Market Timing – Weekly Stock Market Strategy – June 2010

Weekly stock market strategy updates that went out to subscribers during June 2010. To receive current weekly update sent to your email, click on the FREE TRIAL link at the top of the page.

Weekly Stock Market Strategy Update 6/5/10

Well my rare but reliable ADX signal is not looking so good. Maybe you were fortunate enough to wait until the final hour of trading on Thursday. If so, you may not have taken the trade. That is usually how I place the trades but since I had back tested this ADX system with a buy stop that is how I placed the trade. Since I suggested this only as a more aggressive trade, hopefully most of you did not take it. I will exit this trade at 104.25 on a stop.

So much for a cascade of buy signals following the ADX buy signal. The buy stop was barely breached on Thursday morning before the selling began. A weak afternoon rally could not even reach the stop level. Friday’s weak employment report was all that was needed to start the sell off. It appears the 104-105 level on the SPY will have to be tested a third time. The more the market sells off the more bullish I am getting. It just becomes a matter of waiting for the market to stabilize and start generating some buy signals. However, just because sentiment has declined and the market has sold off, does not mean we can’t see a prolonged decline.

Weekly Stock Market Strategy Update 6/12/10

The market has found a range that it is comfortable in. Until the SPY has two consecutive closes above 111.50 or below 104.00, it is not entirely possible to no which direction this market will trade in the intermediate term. I think the odds are slightly in favor of a bullish move out of this range. Currently however, it is to early to make a trade based on that assumption. We will have to watch and wait.

Weekly Stock Market Strategy Update 6/20/10

Thursday and Friday the SPY managed to close above 111.50, which I had pegged as resistance. The market is now overbought and looks like it needs to take a breather or sell off a little before it can work its way higher. I have not seen any new buy signals but they could come when the SPY takes out the high of 111.73. There is nothing else to report this week. If signals are generated I will send out a midweek update.

Weekly Stock Market Strategy Update 6/27/10

The SPY traded down Monday thru Thursday. The sell off was a little more than I had anticipated. Now the SPY is oversold and Friday’s consolidating price action indicates that a close above Fridays high could be at least a decent short term buying opportunity. Looking at the charts this week, the possibility of breaking support near 104 on the SPY, needs to be considered. The weekly chart looks as if a Head and Shoulders formation might be in the making. If we do manage multiple closes below support at 104 the target would be around 87. That is quite a sell off from current levels and is by no means what I expect to happen. However since there is such strong support at 104 and the SPY closed near 108, the downside risk is somewhat limited at 4%. If you’re wrong you risked 4%. If you’re right this may be the best buying opportunity for the next three months. This suggestion is based purely on technicals and is not generated by any systems that I watch. For that reason I will not track this as an official buy signal.

Market Timing – Weekly Stock Market Strategy – March 2010

Weekly stock market updates that went out to subscribers during March 2010. To receive current weekly update sent to your email, click on the FREE TRIAL link at the top of the page.

Weekly Market Update 3/7/10

It was a very good week for the markets. The SPY broke through 111.60
on Monday, and finished the week within 1% of the highs for 2010. As
I said last week once 111.60 was taken out the next logical target
would be the highs made in January. I was surprised the move came as
quickly as it did. It pains me to be on the sideline during a week
like this. I think the upside this week is probably limited. The SPY
is extremely overbought. The VIX has reached a level that has not
been seen since May 2008, shortly before the market peaked. The rally
this week came on lower than average volume. I think the rally this
past week was more likely desperate short covering than aggressive
new buyers.

Weekly Market Update 3/14/10

Another good week for the markets and I am on the sidelines. I got a
buy signal on March 4th. Unfortunately I had gotten used to being
able to get in on a retracement after this particular signal is given.
We have yet to see that retracement. My bad and I am sorry we have
missed this move.

This does bring up a good point regarding diversification. It is
never a good idea to have all your eggs in one basket. We usually
think of diversification in terms of having multiple stocks instead
of just a few. This is why I trade ETF’s like the SPY. It can quickly
become a daunting task trying to keep up with enough stocks to get a
fair amount of diversification. However there is another form of
diversification I want to discuss with you and, that is system
diversification. The SPY system I follow did an excellent job of
being out of the markets when things got ugly. But it is one system
and no one system is right 100% of the time. That is why I think it
is best to diversify with multiple systems that have worked well over
time and are not overly optimized.

