Market Timing Brief™: Tells on Stocks, Gold and the US Dollar

Posted on November 10, 2011 by David Durand

Market Timing Tells on the Markets (with 11-11-11 update at base)

1. Follow the bond market.  The last time the stock market moved down briskly, bonds were rallying hard.  Unfortunately the bond people are off on Veterans Day, so we won’t have this “tell” on Friday.

2. The action on 11-10-2011 was not that helpful.  Most indices made very little progress against significant overhead resistance.

3. The US dollar is still in rally mode (UUP).  It barely slipped today, so the dollar rally is still intact.  The Europeans are still floundering, which will fuel the dollar rally further.

4. That makes it harder for gold to make progress.  Although gold (GLD ETF) did hold up at the daily uptrend line (see my gold tracking page on the main site for two GLD charts; see publishing schedule for link), it appears that it is being pulled back to at least the 50 day moving average for a test,  which may not hold.  I explained how to manage a market timing entry on support in the article from today on the gold tracking page.

5. The stock indices including the SP500 Index can all continue to recover as long as the VIX (fear or volatility index) does not blast off through overhead resistance.  I put up the VIX chart on the main site today (go to the “Read My Feed” page to see it).  As long as we stay below immediate overhead market timing resistance, the rally will survive another day.

11-11-11 Market Timing Update:

1. Italian 10 year notes fell well below 7% today, as Italy moved to initiate the demanded austerity measures. This has calmed the world’s markets substantially. The VIX, or volatility index, collapsed below 30.16 at open now 29.61. 30.16 was key support before and now we’ve moved below that. That means fear has dropped and the rally can proceed more easily. Remember of course that fear can come back in a day as it did earlier this week, so following the VIX is not enough. We have to pay attention to whether Europe is truly solving its problems.

2. Dollar breakout was broken.  UUP is now below the mid-Oct. high and Nov. 1 high. This supports stocks in that earnings of multinationals become more competitive. It also results in inflation of stock prices, one of the Fed’s stated goals.

3. The GLD (gold ETF) has held up at the uptrend line on the daily chart and could continue to rally from here.  I would not rule out a bit more correction as stated above, but it does not have to happen. The issue for individual investors is that you cannot trade gold in the overnight market, at least not most of us.

Currency traders do that every day. Since gold is reflecting the strength of the dollar most days now even more than it reflects endogenous buying and selling of gold, the price can whip around overnight entirely based on moves in the dollar. And most of us are buying gold in dollars.

I advocate holding a long term gold position, but have been trading a second position. It may be smarter now to wait for a move over the Nov. 8th high to buy back that trading position. Buying the rise back above the uptrend line was another such point that I mentioned yesterday when it was happening.

Just be aware that today, you are selling the US dollar more so than you are buying gold. As reported by Kitco.com, gold is up 0.64% due to a dollar decline, while gold buying only amounts to 0.25% of the move in gold for a total of 0.89%. So actually you are more of a currency trader today, shorting the US dollar than a gold buyer if you buy the GLD gold ETF. See my “Read My Feed” page and scroll down to my article on “Gold Trading Signals: Market Timing Gold and GLD Update” to learn more about this concept.

4. The SP500 Index is now above 1249.05 resistance and is rising to challenge the 200 day moving average.  It won’t take long to find out if it has further momentum as the 200 day moving average  is at 1272.24 at the moment, and the SP500 Index is at 1257.37

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

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

I posted an important Update on the Stock Market Here: This Weeks Video Chart Update

Been wondering about how investors are feeling?

Survey Says! (AAII Sentiment Survey that is!)

I’ll put up an update on Saturday on sentiment.

Follow my Twitter comments during the market day (link to right).

Copyright © 2011 by Wall Street Sun and Storm Report, LLC All rights reserved.

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

Market Timing Brief™: The Critical Signals to Watch

Posted on November 1, 2011 by David Durand

The Tells on this Market

Treasuries have rallied again and are testing the prior market timing consolidations in both the 10 year note and the 30 year bond.  The VIX (“fear index”) moved up in the downtrend.  The market is still fixated on the 30.16 VIX low I believe, so rising above there could trigger some selling.  It could prove a reversal point for the Bulls.  We won’t know until or if we get there.

