Market Timing – Weekly Stock Market Strategy – July 2011

Weekly stock market strategy updates that went out to subscribers during July 2011. To receive current weekly update sent to your email, click on the FREE TRIAL link at the top of the page.

Weekly Market Update 07/03/11

What a difference a week makes. So much for a pause before another leg down, the markets took off this week and didn’t look back. I needed to see a weekly close over 130 on SPY to signal a long position. We got that and then some with SPY closing at 133.92. The move was enough to take our intermediate term market call back to bullish.

What I keep asking myself is, “What changed this week?” Greece was able to kick their problems down the road. I don’t think we have completely avoided a Greek default. QE2 has officially ended, so what will happen to interest rates now? So there is a lot of potential bad news out there. I am still cautious. I will be looking to buy the SPY on a healthy pullback.

Weekly Market Update 07/10/11

The Employment Situation report was released on Friday and it was not pretty. Anyone who reads this newsletter would not have been surprised by the up-tick in the unemployment rate. Every week we see over 400k new unemployment claims and the previous weeks claims are consistently revised higher. When the prior weeks numbers start getting revised lower we may actually be making some progress on the employment front.

I have yet to see to see the pullback I am looking for. The more I look at this market the more I worry about where we go from here. The last week of June is looking more like a short covering rally than the beginning of a new leg up. That price action caused two trading models to turn bullish. The RSI system and the Stock/Bond model are two systems I have a great deal of faith in both turned bullish. I do not like that I am trying to second-guess these two fine systems. On the other hand occasionally systems get whipsawed or give a bad signal before turning back in the prior direction. What I will probably do is recommend a relatively tight stop if I see a pullback that would allow a good entry point.

Weekly Market Update 07/17/11

We saw a pullback most of the week. Friday’s price action was the first of the week that closed closer to the high of the day than the low. I am recommending a purchase of the SPY if in the final hour of trading Monday (after 1pm pacific) the SPY is trading over 132. I will be honest this is a difficult trade to recommend. I have concerns about where the market will be in 6 months. As I have said in the past I try my best to stick to my systems and not trade on my gut feelings. I will be recommending an exit on the first close below 130. That should keep the risk to a relative minimum. I will be placing 25% of my portfolio in this trade.

On the economic front, despite a holiday-shortened week, jobless claims still came in over 400k. Retail Sales were flat for June. There was not much else that came out in the form of economic reports this past week. This coming week news will probably focus on the negotiations over the debt ceiling. The European Banking Authority released the results of a stress test design to check the health of 91 European banks. Several banks in Spain failed the test. I am not sure the full ramifications of the stress test were felt on Friday. In my opinion one thing going in favor of the U.S. equities markets is the problems in Europe. Which currency is in worse shape? I am not sure anyone truly knows the answer.

Weekly Market Update 07/25/11

Well we missed an opportunity to get long the SPY at 132. Monday did not rally to close over 132. Tuesday gapped higher and closed near 133. I did not feel like chasing the trade after Tuesday’s close. I will sit back and watch the price action this week. If I see something interesting I will send out a mid-week update.

The jobless rate rose in 28 states last month. This is definitely not a sign of recovery. Jobless claims came in over 400k again this week with the prior weeks number once again adjusted higher. There is a lot of negative press regarding the debt ceiling negotiations. With all the dire predictions regarding a default you would think I would be a little more pessimistic. I am not. Even though this is important, I see it as a non-event for the stock market. I do not see it playing out like the dooms day reports coming from the press. There is a lot to be negative about in this market but not the debt ceiling negotiations.

Weekly Market Update 07/31/11

I could not have been more wrong when I said I thought the debt ceiling negotiations would be a non-event for the stock market. Our politicians on both sides of the isle have managed to make this a real event for the stock market. And the kicker is now we are almost guaranteed a mediocre piece of legislation that will do little more than raise the debt ceiling. This could likely trigger the downgrades on U.S. debt obligations from the ratings agencies. The question then becomes how big of an effect a ratings downgrade has on the stock market. I don’t know but we can be pretty sure that the long-term outlook for the dollar will be negative since the fed will continue to try and inflate our way out of debt. This should be good for gold bad for the dollar. The stock market could be driven either by fed policy or economic news.

A couple of economic numbers this past week were notable.
Durable goods orders were expected to be plus 1.0%, they came in at minus 2.1%. Jobless claims came in under 400k at 398k for the first time in recent memory, although last week numbers were once again revised higher. GDP was the big shocker, 1st quarter GDP was revised down from 1.9% to 0.4%.

There may be a bit of a bounce when congress increases the debt ceiling but beyond that I am in a wait and see mode.

Market Timing – Weekly Stock Market Strategy – December 2010

Weekly stock market strategy updates that went out to subscribers during December 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 12/5/10

The US stock market indexes had a very good week. It appears the gains had a lot to do with a rebound in the Euro and decline in the Dollar. Now the US indexes are all near their November highs, and showing a negative divergence with RSI. I would not recommend trading based on the negative divergence, for me it is more of a caution sign. This week could prove interesting. Will the dollar continue to decline? Will a decline in the dollar be enough to push the indexes above their November highs? The dollar is pretty oversold on a short-term basis. If the rally in the Dollar from its November lows is truly a change in trend, and I am not sure it is, there should not be much left in this pullback for the dollar. I think this week might see a modest move above the November highs in the US indexes followed by some consolidation.

