Market Timing Brief for 08-31-2012: Metals Rally While Bonds Sizzle

Posted on September 5, 2012 by David Durand

Based on the 8-31-2012 Close published Monday, 9-03-2012

UPDATE 9-6-2012 9:41 pm: NOW we have a fresh breakout for the SP500 Index.  The breakout is supported by a collapse in the VIX volatility index, a collapse in the 10 Year Treasury Note (see comments below), breakouts in both the banks and in housing (the two culprits of the financial crisis), and weakness in the US dollar.  See my Twitter comments on the right side as well and the CHART below.  The dollar(UUP, USDX, EUR/USD) must break down a bit more or at least go sideways to keep all the current m0mentum going in stocks and metals.  Given the dollar’s recent weakness, it is not surprising that the metal market is still on fire as noted in this week’s text.  The following chart shows today’s breakout.

sp500-index-market-timing-chart-2012-09-06-close

A fresh breakout for the SP500 Index.

UPDATE 9-5-2012 11:08 pm: We are STILL below 1415.32, so the Bulls do NOT have the ball.

Market Timing Brief for 08-31-2012: Metals Rally While Bonds Sizzle

Last week I claimed the market was “topped out.”  It continued to act like that, despite the slight blip up in the gentle down trend that began with the reversal on August 21st seen on the chart below of the SP500 index (SPX, SPY).  Notice the little shelf formed by the two August lows on the daily chart.  When we breach that, you’ll know that the 50 day moving average will be the next target.  The Bulls could claim there is not that much distance between the close on Friday and the last top, so there could be another reach for glory before the fall.  Speaking of fall, it is close to being fall, which means we’re in September which has a bad reputation among traders after a long run to the upside, which we’ve had.

The chart of the SP500 Index is here:

http://www.sunandstorminvesting.com/sp500-index-sp500tracker.html

Remember that if new highs in the SP500 Index hold, that will erase all the bad technicals.  The catch is that sometimes the market takes in the suckers for a day and then pulls the rug, so be sure any new high that is achieved lasts through the 3rd day or so before committing grandma’s or grandpa’s money.

The VIX (volatility index) held ground on Friday and has plenty of room to the upside to support a sell-off. 

Investor sentiment by AAII shows the Bulls dropping from 41.96% to 34.72% and Bears rising from 25.87% to 32.64% this past week (ending on Weds. night).  The Bull-Bear Spread dropped from 16.1% to 2.1%.  That is quite a fall in one week and suggests that investors are non-convicted.   Lack of conviction near tops is likely to hurt the Bulls!

My metal recommendation to buy gold has continued to be correct this week.  Silver has also been a big winner despite the fact that it insists on bursting up faster than investors can pile on.  My concern longer term is whether the economy will actually slow even more and since the emerging markets are doing the worst and China is slowing month after month, I would expect silver buyers to disappear in China (FXI) and India (PIN) as their near term prospects dim.  But for now, the trend is up and the pile on happening.  The best buying point for silver was during the easing back to support on Thursday.  Wait for a bit of a pullback before adding to silver positions.  A 50% retracement of Friday’s move may be the best we can hope for during this rally.

Gold broke out in a BIG way too on Friday as shown:

GLD Gold ETF Chart: http://www.sunandstorminvesting.com/gld-etf-gold-market-timing.html

The CRB index also broke out on the daily chart and on the monthly chart as well.  Not good news for the Federal Reserve on the inflation front.  The rise in commodities restrained them the last time they printed money.

The 10 year Treasury Note continues to flash a bearish market signal for stocks as discussed over the past two weeks.  The yield on 10 Year Treasury Note (TNX) has now broken below it’s 50 day moving average and is headed back to test the lows of the year (means the Treasuries are rallying, and their yields are falling).  The reversal above the 2011 low in yields was reversed, which is extremely negative for stocks.  Have a look here: The Bonus Chart of the Week: http://www.sunandstorminvesting.com/index.html

From an independent perspective, I believe it is less clear now that Pres. Obama will win re-election.   Governor Romney let people get to know him a bit better this past week, which was the biggest impediment to his election over Obama.  If Romney wins, the previously winning health care stocks will be slaughtered.  Ironically Romney called out Obama on suspending the work for welfare rule as an abuse of executive power.  Now Romney threatens to do the same thing with Obamacare.  Do they think we’re asleep?   😉

The other more important question beyond the blatant misuse of executive power is what Obamacare would do to the economy, particularly jobs.  It seems clear that instituting the program will greatly limit job creation by small businesses.  If you have evidence to the contrary, please pass it on to me!  Guess where the vast majority of jobs are coming from in this tentatively recovering economy?  You got it.  Small businesses!  So right or wrong as an idea, Obamacare is exactly what the economy does not need right now.  While many features of the Obama Health Plan are needed (no one should go bankrupt because they are sick, being insured for pre-existing conditions is a must etc.), the timing may be off, particularly the costs planned for small businesses at a risky time for the economy when those businesses are the top source of new jobs.

Tell of the week: Watch the US dollar index futures (USDX) this week.   If the dollar breaks the June and August support levels, stocks will benefit and so will the metals!

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

The above is the text from the 8-31-2012  “Weekly Wall Street Sun and Storm Report™.  To see the rest of the current issue and this week’s ratings of all 35 markets I follow and receive the newsletter every weekend, subscribe here: 

www.sunandstorminvesting.com/subscribe-to-sp500tracker-newsletter-and-tips.html

By the way, if you “liked” this post, please “Like” it at the “Share” arrow below and/or re-Tweet it below.

