SP500 Index: You think it’s up and all is well? Think again.

Posted on January 24, 2011 by David Durand

The SP500 index gave a market timing signal the other day that is shown in my FREE tracking newsletter that was just out this morning. The little bump up in the SP500 index today does NOT void that SELL signal represented by a so-called “wedge.”

The SP500 index would of course void the wedge signal if it moved up and closed above the wedge, so that is what the Bulls are hoping for today.

CONCLUSION: The market has to move significantly higher to void the break of the Bearish upward wedge that occurred a couple of days ago. Read today’s free SP500 tracking newsletter to learn more and see the chart by signing up using this link:

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.

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Euro Attempts Breakout and Fails for Now

Posted on January 21, 2011 by David Durand

(UPDATE on 1-24-2011: Please see the comments below this post. This was a decent place to trade against the Euro, but the dollar reversed and failed support, so the trade was exited at a small loss. If you follow your stops, you will likely do well over time; if you ignore stops, you can suffer deep losses while clinging to “being right.”)

The Euro did close above the first market timing stop I suggested could hold if you wanted to use a fairly tight stop on the trade, 1.3497, but then attempted a breakout above the recent high of 1.3537 and failed.

It is your call as to whether you stay in the trade until the second market timing stop (1.3537) gives way and by how much. Currencies are not unlike stocks in that the market will often test obvious numbers and appear to gain strength, only to reverse and fail.

So which is it? Is the breakdown in the US dollar a false breakdown or is the Euro rally in the overnight market the true direction? The market will be answering this soon and you’ll have to make your own decision as to where you believe the trade has been proven wrong. I may simply use a percentage stop on the trade given the failure of the last breakout, which gives the trade a little, but not much more room in which to work. If I’m wrong, I’ll exit with a small loss rather than seeking to be right. Read my webpage on Fear and Greed to understand the emotions of investing, the number one enemies of success.

If this trade does work out, the first downside target for the Euro is 1.3243.

As for US stocks this morning, there is a little blip up that may be squashed by noon. Markets do not usually go straight down and I feel the sell-off has more to go. I’ll comment on sentiment this week later in the day.

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.

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Dollar Reverses Fakeout Breakdown: Sell the Euro

Posted on January 20, 2011 by David Durand

The US dollar index just reversed the prior breakdown this morning and we’ve got a market timing signal. It does that once in a while and when it does, it can work out as a good reversal trade. The market was planning to go down to yet another lower level and then reversed.

Set some tight stops and you’ll be fine. You can go long the dollar using UUP or short the Euro and there are several ETFs you can use to do this.

As long as the FXE remains below 133.90, the trade is still OK. Above there it comes into doubt. The move below that 133.90 is the trigger point for this trade.

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”

******Please click on the comment below for an update. Thanks.

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

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Don’t Hi-yo Silver (SLV) Your Metal Money Away!

Posted on January 20, 2011 by David Durand

Not using market timing when trading silver and gold is insane – unless you are content to ride out 50% drops in silver and 25% plus drops in gold.

Silver and the SLV are looking a bit sick right now. If the move this morning in the pre-market to below 27.45 holds up by the NY close, the silver ETF (SLV) could careen down to around 21.50 to 23.00.

I’ve often said that you should not “ride your investments down the hill” pretending it’s some kind of Wall Street sponsored pony ride. If you do, you are being taken for a ride. You need to use market timing for any commodity TRADE.

Silver is NOT an investment. It is a trading vehicle that requires market timing. Gold is an investment that pays you nothing and although it has traditionally held far more value than silver has (check out the massive 2008 decline in silver and the lesser decline in gold), gold (and the GLD / IAU ! ) can correct very severely depending on the strength of the US dollar over the long term and other factors over the shorter term.

So don’t ride the Silver Pony down the hill. You can always buy back your investment/trade when it turns around.

Having said all that, I do recommend that you keep at least 5-10% of your assets in gold just as you hold US dollars for emergencies and for savings. Gold may work out better than the US dollar given the current government policies. But your trading position in gold is another thing.

Likewise with the silver ETF, if you feel the same way about a portion of it, meaning that it is an “investment,” that is fine. Keep it “no matter what” if you like. But your trading position is another thing and the above applies to it!

As for the overall market? Read the blog entry from yesterday about the breaking of the wedge and sign up for my FREE weekly newsletter coming out after tomorrow’s close. Please click the link below if you would like to receive it at no charge.

