Market Timing Bounce in a Down Trend: Jim Cramer says Sell the Rally

Posted on March 18, 2011 by David Durand

Since Jim Cramer is often seen as a “perma Bull,” it is good for someone to point out when he is not. When he has NOT been bullish, he’s often been right, because his tendency is toward bullishness.  He sometimes tells investors to sell late, but not always.

In 2000 many investors ignored his warnings, because preceding his sell comments he was writing about the “red hot biotech barbeque”!  It’s pretty confusing to investors to be hearing one thing one week and in the extreme, mind you, and then have a complete reversal in direction the next week.  But that is how money is made and capital is preserved in the markets.  You must be nimble.

I don’t use hyperbole, so my subscribers don’t develop an attachment to the upward movement of stocks, gold, or anything else.  So I was also able to get investors out of the market in 2000. We sell when our stops go off and we’ve lost enough!

If you are heavy in stocks, subscribe to my free tracker letter (see link below).   Bounces are opportunities to sell during down trends.  If we make it up over the breakdown point of 1294.26 and then over the 50 day moving average, we could retest the highs again at a minimum.  So sell in stages if you decide to sell (see more recent posts too!)

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

© 2011 David B. Durand, M.D. All rights reserved.

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Market Timing the US Dollar Index and Gold (GLD,IAU,USDX): Last Stop Before Hell for the US Dollar

Posted on March 18, 2011 by David Durand

All aboard! Ninety five percent of Americans are riding the dollar train and are asleep. If the Nov. 2010 low of the US dollar index of 75.63 – 75.73 is taken out, the 2009 low (mini-hell) of 74.23 is next followed by purgatory, the 2008 low of 70.70- 71.31. That 2008 low is then followed by hell itself, which is a bottomless pit of dollar destruction, gold going to a zillion etc. If we even make it through the 2009 low, the danger of a full loss of confidence in the US dollar by foreign governments may arise.

Foreign governments are already on edge seeing the US dollar make new lows while dollar friendly events (crises from Egypt to Libya to Japan’s disaster) take center stage. The US dollar was always the back up band for the world EVEN during its decline. Now, the danger for the dollar is losing its SECOND rate back-up band gig!

You will need insurance for the above events. BUT If the Nov. low 2010 is not violated, you could see a big US dollar rally. If the above landmarks are violated to the downside, you may as well convert a chunk of your dollars into gold.

Could you be whipped? That means the dollar faking all the currency traders out and then reversing upward. Of course that could happen, so watch your stops on your gold trading positions. Throughout all of this many are recommending that you already have 5-20% of your total assets in gold. I’d say 5% would be OK only if you are willing to jump in aggressively at a new breakout high. If not, 10% may be better. Remember that I myself have recently pointed out that gold is not a good buy here. Read my prior posts. But if you have NO gold at all, you have no core protection if the US dollar continues south. Not smart. You may as not own any life insurance or disability insurance. Get smart. If you have none, average in slowly (core positions could be held in IAU rather than GLD because IAU charges less than GLD to hold your money in gold. GLD is somewhat more liquid than IAU in the pre-market and after hours trading periods.

NOTE: if you have not read my explanation of why the US dollar index is going down during this yen intervention, read my prior posts on this blog and on Twitter (DavidBDurandMD). Thanks.

As for stocks, we may simply be in a bounce for the SP500 Index or it could be more.  Catch up by subscribing to my free market tracker newsletter here:

Click Here to Subscribe to my FREE SP500Tracker™ Market Timing Newsletter and free “Tips”

If you want to see the PREVIOUS issue: Previous Issue

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

© 2011 David B. Durand, M.D. All rights reserved.

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The US Dollar Index and Euro War Continues

Posted on March 17, 2011 by David Durand

I’ve just posted a number of market timing tweets as DavidBDurandMD on Twitter. The summary is that the Euro is at the moment winning over the US dollar which effects the US dollar index more than the drop of the yen vs. the Euro because the Euro has a much bigger weight in the US dollar index.

Nevertheless the Oct. and Nov. 2010 highs of the Euro vs. US dollar would have to be taken out for the Euro to win the overall “war” of currencies.

Read my other posts from today. I also commented on gold, stocks, and the Nikkei 225 index.

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Market Timing the Euro and US Dollar Index: An Update

Posted on March 17, 2011 by David Durand

The US dollar index broke the first level of support at the long term up trend line and is now challenging the Nov 2010 low. It is likely to hold here, because the yen looks like a blow-off top today and the Euro has just failed a breakout and is forming a triangle right now. If the triangle is broken to the downside as I suspect it will be, the US dollar will finally begin a rally of at least a few percent and the Euro and yen will both decline together.  That is exactly what the dollar needs.

So if you have not sold your US dollar index or anti-Euro positions (e.g. UUP and EUO), hold on a bit.  Give the trade one more day would be my suggestion. Exiting the UUP trade based on the prior stop (21.90) is not unreasonable, but I’m giving it a bit more lattitude, because today has features of a possible natural turning point for all three of the important currencies mentioned. If the Nov. low is taken out, you may want to quickly step aside.  You must be comfortable with your own stops!  My hypothesis seems reasonable, but reality rules my stops.