And to follow my Buys and Sells and up to the minute insights, please follow and bookmark my Twitter feed here: http://Twitter.com/#!/SunAndStormInv

Copyright © 2012  By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in gold, gold etf, investment, Market timing, S&P 500 Index, trading, Treasuries, volatility index | Tagged , , , , , , , , , | Leave a comment

Market Timing Brief for 08-24-2012: Topped Out

Posted on August 28, 2012 by David Durand

Based on the 8-24-2012 Close published Sunday, 8-26-2012

UPDATE on 8-31-2012 at 10:36 am: Dr. Ben gave his Jackson Hole speech and said enough to confuse the market which has been since gyrating up and down within a range.  He said there will be funny money available still, but that he recognizes the risks associated with too much financial crack.

One telling shift post-speech is in the 10 year Treasury though that continued its move DOWN this am.  The issue is whether this is out of fear that the Fed will continue to pummel interest rates lower or on continued fears of a weak economy.  The SP500 Index has stayed within the range of yesterday, which is called an inside day.  I believe the next move out of that range will give us the immediate direction of the market for the near term, so watch for that.

UPDATE on 8-28-2012 at 10:51 pm:  The SP500 Index (SPY, SPX) is still stuck below the prior breakout point.  It must break out again or we are in for a significant correction.  A Bullish sign is the presence of some tone in the small and midcaps as well as the REITs.

Market Timing Brief for 8-24-2012: Topped Out

The market has topped out for now and is in the process of correcting despite Friday’s rally, which was based entirely on Fed jawboning of the market.  Dr. B responded to a congressional inquiry about his plans for further funny money and really said nothing new, but the market liked it.  If that announcement leads to a new recent high, I’ll take another look, but not until then.  On a new recent high, we’ll be forced to rebuy what we’ve sold (if you in fact have) and rejoin the Bulls.

For now, the Bears have the ball, because the SP500 Index (SPX, SPY) has formed a top and has reversed down through the first level of support below the reversal high.  We have officially averaged out using my process of “passive shorting” for which there is a link on my site if you have never read it.

If you have sold nothing, be willing to at least consider selling some to preserve profits, because giving up huge gains by holding onto false beliefs can be deadly to your profits.  I am a teacher of raising consciousness in investment and other areas of life and one key to doing that sort of work is that you must have real life checks on your thinking in addition to relying on your analysis and intuition.  When we are wrong, we are wrong and the failure to admit being wrong results in the largest of our investment losses.  If you’ve been there, and have done that as I have in the past, DO NOT REPEAT the same behavior would be my advice.  This perspective is far more valuable than any stock tip.

The fall back from the SP500 Index top is clearly shown here:

http://www.sunandstorminvesting.com/sp500-index-sp500tracker.html

The VIX volatility index is retesting the last breakout of volatility and needs to move up Monday to confirm the prior sell-off; otherwise, we’ll at least see a re-topping of the markets.

My suggestion to buy both gold and municipal bonds last week on Twitter has been correct so far.  Set some stops and average UP if you need to from this point.  Muni returns are fairly low, so you don’t want to go out 25 years to get a yield of less than 4.5% to 5%.  Who knows how irresponsible the Fed will be?  If you believe we are in a “Japan era” where interest rates will be near zero for the next 10 years, then you may want to take on more risk (by buying bonds that yield less than 4.5% to maturity).

Gold is moving up as shown:

GLD Gold ETF Chart: http://www.sunandstorminvesting.com/gld-etf-gold-market-timing.html

Continue to average UP as gold rises along with silver.  Silver can crash if the economy does but does represent a better value than gold.  Balance your risk tolerance with your desire to make more and come to a decision to buy or not to buy silver.  If the economy goes back into deep recession, neither metal will do well unless there are additional massive free money programs on the part of both the Fed and the Federal government (the Fed is not part of the Federal government by the way, except for the appointment of the Fed Chairman and his/her confirmation by Congress.)

If the Fed keeps the balls in the air through loose monetary policy, the metals will continue to do well even with some economic slowing.  A recovering economy and rapidly rising bond yields would damage the metals.  The economy is showing signs of mild strength (or mild weakness depending on how you want to look at it) and policy is leaning to the loose side, so in the current environment, the metals are in position to rally further.

The 10 year Treasury Note is still a bearish market signal as discussed last week (see prior issue). 

10 Year Treasury Note (TNX) – The Bonus Chart of the Week: http://www.sunandstorminvesting.com/index.html

If you see the 10 year Note (TNX) rallying further, continue to average out of stocks as long as you are willing to get back in.  The MTT below gives you a lot of good buying and selling points to consider, which is a major benefit of market timing.  Why buy when a market is too stretched, and why buy when there is no evidence that buyers are in the market in reasonable numbers?  Be smart.  Pay attention to what the markets are saying and act upon it when your set of rules say to do so.  If you have no rules, you have no plan.  In that case, please get a plan and invest consciously.

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

The above is the text from the 8-24-2012  “Weekly Wall Street Sun and Storm Report™.  To see the rest of the current issue and this week’s ratings of all 35 markets I follow and receive the newsletter every weekend, subscribe here: 

www.sunandstorminvesting.com/subscribe-to-sp500tracker-newsletter-and-tips.html

And to follow my Buys and Sells and up to the minute insights, please follow and bookmark my Twitter feed here: http://Twitter.com/#!/SunAndStormInv

Copyright © 2012  By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in gold, gold etf, investment, Market timing, S&P 500 Index, trading, Treasuries, volatility index | Tagged , , , , , , , , , | Leave a comment

Market Timing Brief for 08-17-2012: Creep Up About to Stop? Mixed Signals and Exactly What to Follow

Posted on August 20, 2012 by David Durand

Based on the 8-17-2012 Close published Sunday, 8-19-2012

UPDATE on 8-22-2012 at 10:18 am:  Look for a close below 1410.03 to confirm a correction in the SP500 Index.  The 10 Year Treasury Note (TNX) rally this am, which represents a break of the trend line confirms the SP500 reversal.  I would lean toward lightening up and taking profits here in stocks and buy some municipal bonds if appropriate for your portfolio.

