given the current scenario economic slowing with deflation.

So let’s see if that hypothesis is what the MARKET thinks:  Yes, it is, as the chart shows. XLV and XLP are the winners this year.  XLV (healthcare including drug companies) does well when the economy is slow and Obamacare ensures that even more drugs will be dispensed.  XLU is behind them, but doing OK because low rates make utility yields look good:

sp500-relative-2015-performance-XLB-XLE-XLF-XLI-XLK-XLP-XLU-XLV-XLY-2015-01-10-close

XLV and XLP are the clear winners since 12-31-2014.

The worst performing sectors are XLF and XLE.  Banks (XLF) do poorly with lower rates because the spreads they charge get smaller.  We all know about the impact of lower energy prices on the companies producing energy, so down goes XLE.  And that drop is not yet over, in case you get itchy fingers.  Wait for a bottoming formation or at least a real rally in oil. I warned investors NOT to bite on XLE when oil was going up a bit, but still within a consolidation.  And down it went, wiping out the early bird profits.  The “too” early bird gets whacked in investing.

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

What about U.S. small caps?  They have significantly faltered and present a greater risk (see the failure on the chart), but the pullback Friday could be a retest of the prior breakout.  That means the trend could continue up on Monday, but it must do so promptly.  I’d use a stop below that red line if I held small caps (not too close, because markets like to fool investors who set tight stops).

The U.S. Small Caps (RUT, IWM):  Russell 2000 U.S. Small Cap Chart (click the chart to enlarge it):

rut-small-cap-russell-2000-index-market-timing-chart-2015-01-02-close

Small cap rally halted at prior high. We are still above the lower highs which offers some support.

Gold did respond to the further fall in rates to some extent, but I believe that the worries about deflation over inflation will keep gold in a range at best.  It could reach the upper yellow channel line in the chart and simply turn back down.  Remember that I am talking in U.S. dollar terms here, not Euros or yen or other currencies that are going to Hades in a handbasket.

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

gld-gold-etf-market-timing-chart-2015-01-09-close

Gold is not falling apart but not rallying strongly either. Too much of a deflation threat for that in my opinion.

The 10 Year Treasury interest rate (TNX, tracked by TLT if Bullish; TBT if Bearish): The bond market is more clear than the stock market about what it expects.  It absolutely expects deflationary pressure to continue.  The 10 Year Treasury yield fell toward the prior low as the chart shows.  This area could provide support IF signs emerge that the world economy is doing better.  But maybe it won’t.  If deflation is not interrupted, the 10 Year could reach the 2011 yield low again.  That means more gains ahead for TLT investors.  Munis should also do well, and I’ve increased my position.  Taxes and low rates make munis attractive going into 2015.

Please Click the TNX Chart to enlarge it:

tnx-10-year-treasury-note-market-timing-chart-2015-01-09-close

Rates plummet to prior low.

Summary: The U.S. stock markets are faltering, but this is neither a great place to buy or sell.  Friday was a consolidation.  Buying the highs in fear (lows in the markets) will be our strategy this year.  Trimming a bit near the tops is not a bad idea, but timing is a tricky thing to do.  Most of you will sell in the wrong place.  Why do I know this?  I’ve been there and done that too.  It’s too easy to sell.  It’s much harder to stay with a Bull market.  I believe there is too much stimulus and too patient a U.S. Fed to warrant leaving the party yet.

Gold will likely hold its gains and as worldwide currency destruction continues will gain some strength.  If the economy improves again worldwide, assets will seek a better return than gold, and it could fall significantly. 

Rates are nearing the prior low, but if the world does not get its act together soon, deflation will rule and rates could reach the 2011 low that was retested in 2013.

In my counsel to those who receive my private newsletter (free, but you have to be a loyal reader to keep getting it as noted below), I am recommending just two markets, China and the U.S. for this year (check Twitter).  I believe they both could continue to outperform the rest of the world that is looking for growth.  Japan may have a shot with all their crazy direct market intervention (read that asset buying).  Europe doesn’t seem to have the political will to do what Dr. Bernanke did for the U.S. due to the German influence on policy.  The Germans don’t like to debase their currency. So Dr. Draghi of the ECB drags his feet while Rome burns (well, Italy is in recession!).  Stick with the stock markets of the stronger economies for 2015!