If you do not know how to set stops, read my “buying checklist” here: Buying Checklist with Comments on Trailing Stops

Click Here to Subscribe to my FREE SP500Tracker™ Market Timing Newsletter and free “Tips”

If you want to see the PREVIOUS issue: Previous Issue

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

© 2011 David B. Durand, M.D. All rights reserved.

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Market Timing Gold (GLD, IAU): A Pause?

Posted on March 17, 2011 by David Durand

Yes, it looks like a pause in a decline.  Gold has just gone sideways for a couple of days. Although it could rally from the 50 day moving average which is not that far below here (GLD 50 day mav = 134.54 for ex.), I believe gold is in a longer term retracement.  More intermediate than short term.  My downside target is around 132 and then a bounce becomes likely.  Keep in touch by following me on Twitter as DavidBDurandMD.

I do see the possibility of a rally back to around 138ish for GLD but I do not believe that the correction will be over at that point. The next move should be down from there IF we get such a bounce.  Tops can take a while to form – quite a while.  Why?  Because investors get stuck doing what they did last month even if it does not work this month.  Don’t do that!  I am NOT advocating the liquidation of your long term position in gold any more than I would recommend you converting all your US dollars to Euros.   But to me, trading positions are different.  When the trend changes, I change and my trading positions go to zero after a failure at a major top.  I can always buy higher.  I don’t need to “ride the pony down the hill.”   You can quote me on that!  ; )

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If you want to see the PREVIOUS issue: Previous Issue

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

© 2011 David B. Durand, M.D. All rights reserved.

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Market Timing: They are Selling the Rally of the SP500 Index

Posted on March 17, 2011 by David Durand

I pointed out earlier today that this would happen and the SPY for example peaked at about 10:24 am ET and has been skidding slowly from there. That does not mean the day won’t turn out positive, but it does mean there is not sufficient momentum YET in the buying to reverse the trend. Could it show up later today? Yes. Will it is the issue. If you are heavily weighted in stocks see my website on how to go “passively short” as I have coined it. It is one way to handle a bear market rally and limit your downside, while being willing to get back in as needed.

Buy and hold has failed.  Wall Street doesn’t care for that sort of view because they make less money on you than if you sit in falling mutual funds and ETFs. Think about it. It’s YOUR money, not theirs and your profits from this long rally we’ve seen.

Do not jump out (in general) in one jump. Scaling out is usually wiser due the the bear market rallies we always tend to see on the way down.

What I teach you through my newsletter worked in 1987 and it worked for Japan last week. Proof that market timing can work if you are taught by someone who understands not only how to get out, but how to get back in!

The move today is likely just a market timing bounce in a decline.  You’ll want to check back here for further comments. Take a look at my free SP500Tracker™ newsletter.  This week’s copy with my stop is already available to FREE subscribers. It will be out again this weekend and again, it’s FREE, so please subscribe below if you are concerned about where the stock market may go from here:

Click Here to Subscribe to my FREE SP500Tracker™ Market Timing Newsletter and free “Tips”

If you want to see the PREVIOUS issue: Previous Issue

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

© 2011 David B. Durand, M.D. All rights reserved.

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Market Timing the SP500 Index Decline: A Place to Scale Out – Now

Posted on March 17, 2011 by David Durand

QUICK NOTE: You want to scale when investors are buying whenever possible in a down trend. Now if you disagree with me and believe we are not in a more substantial down trend this time, ignore this. But if you believe the down trend has not yet completed itself, then sell right about here. If you look at the 15 min chart on Yahoo or your favorite software, you’ll see that we came back up to the down trend line this morning. So it turned out to be better to sell this am than last night. It’s still a decent place to sell IF you believe the market has more work to do on the downside.

The move today is likely just a market timing bounce in a decline and that goes for the SP500 Index as well, but we won’t know right away.  You’ll want to check back here for further comments.   If you do any selling you will likely want to move out in scale rather than all at once.  You’ll have to decide what works for you.  Take a look at my free SP500Tracker™ newsletter. It will be out again this weekend (and you can catch up with this week’s copy today – link to it is sent to you by email) and again, it’s FREE, so please subscribe below if you are concerned about where the stock market may go from here:

Click Here to Subscribe to my FREE SP500Tracker™ Market Timing Newsletter and free “Tips”

If you want to see the PREVIOUS issue: Previous Issue

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

© 2011 David B. Durand, M.D. All rights reserved.

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Nikkei 225 Index: A Market Timing or Fundamental Bargain Here?

Posted on March 17, 2011 by David Durand

Do not become enticed by small or even sizable market timing bounces in up trends that do not truly change the trend.  Some of these come because an external event like Japan settles down a bit from the earlier panic. They are bounces in a down trend that will take much longer to play out.  There is huge structural damage to Japan that cannot be worked out in a few days.

If you go by valuation, Japanese stocks may be better valued today than before the crisis, but that does not say they will not become even better values.  That is the problem with value investors at times. They do not consider the trend.  I say consider both the trend and the fundamentals.