I have finished the research on a quarterly ETF system that over the
last 10 years would have doubled your money. I will be adding this at
the end of the quarter for some added diversification.

Not much to say on the markets this week. Unfortunately, I cannot in
good conscience recommend buying the market when it is this overbought.
I will be waiting for something to upset this trend. If congress
manages some resolution on health care reform, that could be the
trigger. I will keep you posted.

Weekly Market Update 3/21/10

Well the market finally ended, on a daily basis, its streak of
consecutive up closes. It was a very impressive run. Bullish market
sentiment has reached a level that should limit any advance from
here. The market should be sideways or down over the next few weeks.
If we get a pullback it could give us a buy setup.

The potential market reaction from any health care reform passed is
the real wild card here. Typically the market seems to know all that
is knowable. The exception would be natural and man-made disasters.
The “buy the rumor sell the fact” saying is what keeps coming to
mind. What I mean is the market has rallied to this point. I think
any sense of finality in regards to the healthcare reform, could be
a turning point.

Weekly Market Update 3/28/10

Well the market continued its climb this week. Not even major
healthcare legislation could stop it. Well if I had not been out of
the market yet I would now be looking for an exit. Momentum has
definitely slowed and we are starting to see technical indicators
set up for a sell signal. The MACD has turned negative for the first
time since February 16th. The RSI indicator is showing a bearish
divergence. More and more sentiment indicators are reaching bullish
extremes. I know last week I said the market should be sideways to
down over the coming weeks. Going into this past week I would have
given the market no more than 2% on the upside. I would be very
surprised if the market is up over 1% at any point this coming week,
and I think we will see negative returns for the week.

Market Timing – Weekly Stock Market Strategy – February 2010

Weekly stock market updates that went out to subscribers during February 2010. To receive current weekly update sent to your email, click on the FREE TRIAL link at the top of the page.

Weekly Market Update 2/6/10

I recommend going 60% long on
the open Monday if the SPY is trading above 106.66 but below 107.73.
Once filled place stop at 104.25.

My thoughts on this week’s market

As expected the market managed a modest bounce early in the week. For
those inclined it set up a nice opportunity to sell on Thursday. That,
however, is not the purpose of this newsletter. The market continued
to sell-off until the final hours of the week. The sell-off that
began on Thursday seemed to be brought on by fears of possible debt
defaults by a few of the smaller members of the European Union, and
fear about pending jobs data. What brought the market from -1.75% to
close with a modest gain on Friday, is a little less certain. It
appears that the rebound was technical in nature. Be that as it may,
it is a positive sign that investors became less fearful of holding
stocks over the weekend. I think the lows put in on Friday could
possibly be at least an intermediate term low, that should hold for
a least a month.

In previous emails I have mentioned my use of the 3-period RSI on
daily charts. I like to use it on the weekly charts as well. The
3-period RSI closed below 20 on Friday. This sets up what I believe
is a good point to buy on the intermediate time frame. The last such
opportunity came in July of last year. I am recommending a buy on
Monday morning if the SPY is trading above Fridays close at 106.66.
There is a real possibility the market could gap open significantly
higher. If the gap up is over 1% or 107.73, I would recommend
waiting for a better entry. Friday’s low of 104.58 should hold if
this pullback is over.

Midweek update 2/8/2010

The follow through I was anticipating has not materialized. If you
place your trades for the close, do not place your trade today. If
you did buy this morning as the SPY traded briefly above 106.66,
exit the trade on your first profitable close.

I apologize I was expecting more follow through on the open. A lack
of follow through changes my outlook.

Weekly Market Update 2/14/10

I had recommended going long
last Monday but the opening was not as strong as I had anticipated.
For that reason I sent out an email Monday suggesting no entry or
getting out on the first profitable close. The first profitable close
would have been Tuesday, so thankfully nobody should have taken a loss.

