Market Timing Gold: You Can’t Go Both Ways

Posted on March 7, 2011 by David Durand

Nope. Either gold miners go up with gold or gold (GLD, IAU) cannot continue to go up. That correlation can fail over short periods of time, but not over long periods of time and it’s a good idea to look up and take notice when the correlation starts to fail.

Today it’s not working. Gold is up (GLD is up 0.46% at 2:16  pm ET) while gold stocks are down (GDX is down 0.51%).  This lack of positive correlation can last for a while, but not for long.  Eventually the two move together.

Gold had trouble making a new high recently, then failed, and is now attempting to maintain a brand new breakout. GLD must remain above 139.54 to keep this breakout viable.  If not, the downside will be swifter this time.  Commodities correct violently (high volatility) when they correct, because the market really does not know their exact price; it’s just a guess.  And with gold and silver, it’s a very wild guess.

The recovery of GLD above the 139.54 level is encouraging, but it must be proven as a true breakout. The dollar has fallen a bit fast of late, so a dollar rally could be in the offing, which could cause the gold breakout to fail once again.  Enter slowly here and again on a brand new high in GLD (we are under that high).  A more conservative approach would be to wait for the new high before investing more.

Take a look at my free SP500Tracker™ newsletter. It was just posted last night 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:Weakness

Posted on March 6, 2011 by David Durand

The SP500 Index has finally shown weakness and has not been able to make it above and then STAY above the high for 3-1-2011 which was 1332.09. That is the first hurdle, but you do not want to buy there. Read this week’s issue to see where the buying and selling points are NOW. I also write about various selling strategies that may come in handy and give you my first SELL point for this week for the SP500 index. I value my own email privacy and your information will never be shared. Click the link below if you want my take on the market for the week.

Subscribe for FREE to the current issue here: Click Here to Subscribe to my FREE SP500Tracker™ Market Timing Newsletter and free “Tips”

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Market Timing Gold: Will the Sell Signal Be Voided?

Posted on March 4, 2011 by David Durand

Gold (GLD) is attempting to recover from the SELL signal generated when it closed below the GLD high of 139.54. What I’ve described multiple times is that it’s important to pay attention when markets “play” with a particular number.  This is advice that translates into dollars.

When a number is important to a market, the market will “play” with the number, meaning that it trades just above and just below the number on the intraday time frame deciding which way to go. The direction gold turns from this point will likely determine the intermediate term direction of the market in my opinion. 

That makes the CLOSE today critical. A close above GLD of 139.54 (you can apply the same principle to both IAU and the spot gold price) will potentially void the SELL signal. Unfortunately, the only way to know if that is the case is to watch the follow through for at least 3 days.

There are reversals that fail after 3 days above or below a key level, but the odds of a failure of a breakout or recovery go down with each day of that breakout or recovery.

When selling, my personal preference is to exit trading positions, when market timing gold, while keeping a core position in gold that is not touched, at least until things get very stretched.  Some say that core should only be 5% while others are advocating up to 20%.  You should decide what you are comfortable with.

I would begin averaging back into GLD only with a close over 139.54 and I would do so slowly. Gold and oil are both setup to reverse hard if the world scene calms down.  They will very likely both ease off their highs.  There is heightened risk in these markets whatever the market timing signals say.

Take a look at my free SP500Tracker™ newsletter. It is out this weekend (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.

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

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Market Timing Gold: Reversal at a Top or Not?

Posted on March 3, 2011 by David Durand

Gold (GLD, IAU) is down hard today from an attempt at a new high. This does not guarantee it will fail, so you may want to average out instead of selling everything at once, but it does increase the risk of a significant price correction.  The alternative is that it represents a retest of the breakout area. We will know more by the close.