So let’s do that.  The market timing trend is down with a bounce so far.  The fundamentals are very unclear and very difficult. Do not jump in to be a hero.  If you know individual Japanese companies that will continue to do just fine because of their physical location in Japan (no damage etc), then I say great.  Investing that way could be smart.  I do not believe the waters have been cleared for the Nikkei 225 however (EWJ tracks it as well as many Japanese mutual funds).

The move today is likely just a market timing bounce in a decline and that goes for the SP500 Index as well, but we won’t know right away.  You’ll want to check back here for further comments.   If you do any selling you will likely want to move out in scale rather than all at once.  You’ll have to decide what works for you.  Take a look at my free SP500Tracker™ newsletter. It will be out again this weekend (and you can catch up with this week’s copy today – link to it is sent to you by email) and again, it’s FREE, so please subscribe below if you are concerned about where the stock market may go from here:

Click Here to Subscribe to my FREE SP500Tracker™ Market Timing Newsletter and free “Tips”

If you want to see the PREVIOUS issue: Previous Issue

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

© 2011 David B. Durand, M.D. All rights reserved.

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Market Timing the SP500 Index, Gold and the US Dollar

Posted on March 15, 2011 by David Durand

The dollar has failed to begin its bounce, while the stock market is likely to sustain the first important breakdown today on the close (see below!).  But there are false starts. The last time we had a great US dollar index (USDX) trade going long the US dollar, there was also a false start.  The market likes to test us.  To see if we are convicted in our investment or trade.  If so, the market often rewards you more than if you go in and out of a trade at the very first blip in the wrong direction.  Still, set a mental stop and exit the dollar trade if we make new lows.  For the UUP for example, 21.90 should hold at least on a closing basis. If you trade currencies, you’ll be able to react a lot sooner if the trade fails.  These currency trades are higher in risk in general than buying Intel at current prices.  Most of you will want to stick with investing in and trading the other indices (other than UUP and the double inverse Euro, EUO etc.), but that is up to you!

Turning to gold, and the gold ETFs GLD, IAU etc., gold has topped and is falling from the top.  If you simply read this blog here, you were out of all your trades before it fell much at all.  That is the beauty of my approach.  You stay conscious and see the tops being formed and get ready to take action when the markets start to fall apart, preserving profits and maximizing gains.

My subscribers were out of Japanese stocks based on the Nikkei 225 close on Friday which gave us a good deal of time to exit before the US close of ETF trading. Since then the EWJ for example is down 7.96% as I type this.  It has bounced from earlier lows today.  We will re-enter on either strength or on more weakness.  It is not likely that today is the end of the selling given the structural problems in Japan.  The EWJ is now at 9.95 which on the 15 min chart looks like a good place for it to break down again.  It may not.   There could be a bounce, but we’re likely to still see lower lows before the pullback is over.

We already have gotten our first SP500 sell signal – read my free newsletter (see below) NOW and you will be better prepared to handle this decline. You will likely want to move out in scale rather than all at once.  You’ll have to decide what works for you.  I have some advice that you may find of interest in how to go about the selling.  Since stocks are likely to move in the opposite direction as the dollar moves up, take a look at my free SP500Tracker™ newsletter. It will be out this weekend (and you can catch up with this week’s copy today – link to it sent to you by email) and again, it’s FREE, so please subscribe below if you are concerned about where the stock market may go from here:

Click Here to Subscribe to my FREE SP500Tracker™ Market Timing Newsletter and free “Tips”

If you want to see the PREVIOUS issue: Previous Issue

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

© 2011 David B. Durand, M.D. All rights reserved.

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

Market Timing the US Dollar Index, Gold and Stocks: New Trend?

Posted on March 11, 2011 by David Durand

The dollar looks like it is starting a rally. Yesterday I tweeted via DavidBDurandMD on Twitter that I had gone long the US dollar.  Today I went short the Euro.  There are ETF’s you can use to do this if you believe as I do that the US dollar has gone down enough for now.

The US dollar hit a long term up trend line over the past couple days and has bounced from it. That bounce will take it further.  I cannot tell you if this will be a short trade or an intermediate term one, but either way it will pressure both stocks and gold (as well as other precious metals).

As for gold, the GLD gold ETF has failed a recent breakout above 139.54 and is moving down again. Given where the dollar is, the dollar rally is a strong reason to sell a failed breakout in gold.

I’ve written a very interesting article on the relationship of stocks (SP500 index), the US dollar and gold and how they have interacted over time and you can read it for free on my “Tips” access page once you get the FREE password.  To do that, simply subscribe to my free Tracker and Tips newsletter below. Once you get the password back, simply log into the free private “Tips access” page via the blue navigation bar on the left of the home page (SunAndStormInvesting.com)

Since stocks are likely to move in the opposite direction as the dollar moves up, take a look at my free SP500Tracker™ newsletter. It will be out this weekend (and you can catch up with this weeks copy today – link to it sent to you by email) and again, it’s FREE, so please subscribe below if you are concerned about where the stock market may go from here:

Click Here to Subscribe to my FREE SP500Tracker™ Market Timing Newsletter and free “Tips”

If you want to see the PREVIOUS issue: Previous Issue

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

© 2011 David B. Durand, M.D. All rights reserved.

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