UPDATE on 8-21-2012 at 3:36 pm:  The SP500 Index is currently undergoing a reversal below both the two top lines shown on the following chart (the green and the top aqua line).  These must hold up on the close to be significant and lead to a greater correction.  The same thing has happened in the QQQ (NDX NADAQ 100 Index).  There was an attempted breakout and then a reversal.

sp500-index-chart-2012-08-21-331PM

Falling Below Two Breakout Lines

Market Timing Brief

Last week I said: “The SP500 Index (SPX, SPY) has been creeping up, but just barely over the past 6 days.  To prove itself, it has yet to move above the high from 8-7-2012.  This does not mean the market cannot blast up to about 1415 at the 5-1 high or to 1422 on 4-2-2012 before pausing.”  We are now in between at 1418.16.  The VIX volatility index has blown out the 2010, 2011 and March 2012 lows.  This is a bullish development provided it does not reverse quickly.  The VIX is at the base of the 2 standard deviation 20 period Bollinger bands, so there is room for it to rise.  Without a breach of the lower band on the close, however, it could still continue to fall lower as the SP500 Index rises to challenge the 1422 high and then break out yet again.  The banks continue to rally along with techs which I pointed out recently and are the backbone of this rally.  Rising rates mean the banks are safer because their European exposure is lessened.  Rates are rising as fear subsides.

Here we are:

http://www.sunandstorminvesting.com/sp500-index-sp500tracker.html

Although I’ve been leaning toward a pullback, the 10 year Treasury Note (TNX) has continued to sell-off which fit my Bearish on Bonds-Bullish on Stocks scenario. 

10 Year Treasury Note (TNX) – The Bonus Chart of the Week: http://www.sunandstorminvesting.com/index.html

Remember that a rise in rates to levels above 2.4% would begin to hurt stocks.

The housing market (HGX, ITB) continues to break out to new highs.  It is as if the housing industry is cured.

I asked last week: Should you buy more gold (GLD; gold ETF)?  And said: “Not at these levels.”  Well you still shouldn’t bother, unless you intend to use a stop, because gold is back in a holding pattern.  There is less interest in gold because the dollar (US dollar index; UUP) is going sideways rather than down and the Euro panic is fading so fear based gold buying is lacking.  The chart shows this:

GLD Gold ETF Chart: http://www.sunandstorminvesting.com/gld-etf-gold-market-timing.html

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

The above is the text from the 8-17-2012  “Weekly Wall Street Sun and Storm Report™.  To receive the newsletter every weekend, subscribe here: 

www.sunandstorminvesting.com/subscribe-to-sp500tracker-newsletter-and-tips.html

By the way, if you “liked” this post, please “Like” it at the “Share” arrow below and/or re-Tweet it below.

And to follow my Buys and Sells and up to the minute insights, please follow and bookmark my Twitter feed here: http://Twitter.com/#!/SunAndStormInv

Copyright © 2012  By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in gold, gold etf, investment, Market timing, S&P 500 Index, trading, Treasuries, US Dollar Index, volatility index | Tagged , , , , , , , , , , | Leave a comment

Market Timing Brief for 08-03-2012: A Further 10 Year Treasury Sell-off Would Energize the Stock Market

Posted on August 7, 2012 by David Durand

Based on the 8-03-2012 Close published Sunday, 8-05-2012

UPDATE INTRADAY 8-8-2012: The SP500 Index is up against the resistance of the top white line show in the chart you can get to via the link down below (SP500Tracker™ link).  It looks like it could turn back, but it’s not a given.  There is room for it to move up a bit more.  Watch the 10 Year Treasury Note pictured in the chart image just below here.  If it can’t keep moving up, it will likely pull back (in yield, which means bonds are rallying) and the stock market will at least ease back a bit.  Much more below…

UPDATE INTRADAY 8-07-2012: Treasuries Cooperate – The 10 year Treasury Note is selling off as the chart shows below.  Note the rise above the aqua resistance line with the downward arrow pointing at it.  This is supportive for a further rally in stocks as discussed below.  (When yields rise, bonds are selling off.  The chart below shows the yield rising.)

ten-year-treasury-note-tnx-market-timing-chart-2012-08-07-1251PM

Ten Year Note Sell-off Helps Stocks

UPDATE AT CLOSE 8-6-2012: The SP500 Index has broken out once again, but is now up against the trend line formed by the highs from June and July (see chart link below).  The index may simply edge up a few more points over 1-2 days and then pull back to test the lower line of the channel formed by the lows of June and July.  The main indicator for a continued rally that will defy the prior pattern would be continued Euro strength and US dollar weakness with a sell-off in the 10 year Treasury Note (TNX).  And now for this week’s earlier comments…

The rally resumed once it was clear that Spain would be receiving all the free money they need from the European Central Bank.  The VIX volatility index plunged to just above the July low on Friday.  It can still drop to the March 2012 low.  The US dollar (USDX, UUP,EUR/USD) is weakening, but must break 82.34 to change the trend definitively.

The biggest tell on the stock markets will be the 10 year Treasury Note and if it runs up above the yield high of 7-27-2012, stocks will have another leg up.  Here’s the chart:

10 Year Treasury Note (TNX) – The Bonus Chart of the Week: http://www.sunandstorminvesting.com/index.html

The reason the 10 year Note is so important is that the world must signal that the fear of the destruction of the Euro has faded away before it will invest elsewhere, specifically in the US stock market.  The US dollar should drop as the 10 year Note.  Other bond markets should begin to sell off as well.  Otherwise, stocks will tip down again.