Today’s SP500 Index close was just above support at around 1249.  The close was at 1253.30, so we are already nearby.  The banking index (BKX) is slightly below the August high.  If you see the BKX break down further with the VIX rising above the resistance level mentioned and Treasuries rallying through the prior consolidation, the SP500 will likely fall to support lower than 1249.05.  The other index to watch is the NDX (tech; QQQ). If it fails to regain its recent new high, again, the SP500 index will likely be selling off.

There is yet another “tell” on this market – the US dollar.  For this to be a small correction on the way to higher highs, Europe will have to improve its story.  Otherwise, the US dollar will continue to rise through the prior consolidation level through which it had fallen and move straight back up.  That market timing signal would mean serious damage to the Euro and all major global stock markets.

Of the pullbacks we’ve had to date, this one is perhaps the best place for the market to fail.  Why?  Because many have reversed from important resistance points.  I am not saying it must fail, but this is a place that could be  a pivot point depending on the flow of news.  Let’s hope Europe looks better on Tuesday than it did on Monday!

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

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

I posted an important Update on the Stock Market Here: This Weeks Video Chart Update

Been wondering about how investors are feeling?

Survey Says! (AAII Sentiment Survey that is!)

Follow my Twitter comments during the market day (link to right).

And for some fun with the latest Fed Statement: Fun with the Federal Reserve Statement

Copyright © 2011 by Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in Market timing, S&P 500 Index, trading, US Dollar Index | Tagged , , , , , , , , , | Leave a comment

Market Timing Brief™: From Selling the Rallies to Buying the Dips

Posted on October 28, 2011 by David Durand

Market Timing Brief™ for 10-28-2011: Now that Europe is Solved, NOT

On 10-26-2011, I told you to sit tight.  I said the markets were retesting in a market timing terms and that the little swoon was not the next wave down.  That turned out to be good advice.  What has improved since then?

1. Europe got its act together to take care of Greek debt and has begun the process of recapitalizing their banks.

2. As a results fear began to wane a bit and the VIX slid through the 30.16 level and then some, which could auger in a further rally.

3. Most of our markets went up by 4-6% yesterday leading to the crowning of the month as the month with the largest percentage gain in history.  Talk about volatility!

Very bad has flipped to very good, so of course that makes it a bit trickier to make money.  The rally is not likely to end abruptly, but pullbacks of varying depths are likely.  There is too much at stake worldwide for the players not to do their parts.  When things get a bit ahead of themselves, you have to step into the market timing dips and buy when others are getting a bit more nervous.  Remember that investors and traders are programmed as they watch and are somewhat stuck in the fear mode even though conditions have improved.  This can lead to investors taking profits prematurely, which is to your benefit if you are underweighted in stocks during a rally.

The further twist is that you may have to be willing to take a loss to make money at this point in the rally.  Are you going to sell the next little swoon?  You won’t make money that way.  Trading blips in the market is for day traders only who have their eyes glued to the screens all day long.

There could be a 2-3% pullback any day now if one of the worldwide players says the wrong thing.  Of course, you need to set your stop loss point where YOU feel comfortable as it’s your money, but consider widening your stops a bit.  Otherwise you may stop yourself out and have trouble re-establishing your positions in the market if you fall behind.  Of note during the rise of the market this month is that the swoons that previously were enough to trigger big selling did NOT do so this time.  So that was different.  And when the market changes, we need to change and adapt to continue to make money.  Our market timing has to be clear headed.

Buying the indices that have a lot more upside to the July highs may be a good strategy now.  Examples would include emerging markets and small cap stocks.  These are also more volatile by the way (down 4% and up 4% in a day), so be sure you can stomach these sorts of moves before investing.

Realize as I tweeted yesterday ( you can follow my tweets on this webpage to the right, even if you are not on Twitter), the Euro situation is far from over with the other debtor nations still on shaky ground.  Italy is right behind Greece in needing assistance.  These headlines will generate the dips.  We’ll have to continue to watch the Euro currency for signs of failure of the overall SP500 Index rally as it is predicated on Euro zone stability.  I’ll be watching it with you.  Look for my update on the markets (the “Tracker” newsletter) this weekend.

