Sun and Storm Investing Market Timing Blog™

A Market Timing Report based on the 3-28-2014 Close published Saturday March 30, 2014

The SP500 Index (SPX, SPY) failed again to break out this past week.
Eventually an index must make a new high or it will tend to descend to the next new low.  First, let’s look at the chart.

Here’s the SP500 Index Chart (click to enlarge):

SP500 Index has not been able to break out.

As discussed last week (see link to upper right), the SPX has been positively correlated with the yield on the 10 Year Treasury Index.  Rates down, market down.  A healthy economy is supposed to result in higher rates, because the Fed can stop printing fake money.  When the economy is suspect, rates fall in anticipation of more Fed action or slower QE or a Fed funds rate of near zero out into the distant lala-land of a future they are building for us.

Note that there is NO sell signal on the index in my opinion, unless you’ve been shorting every attempt near the top and buying the lows.  But considering the sentiment analysis I did this past Thursday, I now favor a further downturn. 

How low?  Mildly to moderately, but it’s best to read it.  You can access the work as well as my exposure levels to each index after getting the password here: Free Subscription to My Newsletter and access to my latest comments  I’ll send you back the password to the access page and the monthly newsletter in the same email.

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

I also comment regularly on Twitter: Follow Me on Twitter

I thank Worden Brothers for the chart 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, so it’s a great investment to have an excellent charting system.

Look for updates this week as needed via Twitter.

Copyright © 2014 By Wall Street Sun and Storm Report, LLC All rights reserved.

A Market Timing Report based on the 3-21-2014 Close published Saturday March 22, 2014

The SP500 Index (SPX, SPY) was below the prior breakout point two Fridays back and this week it closed below the all time high after failing to break out.  The attempted breakout brought us to 1883.97, while the prior high was 1883.57.   I don’t make up these numbers.  When the market tests a high as it did on Friday, it often will test above the high.  Buyers are still enthusiastic but a completed breakout takes buyers who are willing to “pay up” for the merchandise.  If not enough buyers come in at these highs, the market can simply fall under its own weight.  On a pullback there are few buyers and many more nervous sellers or shorts jumping on the decline.

The failed breakout defines the top very clearly, and the Bulls need to take out that high quickly to avoid a correction of magnitude.  Why is it useful to know this?  Because buying just below an obvious resistance point is not smart.  You need to know where resistance and support lines are so you don’t sell at support and buy at resistance.  You want to do the opposite, and it’s especially lucrative in a Bull market.   In a Bear market, you have to be nimble and get out after each counter rally or simply stand clear during the bounces.  After a sustained breakout, it can be OK to pile onto the next move, but you must be willing to exit on a reversal or that late entry can be very costly.

Here’s the SP500 Index Chart (click to enlarge):

SP500 Index: Bulls Must Take Out the High

I want to show you another chart this week comparing the market’s performance to the yield on the 10 Year Treasury (used to determine various interest rates; TNX, TLT, TBT).

SP500 Index Plotted with 10 Year Treasury Yield in magenta.

You see that the SP500 Index has been moving up when interest rates have been moving up.  That is because when the market feels that a stronger economy implies higher rates.  The Fed will back off of QE and then, according to Chair Yellen last week, it will ratchet up the Fed Funds rate in about a year, because they feel the economy is recovering, and they don’t want to cause too much inflation.  They have already increased the inflation rate, but feel it can and should go to their 2% target.  Until that happens, we could see a reversal of or at least a pause in the QE tapering process that is underway.

You see that when rates have fallen, the stock market has pulled back as well, or has at least struggled to make any progress.  On Friday, after a rapid rise from support in the few days preceding the Fed statement on Weds. and again on Weds. and Thursday, rates seemed to stop right at resistance,  but then rates pulled back Friday, and the US stock market fell in a positive correlation.  Falling rates also help gold and silver, which is why I added back some of my gold position on Friday afternoon (as Tweeted; more will be posted on gold tomorrow).