I cover foreign markets on social media (see links above) and in my newsletter.  Note that the newsletter is now closed again to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the April. 4th issue.  If you join and don’t read the newsletter, you will be deleted.  I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website 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 © 2015 By Wall Street Sun and Storm Report, LLC All rights reserved.

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

Market Timing Brief for the 1-02-2015 Close: Stocks Reverse Lower. Gold Falters. Rates Fall Again.

Posted on January 4, 2015 by David Durand

A Market Timing Report based on the 1-02-2015 Close, published Sunday January 4, 2015

The S&P 500 Index failed a breakout and turned lower.  I believe it is just a pullback in a Bull trend.  Sentiment got a bit high with the Bull minus Bear spread % rising above 30 again, so the market was due a pullback.  For now it is more likely a dip vs. a more significant correction like the one we had in October.  You can see how the market has pulled back to the magenta line, which is a line that marks the up trend line connecting the 2001 and August lows.  Never bet the farm on any one entry point though.

SP500 Index (SPX, SPY; click the chart to enlarge it):

sp500-index-market-timing-chart-2014-01-02-close

Reversal.

Last week I said: “This still holds: ‘I suspect that if oil does not maintain the current consolidation (see the charts I posted to Twitter®),  and falls, the stock market will pull back a bit.'”  Indeed, oil broke to new closing lows and the stock market eased.  Oil stocks have yet to break down again definitively however.

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

What about U.S. small caps?  They reversed from new all time highs.  The nearest support is provided by the prior lower highs (top red line for example).

The U.S. Small Caps (RUT, IWM):  Russell 2000 U.S. Small Cap Chart (click the chart to enlarge it):

rut-small-cap-russell-2000-index-market-timing-chart-2015-01-02-close

Small cap rally halted at prior high. We are still above the lower highs which offers some support.

Gold is faltering too with decreased volume kicks on up days for the past 4 weeks now.  It closed Friday back below the Dec. 2013 low of 114.46, which is negative.  Buyers need to come back in soon or Goldman will start looking smart.  The issue is that low rates are being interpreted as a sign of DEFLATION rather than a sign of impending INFLATION.  Lower rates do help gold on the margin, but not if deflation fears are rampant.

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

gld-gold-etf-market-timing-chart-2015-01-02-close

Gold volume is not there yet to sustain a rally.

The 10 Year Treasury interest rate (TNX, tracked by TLT if Bullish; TBT if Bearish): The 10 Year yield rose to my 2.3% target and pulled back.  The rally DID resume from there as predicted last week (falling yields). 

Please Click the TNX Chart to enlarge it:

tnx-10-year-treasury-note-market-timing-chart-2015-01-02-close

Rates falling again.

Summary: The U.S. stock markets have failed breakouts.  The pullback is not likely to be too great as the U.S. economy, although slowing a bit, still shows signs of strength.  The employment report on Friday will be important, because if the economy is healthy, jobs should continue to expand strongly.  If not, the Federal Reserve is on hold, which the market may ironically appreciate.  The issue is that a drop of earnings would raise valuations further and be a drag on further appreciation of stocks.  There is not enough volume yet in the gold market.  Rates are falling further and that may stimulate a real rally in gold with volume.

I cover foreign markets on social media (see links above) and in my newsletter.  Note that the newsletter is now closed again to new subscriptions: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening again for the April. 4th issue.  If you join and don’t read the newsletter, you will be deleted.  I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website 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 © 2015 By Wall Street Sun and Storm Report, LLC All rights reserved.

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

Market Timing Brief for the 12-26-2014 Close: Stocks Reach New Highs. Gold Falters as Rates Rise, But Rates May Make a U-turn Here!

Posted on December 28, 2014 by David Durand

A Market Timing Report based on the 12-26-2014 Close, published Sunday December 28th, 2014

U.S. Markets reached new highs in both large and small cap markets in the U.S. as we may have entered a sweet spot where the Fed stays out of the way due to slowing of growth worldwide, and U.S. growth is still enough to keep the stock market happy with earnings growing slowly.  The U.S. economy is stronger than most economies around the world courtesy of aggressive Fed monetary policy resulting in an upward revision in GDP numbers this past week.  Here is the statement from the government:

Real gross domestic product -- the value of the production of
goods and services in the United States, adjusted for price 
changes -- increased at an annual rate of 5.0 percent in the 
third quarter of 2014, according to the "third" estimate 
released by the Bureau of Economic Analysis.  In the second
quarter, real GDP increased 4.6 percent.