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

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

I posted an important Update on the Stock Market Here: This Weeks Video Chart Update

Been wondering about how investors are feeling?

Survey Says! (AAII Sentiment Survey that is!)

I have not updated sentiment lately because it was barely moving, but I will this weekend, so check back for it.  The tease is that it’s clear how the sentiment moves over the past few weeks are going to end.   Sentiment has not been helpful in the middle range it has been in, but it’s about to become important (hint: bullishness is rising and will trigger a sell signal).

Gold’s Next Move: GLD Gold ETF Market Timing Update

The most recent comment on gold is above, but check back to the above link for intraday comments or on Twitter (follow link to right).

And for some fun with the latest Fed Statement: Fun with the Federal Reserve Statement

Copyright © 2011 by Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in investor sentiment, Market timing, S&P 500 Index, trading | Tagged , , , | Leave a comment

Market Timing Brief™: Euro Fever with Stocks Down, Metals Up.

Posted on October 25, 2011 by David Durand

Market Timing Brief™

for 10-25-2011: Euro Fever for Stocks

Given the lack of perceived adult behavior on the part of Euro leaders, all stock market indices showed weakness today.  The REITs (Real Estate Investment Trusts) had what is referred to as an inside day.  Since they have been particularly volatile lately, the fact that they remained within the range of trading for the previous day (hence, “inside day”) means that the market has not yet decided to sell off seriously, even though the percentage drop of 1.87% would seem like a bit much.

Commodities (CRB Index) held up today and gold and silver both scored breakouts, which would indicate that we are not simply slipping back into the “sell everything” mode of either 1) Emergency liquidity needs or 2) the sense that we are headed back into a deflationary period with a dying economy.  Oil goes down, not up when the economy goes into recession during a non-inflationary period.  It goes up when the economy is booming and demand is rising and it also goes up when the dollar is being degraded by overprinting by the Fed.

That is exactly what happened the last time the Fed shot it’s QE bullets.  The economy did not seem to get much better, no significant job creation resulted and we ended up with inflation.  That is good example of Fed generated stagflation.  So fortunately there is no QE3 in sight, because the Fed knows it was not worth the suffering they inflicted worldwide in higher food and energy prices.

Continue to add to commodity, gold (GLD) and silver (SLV) positions as they go up.  If you don’t have time to “watch” your silver position, gold may be the better choice for you as silver is very volatile.

In the meantime, the pullbacks today were all largely reversals of part or much of the gains attained on Monday.  There was no bloodbath sell-off.  At least not yet.  If the Europeans do not get their act together and come up with trillions of Euros to throw at their debt issues, we could be in for more of a correction.  On the other hand, if they do the right things that the market is now expecting, the market could easily rebound quickly.

The SP500 Index (SPX) dropped down below the intraday high on 9-01-2011 of 1229.29 but not below the prior closing high of 1218.89.  That is fine for a retest.  A close below the closing high would be one step closer to a more severe correction.  For now, it’s just a dip.  The NDX did the exact same thing.  It has pulled below the intraday high of 9-20, but is above the closing high of 9-19.

The VIX is not cooperating with the Bulls.  The fear index was up today and rose above 30.16, which means the prior market timing progress was obliterated.  If it promptly moves back below there, the rally can resume, but if you see it shoot up above the 50 day moving average the sell-off could continue.  Actually if it moved up to that point, we’d need to be watching for a reversal and then a potential breakdown.  So we’ll see what Euro madness or sanity tomorrow brings

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

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

I posted an important Update on the Stock Market Here: This Weeks Video Chart Update

Been wondering about how investors are feeling?

Survey Says! (AAII Sentiment Survey that is!)

Gold’s Next Move: GLD Gold ETF Market Timing Update

The most recent comment on gold is above, but check back to the above link for intraday comments or on Twitter (follow link to right).

And for some fun with the latest Fed Statement: Fun with the Federal Reserve Statement

© 2011 Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in gold, gold etf, Market timing, REITS, S&P 500 Index, silver, silver ETF, trading | Tagged , , , , , , , , , , | Leave a comment

Market Timing Brief™: Is the Next Move Up or Down for the SP500 Index?