I’ll be writing up my investor sentiment analysis by Sunday night.  You can access the work after getting the password here: Free Subscription to My Newsletter and access to my latest comments  I’ll send you back the password to the access page and the monthly newsletter in the same email.

NOTE: The Gold and 10 Year Treasury Market Charts will be posted by Sunday evening.

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

I also comment regularly on Twitter: Follow Me on Twitter

I thank Worden Brothers for the chart 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, so it’s a great investment to have an excellent charting system.

Look for updates this week as needed via Twitter.

Copyright © 2014 By Wall Street Sun and Storm Report, LLC All rights reserved.

A Market Timing Report based on the 3-14-2014 Close published Sunday March 16th, 2014

UPDATE 3-17-14 @ 11:05 am: More accurate numbers, which have some error built in as these represent points on trend lines projected over 40 days: SPX resistance line = 1856.52.  SPY = 185.83.  We are now above both after a retest by sellers, so we’ll see what happens by the close.  Reclaiming 1850.84 alone would be a victory for the Bulls and COULD allow for a re-topping of the market.  If we close above the 1856.52ish level, the Bulls will likely take us back to the prior highs at least.

UPDATE 3-17-14 @ 9:15 am ET: SPY is trading back ABOVE the highs that form the green line on the chart below.  BUT, it’s still below both the high from Friday of 185.80 and it’s below the green line itself, which measures out on an accurate chart to 185.84. 

The Bulls need to exceed 185.84 to reclaim the prior all time high.

The SP500 Index (SPX, SPY) closed for 7 market days above the prior high, which normally traders would consider a successful breakout, but after it was 3 days over, it tested successfully lower intraday lows, which showed that the rally was weak.  The abrupt drop on Thursday defines the prior breakout as false.  Friday was a consolidation after the break.

We are likely headed lower to one of the support levels shown.  You can see that the 50 day moving average is converging with one support line and that could support the next bounce.  I’ve written several pages for free subscribers on our strategy with all the numbers, which are on the website (sign up via link below).   I’ll also update the major markets we follow by tonight.

Here’s the SP500 Index Chart (click to enlarge):

SP500 Index pullback under way.

Be sure to read my investor sentiment work from Thursday if you haven’t.  You can access the work after getting the password here: Free Subscription to My Newsletter and access to my latest comments  I’ll send you back the password to the access page and the monthly newsletter in the same email.

NOTE: The Gold and 10 Year Treasury Market Charts have already been posted.  See the link to the upper right.  Thanks.

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

I also comment regularly on Twitter: Follow Me on Twitter

I thank Worden Brothers for the chart 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, so it’s a great investment to have an excellent charting system.

Look for updates this week as I feel they are needed via Twitter.

Copyright © 2014 By Wall Street Sun and Storm Report, LLC All rights reserved.

A Market Timing Report based on the 3-07-2014 Close published Sunday March 9, 2014

The SP500 Index (SPX, SPY) is now four days over the prior (green ) resistance line as shown on the chart below.  The white line above the current price is the next resistance line, now at 1898ish and rising. That channel line could contain the rally.   Problems with the Ukraine could also contain the rally.   But for now, the Bulls are in charge.

Here’s the SP500 Index Chart (click to enlarge):

Four days over prior resistance, but must continue moving up soon.

Once again, please read my investor sentiment work from the end of the week if you haven’t.  It gives you my latest trading strategy.  You can access the work after getting the password here: Free Subscription to My Newsletter and access to my latest comments  I’ll send you back the password to the access page and the monthly newsletter in the same email.

NOTE: The Gold and 10 Year Treasury Market Charts have already been posted.  See the link to the upper right.  Thanks.

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

I also comment regularly on Twitter: Follow Me on Twitter

I thank Worden Brothers for the chart 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, so it’s a great investment to have an excellent charting system.

Look for updates this week as I feel they are needed via Twitter.

Copyright © 2014 By Wall Street Sun and Storm Report, LLC All rights reserved.