My thoughts on this week’s market

As you know I had expected some follow through from the market
activity of Friday February 5th. When the Mondays open looked as
though the open would be unchanged to modestly higher, I became
suspect. If the market couldn’t pick up any more believers over the
weekend I figured the upside this week would be limited. That is
exactly what we got. The market has seen some serious technical
damage over the last few weeks. At the very least we should see a
test of the February 5th lows and we could possibly see a move lower.
For that reason I think it is best we sit on the sidelines and wait
for a better entry.

Weekly Market Update 2/20/10

The markets had a good week this week. Even though it looks as
though we may have seen a tradable low, I am not convinced. I don’t
know about you, but I am hearing “trillion dollars,” with a little
too much frequency. This week’s edition came in the form of the Pew
Report. I will some it up for you, our states have a trillion dollar
gap in pension liabilities. The states can’t print money, so they
will have to raise taxes, reduce liabilities or both. Raising taxes
and reducing expenditures do not sound like ways to get out of a
recession.
From a technical standpoint the markets are now overbought. The
question is, is the market in a trading range, overbought in a new
down leg, or still in an uptrend? I think it is one of the first two.
If we are in a trading range it is most probably bound by January
19th high and the February 5th low, and the market would probably be
stuck in that range for 4 to 6 months. I however think it might be a
little more likely that we are currently overbought in a new down
leg. If I am correct we probably won’t see the markets trade much
higher than Fridays close this coming week.

Weekly Market Update 2/27/10

It was a relatively tame week. The SPY’s range for the whole week
was slightly more than the 2%. The highs from last Friday did hold
as predicted. The market has come off overbought levels and where it
goes this week is a little less certain. There is resistance at
111.60; we could test that this week. If we see a close over 111.60
then the January highs near 115.15 would probably be the next target.
On the other hand if the market is unable to close over 111.60 this
week, the February lows are probably going to be the next target.
Overall it is a bit less clear how things will pan out this week.
With a unemployment report coming Friday, it is possible to have
another tame week.

Market Timing – Weekly Stock Market Updates – Dec. ’09, Jan ’10

Weekly stock market updates that went out to subscribers during December 2009 and January 2010. To receive current weekly update sent to your email, click on the FREE TRIAL link at the top of the page.

Weekly Market Update 12/5/09

Friday was definitely an interesting trading day. I thought I might
have to issue a buy signal when the markets jumped higher on the
unemployment numbers. The market traded to new highs for this move
shortly after the open. The party ended rather quickly as new highs
were quickly rejected and the market proceeded to give back those
gains selling off until the final hour of trading.

It is very interesting that the market could not hold onto new highs
after the best employment figures released since December 2007. I
would be very surprised if Fridays high is taken out anytime soon.
The SPY will probably at least test the lower end of its current
range around SPY 108-109.

What should new subscribers do now?

When a new subscriber joins a market signal may have already been
generated. This creates a dilemma for the new subscriber. Here are
your options and my thoughts.

You could jump in now
If market goes up from this point then it would be a good call.
I do not favor this approach because your risk tends to be higher. I
say your risk is higher because the stop level is farther away from
your entry than for the person who got in at the entry signal.

You could wait for the next signal
In this scenario you risk that the market continues in the direction
of the last signal and you missed a nice move in the market. You
don’t risk a financial loss just a lost opportunity.

My safest entry is when my indicators first go from Bearish to
Bullish. That signal was generated on March 17, 2009 at SPY 79.93.
Unfortunately after that initial signal, risk gets bigger with each
consecutive entry. The market has made quite a recovery from the
March ’09 lows and is looking a little weaker with each advance.

I am a risk adverse person. I prefer to enter the market when my
risk is limited. As a trend progresses new support and resistance
levels are defined and become good points of reference for defining
risk. If you are more of a risk taker than I am, you can get in when
you want to get in, in the direction of the existing trade. Your
maximum risk would probably be 10%. I usually keep my stops within
10% of the current market level. So if you are comfortable with 10%
on the downside you could enter in the direction of the existing
trade at any time.

Weekly Market Update 12/13/09

There was some follow through from last Friday into this week.
However by mid-week the market seemed to have decided there had been
enough selling and rallied to finish the week. The only thing I
found interesting this week was the markets muted response to a good
retail sales report released Friday. Had a similar report come out
two months ago it would have been a 200-point day for the DJIA.
Instead the SPY ended exactly where it started the day at 111.11.
We are in a seasonally bullish period and that could be enough to
keep the markets propped up for now.