The SP500 Index is up against the 7-30-2012 high and needs to move over that to trigger the next buy.  This is some of the valuable information I share in this newsletter.  There is no point buying markets that are up against resistance.  Make them prove themselves before committing further money.  Here we are:

 http://www.sunandstorminvesting.com/sp500-index-sp500tracker.html

The NASDAQ 100 is back in action due to Apple’s better performance over the past week (AAPL).  It is a buy at the moment (QQQ).

Commodities could begin to move again after some consolidation.  Oil has some technical tone now and looks like it’s leaning up.

Housing had been pulling back.  Now it’s rising again (HGX, ITB).  That is a bullish sign for the overall market.  It’s good to have some indices with room to rise to the prior highs.

Copper held the prior June lows (JJC), but needs to pick up strength now.   Gold has regained its footing above the 50 day moving average and can be bought with a stop as mentioned in the MTT below (see newsletter after subscribing w/ link below).  See the chart here:

GLD Gold ETF Chart: http://www.sunandstorminvesting.com/gld-etf-gold-market-timing.html

The money printing press is expected to run in Europe with the US as the backup, but if Europe does not follow through on its promises, the markets show their displeasure.

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

The above is the text from the 8-05-2012  “Weekly Wall Street Sun and Storm Report™.  To see the rest of the current issue and this week’s ratings of all 35 markets I follow and receive the newsletter every weekend, subscribe here: 

www.sunandstorminvesting.com/subscribe-to-sp500tracker-newsletter-and-tips.html

By the way, if you “liked” this post, please “Like” it at the “Share” arrow below and/or re-Tweet it below.

And to follow my Buys and Sells and up to the minute insights, please follow and bookmark my Twitter feed here: http://Twitter.com/#!/SunAndStormInv

Copyright © 2012  By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Euro, gold, gold etf, investment, Market timing, S&P 500 Index, trading, Treasuries, US Dollar Index, volatility index | Tagged , , , , , , , , , | Leave a comment

Market Timing Brief™ for 07-27-2012: Bonds. Treasury Bonds.

Posted on July 31, 2012 by David Durand

Based on the 7-27-2012 Close published Sunday, 7-29-2012

UPDATE AT OPEN 8-3-2012: The SP500 Index has reversed the breakdown in just one day and is now back in the breakout area it was in before the ECB’s Drahgi dragged the market down yesterday.  1380.39 is support now, which is the 7-29-2012 high.  1391.74 is the recent high that represents the next breakout point.  Closing above that 1380ish number would be positive and good for a day’s work.  The reaction to the minimal uptick in the unemployment rate which was almost a rounding error was slightly positive, not negative.   Most of the gains are attributable to European hope that Spain will receive the help it needs on its debt to state it succinctly.  The world must now see that the Europeans are serious about saving the Euro and strengthening their economies.

UPDATE AFTER CLOSE ON 8-02-2012: The SP500 Index has now failed the prior breakout above the previous July high as shown in the chart below and has moved back into the up channel.  The ECB (European Central Bank) failed to take action today, and that is blamed for the fall in the market.  It can drop to the base of that channel, the upwardly sloping red line, and still be in an up trend.  The aqua 50 day moving average could also contain this pullback.  Below there, the May or June low becomes the target.  More below…

sp500-index-chart-2012-08-02-close

SP500 Market Timing Chart for 8-02-2012 Close showing failure of breakout.

UPDATE AT OPEN ON 7-31-2012: The SP-500 Index remains at breakout levels above the prior July high.  The rest is below.  Watch for any reversal of that breakout by the way as you may need stop loss points on trading positions.  The Fed announcement tomorrow is not supposed to say anything new according to most.  Watch for that on Wednesday.  The hope is that the ECB will take the heat and the lead this time.

Market Timing Brief™ for 07-27-2012:

James Bond joined forces with the Queen of England Friday night, but last week bond sellers joined forces with stock buyers!  Finally, the winter of our discontent is lifting with an 8.89% increase in bond yields in one day!  That’s a WOW!  [UPDATE: This moderated a bit with a rally in bonds on Monday, but it’s headed in the right direction so far as the reversal above the 6-1-2012 low in yields is still intact.]  This is great news for stocks because it implies a continued rally for stocks.  The very low yields we were experiencing were a reflection of a market gripped by fear.  Be sure to take some off the table if you are overexposed in bonds right now.  This bond sell-off could continue for a while.  Even the Bond King, Bill Gross, has said bonds just don’t pay enough.  He tweeted that last weekend.

Once it leaves Treasuries (TNX, TYX), the money has to go somewhere.  I believe that gold and other metals have a shot at renewal as well, so I started a gold trading position on top of my long term hold.  The chart this week shows gold shining a bit brighter again:

GLD Gold ETF Chart: GLDTracker™

We also have a new high in the SP500 Index, this and the bond sell-off is thanks to ECB President Mario Draghi and our own Dr. B. who intend to shower printed money on the world until it washes away all the financial sins of the mortgage crisis.  As long as the breakout holds early next week, the Bulls have the ball as shown in the chart here:

The SP500 Index (SPY, SPX) is shown in this chart: SP500Tracker™

The VIX?  It can now fall all the way to the 2011 low (which is a bit higher) or to the March 2012 low in this move.