Posted on October 20, 2011 by David Durand

Market Timing Brief™ for 10-20-2011: Looking Through the Fog

It was another up and down day run by a statistic here and a rumor there.  The action was simply noise on the charts.  The reason I said today that the market is likely to resolve the current range to the downside is because it usually has done exactly that after sliding sideways in a consolidation for 6 days or more.  Now the move down from here COULD be shallow or deeper, even just one big down day followed by more upside.  But it could be something more serious.  I would not venture to go further than that, because our current visibility is pretty foggy.

The semiconductors were down another 1.70% today and Intel gave up its gains from the previous day as I predicted and Tweeted yesterday dropping 2.85%.  The Semi stock index was down big yesterday and INTC was up big.  That made no sense.  Sense eventually returns to the market.

The volatility index that measures the fear in the market (VIX) was up today, but not by much.  It pulled down from some resistance overhead, but is still in rally mode until proven otherwise.

Commodities only got to the middle of their down channel and turned back down again (CRB Index).  Gold fell but held important support – so far.  The dollar index went no where today, so the gold selling was organic selling, not related to dollar weakness.  There is a more extensive comment on the GLD ETF  trade on the “Tips” page on the main website.  If you have signed up for the “Tracker and Tips” newsletter, access is free.  You can do that here: ”Tips and Tracker” Sign-up

On the positive side, the banks are still holding on with the BKX staying above the 50 day moving average.  It’s the same for the housing stocks.  They are holding up.  So did European stocks today.  Pacific stocks slipped a bit more though and the emerging markets look sick.

As mentioned, consolidations like these in the SP500 Index rarely end with an immediate upside resolution.  Much more likely is that there is either 1. a quick several percent drop followed by a continued rally or 2. a much deeper correction.  This makes trading it very tricky if you are expecting to catch the dip.  Buying the reversal may be more effective.

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

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

© 2011 Wall Street Sun and Storm Report, LLC All rights reserved.

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

Market Timing Brief™: Treasuries Did Not Budge. So is this Stock Market Rally for Real?

Posted on October 18, 2011 by David Durand

Market Timing Brief™ for 10-18-2011

Treasuries did not budge today.  If this stock rally is for real, they should have shot up in yield, down in price.  Other sectors were listless.  Why wasn’t biotech rallying today?  The VIX is also not supportive yet of a continued rally, so today could be as much of a fluke as Monday was when the market is selling off.  Understand that technical analysis AND fundamental analysis gets a bit riskier when governments are playing games as they are.  But it still pays to pay attention to the signals.  It’s important to realize that the noise is higher, so you either have to set somewhat wider stops to stay in or get back in if you get out too soon.  It is a very tough investing environment.

Open up this chart before continuing so you can see where we were at the close today on 10-19-2011: SP500 Index Market Timing Chart

Why did the markets sell off sharply twice at about 1230 for the SPX (SP500 Index) if this is really an all clear signal that a 2 trillion dollar fund will be created in Europe?  Maybe it’s not so certain after all.  Jim Cramer said last night that a technical analyst he follows changed his technical opinion from sell to buy based on the 2 trillion Euro rescue package.  That makes no sense.  The chart has to show a breakout above the prior 1230 high on the SP500 Index to confirm a shift of this market to a “range free” as opposed to a range bound market.  Fundamentals do not matter UNTIL they effect the technical picture.  And they have not, because we don’t have that new high in place yet.  It could happen, but it has not happened.

The Dow roared up to the last top – again.  It has to punch through to convince me that there will be more.  Banks did the same thing (BKX).  They are up near resistance on the chart.

Oil is doing fine, but it’s about to run into resistance at the September tops.  The XOI had the first day of a breakout.  Commodities overall just treaded water.  Gold pulled back 0.48% (GLD shares).  It was down much bigger earlier in the day.  I think adding to gold positions now makes sense, because Europe is about to continue the destruction of its currency, but scale in slowly and decide where you will sell if gold dives through recent support.   The US Dollar Index looks like it could hold onto the recent rally.   This could challenge gold unless there is wholesale dumping of Euros and a flight to both the US Dollar Index and to gold.