The prior GLD high was 139.54, so look to see if it closes below there today.  If so, a bigger correction may occur.  If you don’t sell at a top or lighten up there, your other option is to sell on further weakness. You have to define where your exit points will be.  You can use various support levels or percentage stops as in selling when GLD falls 5% from the top and selling more once it has dropped 10% from the top just as examples.  Those are called trailing stops as many of you may know.  (Read more on the “Buying Checklist” page on the main site here: Buying Checklist

The AMEX gold bug index is now down from testing the 1-03-2011 peak of 578.80, so set some stops on your gold stock profits as well!

My personal preference is to exit trading positions, when trading gold, while keeping a core position in gold that is not touched, at least until things get very stretched.

Take a look at my free SP500Tracker™ newsletter. It is out this weekend (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.

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

Posted in gold, gold etf, gold stocks, Market timing | Tagged , , , , | 1 Comment

Market Timing Employment: A Stock Market Indicator

Posted on March 2, 2011 by David Durand

The employment trend is murky. On the one hand, the ADP report today said there were 217,000 private sector jobs created from January to February. This would suggest that the employment trend is improving – that further gains could follow.

On the other hand, government employment, even though it went up in the past month, is supposed to decline going forward as states begin to meet their budget shortfalls. The OTHER “other hand” is that the private employment trend could be pressured by the “energy tax” of much higher oil prices.

Oil prices were running between $65 and $86 per barrel throughout most of 2010, but since October, they’ve spiked to a range of $79.25 to current prices of over $100 per barrel (all near month futures prices). So the energy costs for all businesses are coming straight off their bottom lines due to this oil price trend and consumers feeling the pinch will spend a bit less for every dollar gas goes up, pressuring most businesses.

If stocks then readjust to lower earnings by falling in price, the “rich” will pull back on their spending as they normally do.  So this trend has a very broad potential reach from “Walmart spending” to “Tiffany spending.”

The oil price trend has a huge impact on our economy, as much as say, raising taxes does, so it acts as a stock market indicator. And the oil price trend is an employment trend indicator as well. Less spending due to higher gas prices would mean fewer jobs.

The good news is that all this could change with a resolution of the current Middle East situation. In fact, oil prices could crash from their current levels hurting speculative traders hopeful for a sustained oil price trend. That could also impact the upward gold price trend as the two are very much connected.

The key is to not be reactive, but to decide how much you intend to lose before cutting back on your stock exposure. My way of teaching this is to say “Investments are not an amusement ride.”

You are not supposed to “just sit there” while you give up all that you have made over the past two years!  This is why I coined the term “Passive Shorting™. See my page on how to go “passively short” here:

Passive Shorting™ to Preserve Your Gains

It is not true shorting, but it is how you can protect your gains.  I am not saying to sell everything by the way.  You must follow each market separately and make separate selling decisions, which is the purpose of my newsletter.

Don’t forget, tomorrow is the Federal government’s unemployment report, which could disturb the stock market if the unexpected happens on either side.

If you’ve never looked at it, you really should take a look at my SP500Tracker™ newsletter. It is out this weekend and its 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.

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

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Market Timing the SP500 Index: Giving It Back

Posted on February 28, 2011 by David Durand

The market is giving back much of this mornings gains and for the NASDAQ, then some, as it is in the red at the moment.  The semi-conductors are particularly weak. The small caps are in the red too.  The midcaps are just below water.

There are some interesting areas of strength, notably the REITs that appear to be breaking out.  A reversal there would not be pretty, so enter in stages (scale) if you are a buyer.  As far as the SP500 goes, I went over everything in detail in my latest issue of the SP500Tracker™ that was out last night.

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

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

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

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Market Timing the US Dollar Index: Watch this line

Posted on February 24, 2011 by David Durand

The US dollar index has dropped just below a major up trend line this morning that is formed by the Nov. 2010 and early Feb. 2011 lows. A breach of this line at around 77.19 would cause the dollar to drop to the next support level at 76.88 and then another up trend line kicks in with support at around 76.06. Just below that at 75.63 is the Nov. 2010 low.