Drug stocks continue to celebrate the Supreme saving of Obamacare with A MAJOR BREAKOUT.  I make a stock chart prediction of the election at the following link (you heard it here first, and it makes sense):

The drug stock index chart shows the breakout here: DRG Index (XPH) – The Pharmaceutical Index – The Bonus Chart of the Week:

Bonus Chart of the Week

The NASDAQ 100 is at resistance still fighting the triple tops largely due to the heavy influence of Apple stock (APPL) on the index.  Apple has a “delay of purchase” problem this quarter as their version 5 model iphones are not due out for a while and it is causing customers to delay purchases.  The Android software is functionally outperforming that of the iphone at this point according to some.  A phone company rep told me he had to “hack” his iphone to get it to do what he could have had an Android do without any problem.  Steve was always big on “control,” despite his brilliance.  So Android phones may eat Apple’s lunch at least until the next iphone is released.  This will pressure the NDX (QQQ).  The Bull argument at this point is that AAPL is just above the 50 day moving average, and could gain some strength.  It did not continue to break down on Friday.  The point?  Apple weakness explains why the NASDAQ and NDX did not move up with the SP500 Index on Thursday and Friday.

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

The above is the text from the 7-27-2012  “Weekly Wall Street Sun and Storm Report™: www.sunandstorminvesting.com/subscribe-to-sp500tracker-newsletter-and-tips.html

And to follow my Buys and Sells and up to the minute insights, please follow and bookmark my Twitter feed here: http://Twitter.com/#!/SunAndStormInv

Copyright © 2012  By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in gold, gold etf, investment, Market timing, pharmaceutical stocks, S&P 500 Index, trading, Treasuries | Tagged , , , , , , , , , | Leave a comment

Market Timing Brief™: Correcting from Triple Tops

Posted on July 24, 2012 by David Durand

Based on the 7-20-2012 Close published Sunday, 7-22-2012.

UPDATE AT CLOSE ON 7-26-2012: We could fail from here or at any resistance point up to last high.  Over the last high and on up we go.  If we get there.  What does this mean?  It’s a bad buying point. Wait to add in my opinion.  More below.

sp500-index-market-timing-chart-2012-07-26-close

SP500 Index Market Timing Chart at 7-26-2012 Close: We are just under resistance at aqua line. The other highs just above here are resistance as well, but we are rallying for now. See my Tweets from today on the right side of this page or on Twitter.

UPDATE on 7-24-2012: The SP500 Index did in fact pull down from the triple top I wrote about this past weekend.  It came down to trend line support yesterday at 1335 and bounced back up through and closed above the 50 day moving average, which is now nearby support. 

Note that the past THREE lows were created by “two step” moves down in the SP500 Index.  After the first move down, there was a pause for a day the prior three times and then the second move down to the low or fairly close to it in the case of the prior swing down.  Then there were 2-4 days of hanging around the new low and retesting it (in the case of the 6-28), followed by the upsurge lasting 5-10 days. 

The market recapitulated that same pattern in just two days (Friday and Monday).  We could now redo the rest and bounce.  I believe that any disruption of this pattern, which would occur if the SP500 Index should make another significant move down (it would look like a “jerk” down as it did both Friday and Monday), would result in greater damage than the initial with a possible retest of 1309.27, the 6-27 low or the early June low of 1274.16.

What are the practical points here that can be made?

1. Buying yesterday near the prior trend line formed by the series of daily lows over the past couple of months would have worked, at least thus far; however, the market is continuing to weaken as I type this, so “jerk down” #3 may be here.

2. The next buy will be a move up through the prior high of 1380.39.

3. SP500 of 1325.41 would be the target should there be another “jerk” down.

And now for my earlier comments this past weekend…

Market Timing Brief™ for 07-20-2012: Triple Tops

The banking index (BKX) started to register trouble even before the Friday decline in the stock markets.  The BKX has formed a triple top and is coming down.  I’ve heard divided opinions about how good or bad the earnings season is, which is why we are probably seeing a move of the SP500 Index back down into the recent range.  When markets don’t know where to go, they go sideways.  They do not continue upward.   Since we are moving down, perhaps the Bears would say that the slowdown is going to surprise the markets in the end. The Economic Cycle Research Institute that correctly predicted this slowdown has said that the slowdown would be mild unless gas and oil prices have gone sky high.

The NASDAQ 100 (QQQ) is a good example of a common theme in the MTT below.   There has been a reversal at a triple top.  The SP500 Index (SPY, SPX) is in the same place as of the close on Friday as shown here:

SP500Tracker™

Remember I said that we needed another breakout in biotech to make it a buy?  We are still waiting for that breakout.  The first one failed.

The biotech chart shows the failed breakout here: BTK (IBB) – The Biotech Index – The Bonus Chart of the Week: Bonus Chart of the Week

Utilities remain in an up trend.  Good yields are vanishing from markets all over the world.  Stocks become more attractive in relative terms, even when an investor can only get 2-3% in dividends.  If interest rates were to move back up, it would mean trouble.  The stock markets are at the current level, because rates are very low, abnormally low.

Muni bonds are on a tear both because interest rates are headed down AND because the Bush tax cuts are in danger of being repealed.  President Obama’s agenda for his last term will be to reverse those tax cuts and drive marginal tax rates back up toward what they were under Bill Clinton.  I am not saying whether that is good or bad.  I am too smart to state that in a financial newsletter.  What I can say is that if the Bush tax cuts are repealed, munis will benefit further.

What about the gold market?  Gold cannot seem to get moving.  Many of the metals are hanging out near their recent lows.  Gold is no exception as seen here:

GLD Gold ETF Chart: GLDTracker™

The only reasons gold would break the recent lows would be if:

  1. The world’s central banks stopped printing money.  That is obviously not happening.
  2. The world’s economy goes into a deflationary spiral, which would likely only happen if #1 happened.  Dr. B has not revealed any inclination to let off the monetary gas pedal. 
  3. The SP500 Index fell dramatically in value.  Valuation is relative.