A plus for the overall stock market is that banking and housing are acting better and making progress with the market.   If they turn back down, so will the overall market.

I’ll be sharing these sorts of thoughts here and on the main website (links under “Publishing Schedule” tab above). 

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

My update from this eveningis here: Market Timing Brief

To keep up with my weekly analysis on the stock market, you can sign
up here:
Free SP500Tracker ™ Newsletter

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

invest it.

© 2011 Wall Street Sun and Storm Report, LLC All rights reserved.

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

Fed Speak on 9-21-2011!

Posted on September 21, 2011 by David Durand

Fed Speak : Fun with the Federal Reserve Statement!

(translation to American English in bold; Fed Speak in non-bold print below)

Release Date: September 21, 2011

For immediate release

Because why should you have to wait for this stuff?  You paid for it!

Information received since the Federal Open Market Committee met in August indicates that economic growth remains slow.

No kidding?

Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated.

Really?  There are folks out of work?  We aren’t.

Household spending has been increasing at only a modest pace in recent months despite some recovery in sales of motor vehicles as supply-chain disruptions eased.

Spend more people!  Well, at least Japan is better than it was if even if you refuse to go to the mall and splurge.  Nice that we’re routing for the Japanese now after bashing them for taking over the world when they bought Rockefeller Center (and later sold it for a massive loss).

Investment in nonresidential structures is still weak, and the housing sector remains depressed.

Have you heard the construction business is slow?  Who lowered interest rates to levels that supported the housing crisis in the first place?  Oops, we did!

However, business investment in equipment and software continues to expand.

Go Oracle.  You can depend on government spending needed to analyze the weak economy.  It’s so complicated we need really really big spreadsheets that only Oracle can make.

Inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks.

Peaks that were produced by….oh my golly gosh….by US during QE2!  Not to change the subject, but that’s a boat isn’t it?

Longer-term inflation expectations have remained stable.

Now that we have stopped messing things up.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.

And we’ll do that by taxing savers by keeping rates at zero and destroying the US dollar, instead of increasing taxes and being honest about it.  We like being tricky, not honest.  Hey Lincoln said you can fool some of the people some of the time, so we figure, we have to keep coming up with new ways to do it!

The Committee continues to expect some pickup in the pace of recovery over coming quarters

because we took our medicine this morning and another feel good pill at noon…

but anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate.

And we do like to do our job no matter what it takes.

Moreover, there are significant downside risks to the economic outlook, including strains in global financial markets.

The world is a real mess isn’t it?

The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee’s dual mandate as the effects of past energy and other commodity price increases dissipate further.

From the elevated levels we induced through our misguided policies.

However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

Ooooo do we ever pay attention.  We’ll even watch as inflation goes up.

To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee decided today to extend the average maturity of its holdings of securities. The Committee intends to purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less.

This program known as operation “Twist” is yet another way we’ve found to play around with interest rates, our favorite playtime activity.  You should be happy with us, because by flattening the yield curve, we’re taking away profits from banks that have been making a killing off of making loans in the short term and buying longer term government paper and collecting the difference. 

Confusing huh?  Normally we favor the big banks over you!  Just by holding short rates so low, we’re robbing you daily of your savings interest you deserve and stuffing bank coffers with it.  To stabilize the banking system of course and destabilize your bank account.  But we got tired of hearing Jamie Dimon at Chase whining in public, so we are sticking it to the banks this time and moving more houses in the process by keeping mortgage rates low!

This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

Oh we’ll be a watchin’ ya’ll.  Hey I’m from the South ya’ll.  I know I don’t sound like it.

To help support conditions in mortgage markets, the Committee will now reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities.

Say what?  Round and round it goes?  When it will stop nobody knows?

In addition, the Committee will maintain its existing policy of rolling over maturing Treasury securities at auction.

We love to roll over.  Woof!  Woof!

The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.

Surprised you with that one didn’t we?  Not.

The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate.

We love our tools.  We are tools.  We love ourselves!

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action were Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser, who did not support additional policy accommodation at this time.