Weekly Market Update 12/12/10

The US indices had a modest move up for the week. The good news is that the November highs have been taken out. This move came while the dollar gained for the week. That is contrary to the dollar based move we have seen over the last several months. Bullish sentiment numbers continue to increase and suggest that a top may be near. For this reason I will be moving the stop on our SPY position to 120.50.

Weekly Market Update 12/19/10

This feels like it is starting to get a bit repetitive. The markets moved modestly higher this week. There has been, no real surprises, on the economic front. The dollar has managed to find a trading range. And, market sentiment continues to get more bullish
For this reason I will be moving the stop on our SPY position to 122.75.

Weekly Market Update 12/27/10

The markets moved modestly higher again this week. Market sentiment is at levels usually only reached during market tops. That being said as long as the FED continues purchasing our national debt, I am reluctant to call the top. I will be moving the stop on our SPY position to 123.50.

Market Timing – Weekly Stock Market Strategy – November 2010

Weekly stock market strategy updates that went out to subscribers during November 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 11/7/10

I would like to start by saying thank you to our veterans. I appreciate you and the sacrifices you have made for all of us.

Of all the market moving news this week the Quantitative Easing or QE2 announcement appears to be the one that caused the biggest move. The election results were not much of a surprise and didn’t move the market much Tuesday or Wednesday. The unemployment numbers that came out Friday were better than expected but did not cause much of a move since the market moved so strongly on Thursday.

This week there is not a lot on the economic calendar. The market should be relatively quiet. I would like to see a modest pullback so we can add to our long position. I will be keeping a close eye on our exit since in case the mood of the market changes.

In case you are still having any doubts about whether the Feds POMO operations are having any effect on the equity markets I have added an excellent piece from Tom McClellan. Take a look at the effect the POMO’s have had since January 2009. Here is a link to the article.

http://www.buyandholdisdead.com/public_html/wordpress/in-the-news/

Weekly Market Update 11/14/10

This is the first week the market has lost more than a 0.5% from Friday to Friday since late August. It was a very impressive 10-week move for the markets. Impressive enough to put investor sentiment in a range where we need to be cautious. Also of note stock sales by company insiders, Insider Sales, have increased dramatically. Insiders usually have a good idea of how there business will perform over the upcoming quarters. So when they sell, they think their stock is fairly priced or the outlook isn’t so rosy. There is the possibility that these stock sales are due to fact that the Bush tax cuts have yet to be extended. The question becomes, “Is this a healthy pullback or the beginning of a correction?”

As you know I have struggled to understand this rally, and I have come to the conclusion the rally was primarily due to two things. One was the outcome of the elections and the other the Federal Reserves POMO actions. I am starting to develop a picture of how this might turn out. At some point the POMO actions will have little positive effect. Inflation is already starting to appear in commodity prices. Company margins will be impacted due to rising commodity prices and the inability of companies to raise prices. With margins squeezed earning are unlikely to surprise on the upside. This will mean the stock market will have to sell off. I expect this to occur sometime in the next two quarters.

In the mean time I will be keeping a tight stop and looking to add to our positions if the market looks poised to bounce.

Weekly Market Update 11/21/10

The markets were basically unchanged for the week. If not for the GM offering on Thursday the markets would have been down for the week. When I saw how the market was pumped for the GM IPO, I just got a sick feeling in my stomach. It feels like we are playing a rigged game. It feels like the public just got fleeced on this GM deal. Time will tell if I am right about GM. The Government needs GM to trade to $53 to breakeven. I think it will be quite some time before that price is reached. The other factor that became painfully clear this week is that the Dollar is what seems to be directing this market. The Dollar has been rallying since November 5th, The SPY topped out the 5th. The Dollar has rallied because the Euro is having another scare. This scare happens to be with Ireland. Can Bernanke print money faster than the Euro declines? If the Dollar resumes its decline, which I believe it will due to the Fed’s POMO actions, the stock market should have the wind at its back. At least for the time being.

Weekly Market Update 11/28/10

The markets are starting to get a little choppy here and the positive affects of POMO are starting to fade. The Euro appears to be self-destructing. Having lost 7% this month. This week could be interesting for the Euro since it is extremely oversold and approaching its 200 period moving average. Add to that Spain and Portugal’s debt problems are apparently going to be a focus sooner rather than latter. If the Dollar remains stronger than the Euro, it would likely be bearish for US stock markets. Or should I say less bullish for US stocks. I am a bit anxious to see some retail sales numbers for weekend. If they were much stronger than last year as the media would have us believe, it could be a sign of improving consumer confidence. On the other had it could be cash strapped households trying to save as much as they can. However it turns out, when consumers start spending it is a good thing.

I am moving the stop on SPY to 116.50

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.

Weekly Market Update

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Weekly Market Update for 8/16/2009

Hello Everyone,
Well the market was not able to take out the previous weeks high. I
for one am gratefull, I would much rather be buying in on a pullback,
and lower my risk in the process.

That being said I still have my buy stop on the SPY at 102.05.
I am waiting for one of my systems to signal a buy setup. When that
happens I will be sending out a email.
Until Then.
Good Trading,
Rob

Midweek Update sent out 8/17/2009

We had a nice pullback in the markets today. For this reason I am
lowering my buy stop down to 99.20 on the SPY. This is just above
Mondays high. I would like to see the market sell off a little more
but, if it doesn’t we will be in. If Tuesday gives us another lower
high I will lower our buy stop again.
Until Then,
Rob