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

The above is the text from the 7-22-2012  “Weekly Wall Street Sun and Storm Report™.  To see the rest of the current issue and this week’s ratings of all 35 markets I follow and receive the newsletter every weekend, subscribe here: 

www.sunandstorminvesting.com/subscribe-to-sp500tracker-newsletter-and-tips.html

By the way, if you “liked” this post, please “Like” it at the “Share” arrow below and/or re-Tweet it below.

And to follow my Buys and Sells and up to the minute insights, please follow and bookmark my Twitter feed here: http://Twitter.com/#!/SunAndStormInv

Copyright © 2012  By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Biotech, federal reserve, gold, gold etf, investment, Market timing, municipal bonds, S&P 500 Index, trading, utilities | Tagged , , , , , , , , , | Leave a comment

Market Timing Brief™: Will Dr. B. Spoil the Rally?

Posted on July 17, 2012 by David Durand

Based on the 7-13-2012 Close published Sunday, 7-15-2012.

UPDATE on 7-17-2012: Dr. Bernanke has spoken and the SP500 Index was down at first and is now slightly up and gold is down a bit less than it was when the testimony speech was published this morning.  Sometimes it takes a day or two for the true direction of the market to express itself.  He is saying that things are not great in Europe, and there are risks with the continuing issue of unemployment, so that keeps the Fed in play, which the market likes.  So far, that is the reading reflected in the market.  But there is more in this week’s issue that follows…

Market Timing Brief™ for 07-13-2012

Biotech (BTK; IBB) has been in a Bullish trend this year as I elaborated on in my first issue of 2012.  It is now moving from support to retest the high.  A breakout, if sustained, will be the next buying point.  Sustained means it does not break out and in one or two days break down again.  Sometimes there is a retest of the breakout where an index slips just below the intraday high breakout point and then rises back and closes above it.  That is also a good place to buy.

Buying just below resistance is the worst place to buy.  If nothing else, market timing can help you to buy stocks and indices/ETFs where they are most buyable instead of buying them at “dumb” spots on the charts.  Buying silver (SLV) when it was massively stretched beyond anything it had done in years has cost investors about half of their money so far.  That is another dumb chart point to make a purchase.

The biotech chart is here: BTK – The Biotech Index – The Bonus Chart of the Week: Bonus Chart: Biotech Bull Market

Gold (GLD gold ETF) has been hammering out what gold investors hope is a golden bottom from which it can now rise.  They hope they will not need a golden parachute.  They will if gold breaks the huge base it has formed.  It will likely drop several hundred dollars if it does.  With all the central bank printing of false promises called “currency,” gold has a future I believe and will likely hold the base see in the chart below.

GLDTracker™

Meanwhile, the SP500 Index (SPX, SPY) has immediate overhead resistance as well marked by the two aqua lines on the chart:

SP500Tracker™

Dr. Bernanke’s Humphrey Hawkins Testimony before the Senate on Tuesday and before the House on Wednesday may determine the market’s direction for several weeks to come.   My feeling is that the Fed does not need to act right now, because things are just not bad enough to warrant action.  They want the stock market to be up in general terms, but it’s high enough to be tolerable to them, so why blow up a bubble and be accused of that?

The other factor is the election.  Doing more now could throw it to President Obama and the Fed does not like to meddle in politics.  I say Dr. B’s hints in the coming days will be weak and the market will sell off a bit more by Tuesday, the first day of testimony.  If I am right and you sell a bit into this rally, you’ll be able to buy it back lower.  I am currently hedged with about 50% of my normal allocation to stocks.  Formulate a plan that works for you.

The position of the VIX supports my view, having collapsed 8.68% on Friday to support.  It can now bounce as stocks sell off again, perhaps as soon as Monday or Tuesday.  The dollar is also signaling caution as it is back in Bull 5 mode.  That pressures the earnings of US multinationals as discussed recently.

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

The above is the text from the 7-15-2012  “Weekly Wall Street Sun and Storm Report™.  To see the rest of the current issue and this week’s ratings of all 35 markets I follow and receive the newsletter every weekend, subscribe here: 

www.sunandstorminvesting.com/subscribe-to-sp500tracker-newsletter-and-tips.html

By the way, if you “liked” this post, please “Like” it at the “Share” arrow below and/or re-Tweet it below.

And to follow my Buys and Sells and up to the minute insights, please follow and bookmark my Twitter feed here: http://Twitter.com/#!/SunAndStormInv

Copyright © 2012  By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Biotech, federal reserve, gold, gold etf, investment, Market timing, S&P 500 Index, trading, volatility index | Tagged , , , , , , , , , | Leave a comment

Market Timing Brief™: Trouble for the Markets in Coming Earnings and Further US Dollar Strength

Posted on July 9, 2012 by David Durand

Based on the 7-6-2012 Close published Sunday, 7-08-2012.

Market Timing Brief™ for 07-06-2012

The US Dollar Index remains strong, which means trouble for US multinationals competing in Europe.  In fact the US Dollar Index made a slight new recent high that must now be confirmed.  UUP is just slightly below that breakout point.

The chart is here: UUP – US Dollar Index ETF – Bonus Chart of the Week: Bonus Market Timing Chart of US Dollar Index

Of course, that helps European companies and their economy, which is now affecting ours and around we go!  It would be interesting to see what would happen if there were ONE currency and no country could cheat its savers out of their money in order to balance their debts.  This is not what Dr. B ordered and some say he’ll push the Fed to do QE3 as early as July, not because it worked last time, but because he wants to be “doing something.”  Maybe doing nothing would allow the economy to heal naturally instead of rewarding the likes of robber barons like Jamie Dimon of JP Morgan who gives his local depositors 0.01% interest and smiles…all the way to his bank account while proceeding to oversee one of the worst risk management operations in the world.  The bankers claim, “We have to recapitalize the banks!”  What is being recapitalized is JPM shareholder stock.  JPM is a member bank of the Federal Reserve.  So the Fed has the power to steal from us and give our stolen money to the banks. Their position is obviously that doing so helps everyone, but I disagree.  I believe there has been a loss of responsibility in their fix for the financial system.