They didn’t?  Three abstainers from monetary indecency?  We think they are just afraid of a gold ol’ Texas hangin’ by Governor Perry.  The other seven of us think he’s a genuine nutcase, but it does make us feel important to have our lives publicly threatened on TV by a sitting governor.  We are now packing by the way and have mandatory pistol practice prior to our meetings to boot!

For my latest on the market: Latest On the Stock Market:Tracking the SP500 Index

…and on gold: Gold’s Next Move: GLD Gold ETF Market Timing Update

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

© 2011 Wall Street Sun and Storm Report, LLC All rights reserved.

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Market Timing Update: Buying the SP500 Index, Pros and Cons

Posted on August 29, 2011 by David Durand

UPDATE NOTE on 10-05-2011 – Gold’s Next Move: GLD Gold ETF Market Timing Update

UPDATE NOTE: I posted an Update (10-06-2011) on the SP500 Index Here: The Ascending Triangle: Key to Market Timing the Stock Markets

Market Timing Brief for 8-29-2011

To understand the format of this post, please review the prior Pro/Con post: Pros and Cons: Remove Fear and Greed and Invest Like Buffett

Investing at this level in the SP500 Index:

PROS:

– The market is continuing its rally from the early Friday swoon.  If we hold today’s gains, we’ll see higher levels still.

– Banks and housing both above the prior lows now, reversing prior breakdowns.

– Dollar is fairly steady so far, although we’ll have to see if there is a further drop post Bernanke speech.  The move was still within the range of where the dollar had been trading, not to a new low.

– It takes two quarters of negative GDP growth to define a recession, so a one quarter slip near the 0% growth point won’t matter in that definitional sense, although it makes unemployment worse.  Spending will pick up in Q4 with holiday spending.

– Gold pulled back a bit, but surged after the Dr. B speech Friday.  We’ll have to see if it moderates more on Monday.  It is doing so thus far.  GLD is down almost 2% so far today.

– Oil is still down considerably, even though it’s creeping up.  Oil recovery is required for an economic recovery as they go hand in hand in the world today.

– Sentiment supports a rally to some extent (see link below)

CONS (to investing in the SP500 Index):

– The 8-26-2011 move in the markets was positive in that there was a recovery, but the rally needs to continue on Monday most likely or we’ll be back retesting the lows.  It is continuing thus far.

– Now the market is a bit stretched after the run of the last couple of days.

– Banking is still weak (although it perked up in today’s trade).

– ECB’s Trichet said nothing at Jackson Hole on Sunday. Europe is a mess waiting for a rescue which is not showing up.

– Recession still looming given the 0.4% GDP growth number lately.

– Oil is moving up a bit and is now above the Feb. low.  World demand is still there, so it’s likely to rise. Chinese growth was stronger than expected and that is the source of the greatest new demand.  This could again put a damper on growth.

– If the unemployment figure is too high on Friday, the market will sell off again.

– Sentiment leans toward new lows eventually, even if there is an intervening rally, so why buy now?  See link below for the data!

So what did I miss?  Join in!  I use the feedback I get to decide what to write.

If you want my latest take on this market, see the Survey Says! link below.

I work with investors and traders who want to get past their emotions and improve.  If you are interested in doing this sort of work, please send me a note via the Contact tab above.

If you “liked” this post, could you please “Like” it below at the
“Share” arrow below and ReTweet it if you like?  Thanks.  It does help and is greatly appreciated.

To keep up with my weekly analysis on the stock market, you can sign
up here:
Free SP500Tracker ™ Newsletter

To find out what Investors are Feeling:
Survey Says! (AAII Sentiment Survey that is!)

Be sure to follow my latest posts here on my Read My Feed Page: Read My Investing Feed Page

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

invest it.

© 2011 Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in gold, investing psychology, investment, Market timing, S&P 500 Index, trading | Tagged , , , , , , , , , | Leave a comment

Gold Analysis and Market Timing: So you think gold is cheap???

Posted on August 23, 2011 by David Durand

Market Timing Brief for 8-23-2011

I wrote this article last night.  Today gold fell 3.51%.  You should know that high volatility moves in gold are often followed by a further move in the same direction.  Set your stops on trading positions.  And read this article to understand how the price of gold has been running up a bit too fast.