Full Statement Here

SP500 Index (SPX, SPY; click the chart to enlarge it):  At new highs.  The yellow channel line is the next target unless oil tanks again Monday.  It was about to break on Friday but didn’t.  See Twitter for the recent charts I’ve published for WTI oil.

sp500-index-market-timing-chart-2014-12-26-close

Making new highs on the way to a channel test.

This still holds: “I suspect that if oil does not maintain the current consolidation (see the charts I posted to Twitter®),  and falls, the stock market will pull back a bit.”  The market responded positively when the Fed said it may or may not raise rates.  The 80% odds of a Santa Claus rally indeed came true, but now we’re on to 2015.

This also came true: “Reports on retail sales should be strong through Christmas, because Consumer Sentiment was extremely high in the last report (see Bloomberg data).”

Here is the report card from Mastercard per Reuters: “U.S. retail sales rose 5.5 percent from the day after Thanksgiving through Christmas Eve as solid demand for women’s apparel, jewelry and casual dining offset surprisingly sluggish sales of electronics, MasterCard said in its holiday spending report.”

To find out what I’m doing, including buys and sells, please follow me here: Follow Me on Twitter®.   Follow Me on StockTwits®   You don’t have to make comments yourself to read my messages.

What about U.S. small caps?  They reached a brand new all time high, but follow through is needed.  This is positive in one sense and not so great in another, because they are still overvalued as shown here: Wall Street Journal® Stats.  The trailing 12 month PE for the Russell 2000 small caps has declined from 87.23 to 61.63, but the latter is still quite high.  A Bull could argue that if the market was dumb enough to pay 87 times TTM earnings, it can do it again, so raise your glass of champagne to high valuation if you wish, but I’ll stick with the SP500 and other strong markets worldwide.  Don’t be a sucker and believe the forward earnings PE’s are real, as they do not include “adjustments” for one time accounting issues.  The TTM numbers cannot be fudged.

The U.S. Small Caps (RUT, IWM):  Russell 2000 U.S. Small Cap Chart (click the chart to enlarge it):

rut-small-cap-russell-2000-index-market-timing-chart-2014-12-26-close

New high so it’s on to the prior stratosphere?

Gold is now just above the level it was at by the close of the Fed FOMC statement day on the 17th, but the lack of volume is a problem and GLD is sitting just below the 50 day moving average where it could again fail.  If rates rise, the dollar will rally and pressure gold.  If rates continue lower (see 2nd chart below), gold should hold up and then rally however.  Gold has NOT fallen to the Goldman target of 1000 from earlier this year, although I did hear they revised their view after been proven wrong.  Targets are more useful in the short term than the long term in my experience.

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

gld-gold-etf-market-timing-chart-2014-12-26-close

Gold up but without volume.

The 10 Year Treasury interest rate (TNX, tracked by TLT if Bullish; TBT if Bearish): The 10 Year yield rose to my 2.3% target and pulled back.  The rally could resume from here (falling yields).  Stay tuned on Twitter®/StockTwits® for my Buys and Sells.

Please Click the TNX Chart to enlarge it:

tnx-10-year-treasury-note-market-timing-chart-2014-12-26-close

Summary: The U.S. stock markets have broken to new highs and there is room above to rally farther.  I still don’t like small cap valuations, but the market may tolerate higher PE’s.  Gold will do OK given all the loose currencies around the world and the Fed’s willingness to play along.  Over the short term, if rates fall, gold will rally.  I believe the market is skeptical of how low rates can go from here.  They can go lower as long as the rest of the world is doing worse than the U.S. and most of it is at this point with 5% U.S. GDP growth. 

I cover foreign markets on social media (see links above) and in my newsletter.  Note that the newsletter is open to new subscriptions this week only, so if you are interested, please join the wait list for Loyal Subscribers Only: Join the Wait List to Join the Newsletter as a Loyal Subscriber, Opening for the Jan. 4th issue.  If you join and don’t read the newsletter, you will be deleted.  Sorry, but I don’t publish to non-readers as other newsletters do.  Stay tuned here in the meantime and follow all the action via the Twitter® and StockTwits® links above.

Be sure to visit the website 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 © 2014 By Wall Street Sun and Storm Report, LLC All rights reserved.

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