Dollar strength is now pressuring gold and the other metals which were just starting what looked to be a rally.  It is back to the starting line as the chart shows.  The metals  may not fall all the way back to support but the luster is dimming on the rally.

GLD Gold ETF Chart: GLDTracker™ Chart

Meanwhile, the SP500 Index has topped out at the May 2011 high and is pulling back.  It could rally back up through there of course, but I doubt it will without at least a mild pullback to the support line shown in the following chart:

SP500 Index: SP500Tracker™ Chart

Earnings start this coming week and they are purported to be weak.  But how weak?  There were a few notable earnings pre-announcements from the auto manufacturers and from P&G.  The issue is also whether many other companies bring down guidance for the next quarter as well.  Remember that the European slowdown causes further slowing as other businesses then have to pull back who were servicing the slowing businesses.

The VIX has fallen to a significant support area and has plenty of room to bounce.   That means the SP500 has room to fall.  AAII Sentiment is not at either extreme. Here are my comments on this week’s sentiment data: Survey Says! AAII Investor Sentiment

The stock and metals markets are pointed down at this time.  Housing is one market that is still holding onto a clean breakout.  REITs on the other hand look toppy here: REIT Index Chart

Let’s see what the reaction to earnings is.  Stocks should go down on good news and bad if the sellers are convicted.

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

The above is the text from the 7-08-2012  “Weekly Wall Street Sun and Storm Report™.  To see the rest of the current issue and this week’s ratings of all 35 markets I follow and receive the newsletter every weekend, subscribe here: 

www.sunandstorminvesting.com/subscribe-to-sp500tracker-newsletter-and-tips.html

By the way, if you “liked” this post, please “Like” it at the “Share” arrow below and/or re-Tweet it below.

And to follow my Buys and Sells and up to the minute insights, please follow and bookmark my Twitter feed here: http://Twitter.com/#!/SunAndStormInv

Copyright © 2012  By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in federal reserve, gold, gold etf, investment, Market timing, REITS, S&P 500 Index, trading, US Dollar Index, volatility index | Tagged , , , , , , , , , | Leave a comment

Market Timing Brief™: Revival of Stocks and Metals. Treasuries Say Nein! Although Merkel Says Ja!

Posted on July 2, 2012 by David Durand

Based on the 6-29-2012 Close published Sunday, 7-01-2012.

UPDATE @ 5:18 pm on 7-02-2012: The SP500 Index managed to close over the 6-19-2012 high but just barely, so the jury is still out.  It does give the Bulls an edge going into tomorrow.  Markets are closing at 1:00 pm ET tomorrow, so perhaps nothing much will happen.  Remember that Europe is open on July 4th and ironically we are NOT independent of Europe in economic terms as we’ve seen by the reaction of our markets to the mess across the pond.

This week’s Brief:  The metals and the indices escaped a potential fall this week, due to increased flexibility on Chancellor Merkel’s part but it does not feel as if the European mess is over by any means.

So where at the metals now?  I pointed out last week exactly where they had to hold and both silver and gold held those lows by Friday as the charts show:

SLV – The Bonus Chart of the Week: http://www.sunandstorminvesting.com/index.html

GLD Gold ETF Chart: http://www.sunandstorminvesting.com/gld-etf-gold-market-timing.html

Silver actually fell below support and rebounded after Merkel turned on the Euro printing press (EUR/USD).  Remember that silver is more economically sensitive than is gold, so it may fall further if the economies of the world slow more dramatically.  For now it has found support.

A remaining issue for the metals is that the US dollar Index is down but not out (USDX, UUP).  It is still in a Bull trend for the moment.  It must break the mid June low to change that.

Due to remaining details being unresolved in the European Summit solution and also due to slowing of the economy with weaker earnings coming in from auto manufacturers as well as consumer staples companies like P&G, I expect the SP500 Index to drop to at least 1307 again.  That may just be the first stop.

On Friday the SP500 Index closed barely below the 6-19-2012 market timing high of 1363.46, closing at 1362.16.   On Monday, the index will have a chance to show its stuff and make a new recent high or show weakness and fall back to 1307 or so within days.  Seasonality before the holiday this week favors the Bulls (the two days before holidays tend to be bullish).  Tops sometimes take a couple of days to form, so if there is a failure, it may come on Tuesday or Thursday.  The upside SP500 Index market timing target for a push up through this overhead resistance level would be 1415, which was the 5-01-2012 high.  In favor of the Bulls was that the volume on the push up was decent.

Have a look at the SP500 Index (if your browser is open, the page will open up automatically for you) SP500 Index: http://www.sunandstorminvesting.com/sp500-index-sp500tracker.html

The 10 year Treasury has NOT yet voted for the stock markets by selling off, so risk is not entirely “on” here.  They don’t buy Merkel’s compromise as being curative or there would have been a big sell-off in 10 year notes.  But the 30 year Bond has reversed back down, so perhaps the 10 yr will soon follow.

The VIX volatility index has fallen enough that there is plenty of room for it to rise now, although the March low could be the first target, which is lower than Friday’s close.  It would just take another couple days of rallying to get us there and then the market could start easing back again.

If you bought on Friday or if you intend to buy further strength, you may want to set a mental stop, in case Europe fall apart again and the economic slowdown is worse than expected.  Either of those will propel the market down again.  The same zigzagging plagued the market last summer and is likely to continue.