I think the following table is BIG news.  I smell a rat in the pricing of various items in it.  If we are buying gold and silver for protection against the great inflation, why is it that gold and silver are LEADING THE INFLATIONARY TREND!!!  My answer is below.

 First, look at this table:

GLD- Gold ETF, SLV= Silver ETF, Oil: WTI crude, CRB index = Commodity Research Bureau Index

11/27/2009

8/22/2011

% Gain
GLD

115.06

184.59

60.43
SLV

17.95

42.63

137.49
OIL

75.97

84.42

11.12
CRB Index

273.03

331.77

21.51
Dollar Index

74.23

74.17

-0.08

 FLAT
Swiss Franc:FXF

98.97

125.25

26.55

This period amounts to about 1.66 years.  In that time, gold has gone up an astounding 60.43%.  Is that deserved?  Commodities represented by the CRB index are up only 21.51% in that period, so you can buy a lot more “stuff” than you can gold than you could before.  Oil did worse.  It’s only up 11.12% in that time.  And the dollar index is FLAT over that period, not down.

My suggestion is that either oil and commodities are a bargain or gold and silver are very overpriced.  Of interest is the fact that oil just rose back above the Feb. 2011 low again despite the announcement of the coming resolution of Libya.  The difference in “premium” cannot be explained by the carrying costs of commodities in that you have to keep rolling over futures contracts to maintain your positions.  Even GLD has a carrying cost of 0.4%.  More importantly, the percentage gains are too far off.

Even if the economy slows a bit and goes into a mild recession, do you really think the world is going to need less in the way of commodities?  I don’t.  So why would gold and silver run so far ahead of commodities in general and oil?  Fear and greed I believe are the answers.   These are the two energetic forces that destroy capital in the markets.

Now look at the Swiss Franc that has been under attack by the central bank of Switzerland to drive down its value, because it’s killing their economy.  It’s now “only” up 26.55% which roughly matches commodities, while again, gold and silver stand apart.  Too far apart for the long term.

Now you see why we’ll watch our stops at least on our trading positions.  Keeping a core gold position is OK, although some may differ with that.  You do need to be able to hold it “no matter what,” as gold has had major pullbacks over time hitting a low of around 252.60 in 2001, just 10 years ago.  Soon there will be a flip going on where real estate and the stock market will look much better than gold and silver.  How long will that be in coming?  It depends on how bad the world’s governments can make the next few weeks and years.  If the Euro collapses and the Euro Union is done away with, gold could be much closer to its inflation adjusted high of $2500 or so.  That despite the fact that $2500 may not be sustainable.

Remember that at the time of a crisis, everyone becomes more fearful than is actually warranted.  During the last gold spike, inflation was sky high (the Carter years), and it took Volcker to come in and raise rates to drive down inflationary pressures.  Now we’ve gone back to depressionary scares of unemployment (which is real for many of our citizens) and impending monetary disaster.  Remember that the dollar was devalued twice against gold and gold was seized back then.  It was a way for us to “take our medicine” in big swigs.  So yes, gold and silver can still go higher, but the risk of a large correction is growing.  And the government can intervene any time it wants, as we saw in the silver market correction when the CME increased margin requirements.  I’ve raised our trading stop again.

Here’s the key: the rise in gold is based on fear and I suppose you could argue “under ownership” in portfolios – the parabolic rise of late is based on greed. The weak hands are now going to be shaken out, as I said, unless Europe falls completely apart.   Which is exactly why we keep a core gold position.  For your trading position, time to set your stop.  There will be a time to rebuy gold.

As for stocks, to keep up with my weekly analysis, you can sign up here: Free SP500Tracker ™ Newsletter   I’ll have a new Tracker out this weekend.

This is the latest on gold, but be sure to stay up to date with gold via the GLDTracker ™ here: GLD Tracker™

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Standard Disclaimer: Remember, it’s your money and your decision as to how to invest it.
© 2011 Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in gold, gold etf, investment, Market timing, silver, silver ETF, trading | Tagged , , , , , , , , , | Leave a comment

Market Timing Update: SP500 Index Pros and Cons – Getting past Fear and Greed

Posted on August 16, 2011 by David Durand

Market Timing Brief for 8-16-2011

I’m going to do the Brief differently today and I would like YOU and others to add to it.  Let me explain.  When you invest, you must do so without fear and without greed.  Those emotions kill capital in my experience. 