If the 76.88 level does not hold, gold (GLD, IAU etc) will likely be at new highs. And that level is not far from here, because the dollar index is trading at 77.10 at the moment.

Beyond the US dollar, the US stock market is struggling. Every weekend my SP500 tracking newsletter is out and its 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”

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

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

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Market Timing Signal: The US Dollar Failed A Test and Your Federal Credit Rating Just Declined!

Posted on February 23, 2011 by David Durand

The US dollar has been considered the reserve currency of the world. That means that when the you-know-what hits the international fan, the dollar is SUPPOSED to rally. It barely moved yesterday! Gold did move up significantly. This amounts to a market timing signal vote of “low confidence” at best. This is one more bit of evidence that investors no longer attribute as much “flight to safety” status to the US dollar as it did in the past.

You can thank Dr. Ben Bernanke as the designated leader of the destruction of our currency’s status. In fairness to him, he believes he is saving us.

In case anyone thinks this is just a currency popularity contest, I’d point out that the decline of the US dollar’s status means higher costs of borrowing for US citizens unless this course is reversed. Our government has decided to “save the system,” by ruining YOUR credit. Yes, you can maintain your personal credit number by behaving responsibly in your own life. In the meantime, we allow our leaders to degrade our credit rating in a much more substantial way.

Time to throw even more of the bums out. Throw out all the Congressmen and women (and legislators at every level) who vote every day along the party lines that continue to sap the responsible to help the irresponsible. Time to be conscious in our voting isn’t it?

What to do? My subscribers have been buying gold (the gold ETF, GLD) since the market timing BUY signal on 1-28-2011. The next buy would be a brand new high above 139.56, but be aware that gold could make a new high and then reverse. Sometimes the market will test an old high, move above, find insufficient buyers, and then the market makers scramble to get out and numerous stops go off sending gold back down. It is the nature of the beast.

By the way, speaking of beasts (the stock market beast) my SP500 tracking newsletter is out this weekend and its 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”

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

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

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Market Timing by Investor Sentiment: The Fearful Ones are Running Again

Posted on February 16, 2011 by David Durand

Published 2-16-2011

There they go again. The clients of investment firms who ran from stocks as the market sank to its low in 2009 are now running from bonds (now that they’ve already substantially corrected) back to stocks. Their market timing sense is impeccable. Impeccably wrong. If you want to know how NOT to invest, pay attention to these people. They buy the NASDAQ after a 122% rise from the March 2009 low. They sell municipal bonds after they have crashed. They will be wrong again. You can be right by not acting as they do!

The old saying goes “Be fearful when most investors are greedy and be greedy when most investors are fearful.” That is plain foolish. Why would you take on the negative emotions of fear and greed? Why not simply say “Buy when most investors are fearful and sell when most investors are greedy”?

By the way, my SP500 tracking newsletter is out this weekend and its 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”

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

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

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Investor Sentiment: An AAII Index Review for 2-10-2011

Posted on February 10, 2011 by David Durand

Sentiment was reported today and the results are interesting. Sentiment is not off the wall Bullish or Bearish. It is at a level that could support a further rally, but the number of Bulls may make the market vulnerable to a correction based on an outside event.

The Bulls were at 49.4% and the Bears at 26.9% for a Bull-Bear Spread of 22.5%. I look for a spread of around 30 to say the market will likely either immediately pull back or lose all gains accrued from that point forward. 22.5% is very wishy washy. It shows that investors remain somewhat skittish, possibly due to the Egyptian situation. Skittishness without a “blow-up” event from left field is not a problem for the market. In fact, the market likes some nervousness as it climbs the so-called “wall of worry.”

CONCLUSION: Sentiment at these levels is not a problem for the market. It will become an issue if the Egyptian situation is resolved and investors become complacent enough to drive the percentage of Bears down to around 20%.

By the way, my SP500 tracking newsletter is out this weekend and its 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”

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

You can find the raw data here:
AAII Investor Sentiment Survey”

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

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