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.

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A Market Timing Signal: SP500 Index Breaks the Wedge

Posted on January 19, 2011 by David Durand

The S&P 500 index may now descend to around 1262.60 for starters. How deep this correction will go is difficult to say. My market timing prediction that the sentiment (look up my sentiment page on the feed page for 12-10-2010) was high enough that any advances would be reversed is already coming true for the small caps in particular. In another day or two all the gains since 12-10 may be wiped out.

What to do? You can either sell part or all of your SP500 Index position here and plan to rebuy higher if necessary (and be a bit behind of course which is the risk) OR set a wider stop loss of X % below the current price and sell when it closes below that level.

This correction could be as deep as the one we saw in November or worse, depending on the news flow.

And given the long, long run we’ve had, the market could also go sideways for a day, reflex up for a day and then come down again. I would not bother buying anything but a new high from these levels.

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™ and free “Tips”

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

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China’s Currency Threats: Take them Seriously

Posted on January 19, 2011 by David Durand

President Hu said the US is printing too much money and is the cause of global inflation. Global food inflation is at 25% for the year. Imagine how that effects those who barely get by.

Our Fed is hurting those least able to afford even to eat!

Hu is also threatening to change the currency system and remove our status as the reserve currency of the world. That would be devastating to our economy as interest rates would skyrocket from these levels.

You think it is not possible? It’s started, in that China has been dumping US dollars lately. They cannot do it rapidly, because they own too many dollars in the form of US Treasuries, but the selling has already begun.

Destruction of a currency has never paid off in the end and it won’t this time. So if gold breaks out, we’ll need to buy more. For now, it’s in a correction and so are gold stocks.

There could be a bounce of gold and gold stocks from this level, but I don’t see it yet.

Check back here regularly or better yet subscribe to this blog so you get an email every time I post.

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™ and free “Tips”

If you want to know when to buy gold, please subscribe to my newsletter (cost = less than one movie ticket per month). After every market day, my subscribers know whether it’s a BUY, HOLD, or SELL. Even if you get busy, you’ll know I’m consciously watching the markets, 35 of them every market day.

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

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Time for the Euro to Come Down Again

Posted on January 18, 2011 by David Durand

The US dollar index is at the base of the recent market timing range and the Euro is at the top. Time for that to reverse. Europe cannot stand having a strong currency when more than ever they need an infusion of cash.

I predicted when I exited my short Euro position that the US dollar and Euro would be held in a range. The consequences of that NOT happening are too hard for the European Union to stomach. It’s once again time for Dollar UP and Euro down!

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SP500 Index is in a Wedgey Way Again

Posted on January 18, 2011 by David Durand

There is an upward wedge on the daily chart. It is not worth buying the SP500 Index until we close above there, which tomorrow would be around 1301ish. If you want to know how to spot a wedge, go to the last SP500Tracker™ newsletter and have a look at the chart.

A break of the wedge could bring the SPX quickly down to around 1258.78, which is the base of the wedge.

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SP500 Index: The Third Breakout Since the Wedge

Posted on January 18, 2011 by David Durand

I just published my free SP500 Index Tracking newsletter late last night showing these 3 breakouts following the breakout above the wedge. The link to signing up for it is in the prior post. The SP500 has several support levels that I show that could hold the next pullback. The chart is in the FREE newsletter.

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SP500 Index Market Timing: Time to Buy? No. Here’s Why.

Posted on January 11, 2011 by David Durand

The SP500 has simply done a layup to the last overhead resistance. You can see it clearly on the chart in my SP500Tracker™ out this past Sunday (see link below). When a market simply goes back up to the prior overhead resistance point, which is simply the point beyond which investors are unwilling to buy the index, it is a better place to AVERAGE OUT than to average in. It is a far better practice to wait for the next breakout when you reach a level such as this, JUST BELOW resistance.

CONCLUSION: There is no rush to buy here. Wait for the next breakout. And realize that since investor sentiment is quite high now, any gains you see from YET another breakout may be short lived. In other words, if you buy and have a profit, make sure you KEEP some of it. Don’t give it all back to Mr. Market.

By the way, my SP500 tracking newsletter was out this past Sunday (AND THE CHART IN IT IS STILL RELEVANT) 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™ and free “Tips”

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

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