So how do you get to a place where you become “clear” in your thinking, where your mind is not muddied by fear and greed?  You do it by writing down the Pros and Cons of investing or trading even if there are just a few points to list and then seeing where you stand.  You need to quiet your mind, before you can get past fear and greed and make what people call “rational decisions.”

Rational decisions are not “mental decisions.”  Why?  Because your mind is incapable of truly solving the riddle of the market.  It is only the intuitive side of your mind that kicks in, and this is the key, AFTER you have considered all the pros and cons on a subject.

The reason writing down “Pro and Con” lists is suggested to human beings to solve their problems is because it is the best way for you to shut off the crazy fact-ridden intellect by writing down the facts or at least considering them in your head.  You do not ignore the facts.  You consider them without fear or greed.  You get to your intuition, which will  give you the best available answer once you do this work.

Will your answer always be right if you get it intuitively?  No, but you will improve your results in my opinion.  The reason is that the answer is only as good as your mind is quiet.  The good news is that good answers can be found even when some fear persists.  We all know this.  Comedians have commented on their nervousness before great performances.  What they did not necessarily recognize was that they did not need to be fearful or nervous to do well.   Same with investing.  A little fear won’t hurt you but a lot is likely to ruin your investing and trading results.

If you want to learn more about this, see my Fear and Greed page here: Fear and Greed May Destroy Your Market Timing/Investing Results

So let’s do it.  Let’s TOGETHER compose a Pro/Con list about this stock market.  Is it going to be straight up from here or is there going to be a short Bear Market Rally followed by another decline? 

We’ll use the SP500 Index as our market today for this.  Read my list and add to it in the comments.  I’ll compile the answers by tomorrow sometime.  But let’s begin:

Investing at this level in the SP500 Index:

PROS:

– The market may have bottomed last week during the panic.

– The VIX index is falling.  That is positive.

– The European situation is settling down somewhat.

– The market was greatly oversold and still has room to bounce.

– The public is not panicking out of stocks yet.  Many have left the markets anyway.

– Our growth may have slowed to 0.4% GDP growth, but it may not fall much more.

– Christmas spending is right around the corner.

– As long as we don’t make new recent lows, why sell?

– Warren Buffett is buying, so why shouldn’t I be?  Even if he does not catch the bottom, the companies he buys rise in price, so who cares if the market pulls back another 10% from here.  It will be even higher in 6 months based on value.

CONS (to investing in the SP500 Index):

– Europe is far from out of the woods and was the main reason for our market breaking down.

– Recession is very possible, that is re-recession, because GDP slowed to 0.4% last month and may drop below the zero point next month.

– European GDP was showing 0.2% growth today, almost zero, which will weigh on our multinationals doing business there, bringing down our PE ratios, hence our stock prices.

– We are spending too many dollars and our debt downgrade will hurt our ability to get credit.  Higher interest rates means higher costs for companies who  need to borrow to expand.

– Investors who are overweighted in stocks should sell into the strength we’ve seen.  That will cause a retest of the lows and perhaps a failure to hold them.

– The VIX usually has other spikes during a sell-off of this magnitude, so why not wait until that happens, before buying?

– Without a retest of the recent lows at least, we cannot move up.   A retest is 7.6% below the close today.  What if it does not hold?

– The market could easily fall to the July or August 2010 lows.  that is 7.2% below the recent low during the panic last week.

– Warren Buffett is well known to buy too early at times.

– Stocks are overvalued given the possibility of re-recession.

– Hedge funds won’t want to give up their recent profits on this mini-rally and as they protect them, the market will retest somewhere around or maybe just above the lows.

So what did I miss?  Join in!  I use the feedback I get to decide what to write.

I work with investors and traders who want to get past their emotions and improve.  If you are interested in doing this sort of work, please send me a note via the Contact tab above.

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

invest it.

© 2011 Wall Street Sun and Storm Report, LLC All rights reserved.

Posted in gold, investing psychology, investment, Market timing, S&P 500 Index, trading | Tagged , , , , , | 4 Comments