Weekly Market Update 12/19/09

The market remains in a tight range. There is not much to comment
about this week. It is possible we could be stuck in this range
through the holidays.

Weekly Market Update 12/26/09

The SPY finally broke out of the tight range it has been in for the
last two months. Had this occurred any day other than Christmas Eve,
it would be a significant event. Volume on the 24th was probably the
lowest all year. Therefore I don’t put much faith in this low volume
breakout. The market will have to convince me this breakout is legit.
The market will likely make at least a mild correction going into
the New Year.

Weekly Market Update 1/2/10

The SPY could not follow through on the previous weeks apparent
breakout that closed over 112. Last week had even less volume than
the previous week. This coming week could be more telling with
traders returning to work.

Midweek Update 1/4/10

The SPY has finally broken out to the upside. Volume was not heavy
but it did exceed anything we have seen over the past two weeks. For
this reason I am going to go 40% long the SPY at 113.48 on a stop.

I still have some concerns about the market in the intermediate term.
For this reason I will be keeping a close eye on this position.
However, the market has spoken and I will respect the market in
whatever direction it decides to trade.

Weekly Market Update 1/10/10

I have reservations about the market at this point. Some market
sentiment indicators are at extreme levels. The AAII percent bearish
report for instance, which is a weekly survey of individual investors,
has investor bearishness at a 4-year low. Typically when sentiment
reaches bullish extremes like this the market struggles going forward,
in the 3 to 6 month time frame. For this reason I will be keeping a
close eye on where the markets decide to go from here. Price is the
ultimate barometer of the health of the market and as long as the
market continues to move higher I will respect it and be along for
the ride.

There are some who think market timing is picking tops and bottoms.
That is not my goal. My goal is to get the meat of the move while
missing moves like most of 2008.

Weekly Market Update 1/16/10

Not much has changed this week. The SPY did manage to trade up to
the highs made last Friday. Unfortunately that is all the further
it could get. We did see a sudden drop in the VIX on Monday. There
is some talk that downward spikes like that can lead to a short-term
top. I will be keeping an eye on the markets and let you know if any
action is needed.

Midweek Update 1/21/2010

If you didn’t catch the news today, President Obama announced
proposed legislation to limit the risk that banks can take.
Government policy has the capability to make trends in the market.
You can reference the Up-Tick article on the website to see what
I mean. The announcement of the legislation alone was enough to
start the markets moving down. During the announcement, banks were
used as the sole reason for the market meltdown. As long as our
leaders in Washington refuse to admit any culpability to mess our
economy is in, I can’t help but feel we will be in worse shape at
some point down the road.

I am moving our stop on the SPY to 108.23.

Weekly Market Update 1/23/10

There is nothing like getting blind-sided by an unforeseen
announcement from our President, regarding a change in policy. I
would have liked to have gotten out on Thursday as soon as I heard
the President speak, however I try to avoid knee jerk reactions and
let the market decide when it is time to get out. My uncle point is
very close. One of my favored indicators, a 14-period RSI, closed
below 40. The 40 level usually acts as good support level in a
healthy market. If the market cannot manage to bounce early in the
week, I think it is highly likely that there is further weakness
ahead. Typically the RSI testing the 40 level can be a good spot to
add to existing long positions. It is usually a good spot to add
because the market is oversold and should bounce if it is healthy.
If it is not healthy your risk is minimal to find out. I will keep
you posted this week and let you know if I feel we should add to our
long position, assuming we do not get stopped out on Monday.

Weekly Market Update 1/30/10

Well, the market couldn’t manage much of a bounce early in the week.
That was the first indication lower prices were coming. Apple
reported earnings that handily beat street estimates, couldn’t trade
above resistance at 215, and closed Friday 10% of the high for the
week. On Friday positive, headline grabbing, GDP numbers for the
fourth quarter couldn’t manage much of a rally and late in the day a
sell off ensued. All this negative action indicates to me, the
markets path of least resistance is down for the time being. I do
not like taking a loss, but when the nature of the market changes it
is better to stand aside.

I am not sure what is in store this week. We may see a bounce early
in the week, but I suspect that lower lows will be seen before this
sell off is finished.