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

The above is the text from the 7-01-2012  “Weekly Wall Street Sun and Storm Report™.  To see the rest of the current issue and this week’s ratings of all 35 markets I follow and receive the newsletter every weekend, subscribe here: 

www.sunandstorminvesting.com/subscribe-to-sp500tracker-newsletter-and-tips.html

By the way, if you “liked” this post, please “Like” it at the “Share” arrow below and/or re-Tweet it below.

And to follow my Buys and Sells and up to the minute insights, please follow and bookmark my Twitter feed here: http://Twitter.com/#!/SunAndStormInv

Copyright © 2012  By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Economy, federal reserve, gold, gold etf, investment, Market timing, S&P 500 Index, silver ETF, trading, Treasuries, US Dollar Index, volatility index | Tagged , , , , , , , , , | Leave a comment

Market Timing Brief™: Treasuries and Gold Will Signal a Real Economic Recovery When It Happens. For Now Safety Rules!

Posted on June 25, 2012 by David Durand

Based on the 6-22-2012 Close published Sunday, 6-24-2012.

First, thank you for continuing to drive this newsletter higher in the various Google and other rankings.  I appreciate your interest and loyalty!   I have some really key insights this week that I am excited to share with you.  So now…the news…

The Fed disappointed the markets last week, so despite the Greek elections succeeding to support a unified Eurozone, the markets were upset with both metals and stocks dropping quickly.   So as not to repeat myself, please read the text and see the charts from this week, first silver and gold,

SLV – The Bonus Chart of the Week: http://www.sunandstorminvesting.com/index.html

GLD Gold ETF Chart: http://www.sunandstorminvesting.com/gld-etf-gold-market-timing.html

Then have a look at the SP500 Index:

SP500 Index: http://www.sunandstorminvesting.com/sp500-index-sp500tracker.html

The key for the metals is survival!  They must hold the prior lows.

The key for the SP500 Index is buoyancy.  It must move above the March 6th low in a definitive way on Monday.  Otherwise Friday just represented a blip up in a downturn.  That is what I favor, but shorting is not an easy thing to do, i.e., just as the Bears count on the market falling, it bounces and the Bears are clobbered.  Then after they give up the market bounces a bit more.  Then the Bulls get overeager and invest at the top of the bounce.  At that point the selling starts over, driving out the weak Bulls and bringing the Bears back from the sidelines, now a bit late already.  And on it goes.  It is hard for Bears to stay short during these counter trend rallies. 

The VIX volatility index has pulled back enough on Friday to now continue back up, but there is room also for the VIX to fall if the Bulls can carry the ball and drive the SP500 Index back above that March low.  So the VIX is not much help here unless you like playing craps.

If you step back from the SP-500 market timing chart, it looks like a good place to fail – it happened right at the 50 day moving average.  I would say the Bears have the ball until proven otherwise.  As Proctor &Gamble and other big companies are starting to report slowdowns in business, earnings this quarter could disappoint the markets and drag the indices lower.

I’ve labeled most of the weak markets as holds rather than sells.  Many are on some support at this point.  Selling intraday when I did (reported on Twitter) made more sense than selling at the close.  I don’t claim to know what will happen on Monday.  I do feel my sells were timed reasonably well until proven otherwise. 

Stepping way back and comparing this summer to last, what I cannot rule out is a bounce back up to retest the June high and then a failure.  I am leaning toward another rough summer for the markets based on Euro-uncertainty and a slowing economy worldwide.

Some markets look like they are ready to move higher, including biotech (BTK).  Biotech is as safe as the manliest man on the Bachelorette, because it is now linked to new drug discovery and is no longer tracking with risk.  The Biotech boy is now a man, baby!  These companies are being bought out, not looked at to check their cash burn rates and distant prospects.  Drug companies (who are buying biotech with their cash flow in tow) are also holding up well (DRG).  Utilities have lost some luster from their prior Bull 5 signal, but are still Bull 3.  The theme?  Investors are favoring SAFE, SAFE, and SAFE!  How does this verify my feeling that the summer will be rough?  Safety rules in what?  A weak economy!  So the MTT (table below) is predicting a weak economy without further stimulus.

Treasuries (TNX, TYX) will likely signal the end of this recent selling.  Watch for a reversal of the 10 year note above the Sept. 2011 low in yield – that will be a strong signal to start buying stocks again if other things are aligned.  I’ll let you know in my opinion when they are.

What about gold and silver and other metals holding the line here?  Will that be Bullish for stocks?  If the economy were strong, gold and other metals could sell off and all could be well for employment and business profits, but that is not the case.  So a sell off in gold will simply be the foreshadowing of a deeper stock market correction in my opinion.  All valuation is relative and if there is going to be deflation now, because of the lack of Fed easing, all the boats will be revalued lower.  Metals and stocks will fall or rise together, until real interest rates rise, which will ONLY happen when the economy is truly recovering. 

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

The above is the text from the 6-24-2012  “Weekly Wall Street Sun and Storm Report™.  To see the rest of the current issue and this week’s ratings of all 35 markets I follow and receive the newsletter every weekend, subscribe here: 

www.sunandstorminvesting.com/subscribe-to-sp500tracker-newsletter-and-tips.html

By the way, if you “liked” this post, please “Like” it at the “Share” arrow below and/or re-Tweet it below.

And to follow my Buys and Sells and up to the minute insights, please follow and bookmark my Twitter feed here: http://Twitter.com/#!/SunAndStormInv

Copyright © 2012  By Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Biotech, Economy, federal reserve, gold, gold etf, investment, Market timing, S&P 500 Index, silver, silver ETF, trading, Treasuries, volatility index | Tagged , , , , , , , , , | Leave a comment