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 – September 2010

Weekly stock market strategy updates that went out to subscribers during September 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 9/5/10

The market must have run out of sellers because the economic numbers I saw surely would not have caused a rally one or two weeks ago. The market started the rally on Wednesday based on positive economic data out of China. Does anyone else find that odd? China makes the stuff we buy not vice versa. So what likely happened was there was a lack of any new sellers willing to come to market prior to the holiday weekend.

This rally has successfully pushed us up against resistance and I would be very surprised if we saw another day like the last three. At most I think we have one or two moderate up days before this move tops out. If we do manage a close over 113 on SPY, I will have to reevaluate my position. We are light on domestic economic reports this week. The monetary policy announcements from Canada and England could shed light on the prospects for their economies going forward. President Obama has said he plans to announce a new economic stimulus plan this week. If this is another spending plan I doubt the markets will like it.

Weekly Market Update 9/12/10

Instead of one or two moderate up days like I expected, we ended up with a moderate week. The DJIA, Nasdaq and, S&P 500 were all up less than one percent for the week.

The markets yawned off the new proposed economic stimulus package. After all, it is only a measly $50 billion.

I am feeling like a glass is half empty kind of guy right now. I am just not buying the positive spin on some of these economic numbers. Normally a reduced trade deficit would sound like a good thing right? However when we import nearly everything that tells me we aren’t buying as much as we used to. Exports were up in the report but imports declined 2.1% from the prior month. We will see what the Retail Sales number looks like on Tuesday. Maybe those numbers will make the glass look half full.

We are right up against resistance at 113 again this week. Retail participation in the market has been seasonally week. Any breakout above 113 without retail participation would be suspect. I will be monitoring the market and sending a email out if I make any changes to the intermediate term forecast.

Midweek Update for 9/20/10

Well the SPY managed to close decisively over 113. I am going to have
to bite the bullet and make our intermediate term call bullish. I
recommend making a buy position in SPY for 25% of your portfolio on
the open Tuesday morning.

There are times when things just don’t add up, but you must go with
trend. I would prefer to be adding on a pullback, and I will be
adding to this position if we get one. The market is currently
overbought. However that does not mean a pullback is imminent. That
is why we are opening a position now.

Weekly Market Update 9/19/10

The SPY did manage two closes over 113 and the 14 period RSI did manage 3 closes over 60. Normally I would have to consider moving the short-term call to bullish. However, we have some conflicting signals going on. The QQQQ has decisively closed above the mid June and early August highs. The SPY and the DJIA have not been able to make a convincing close above their mid June and early August highs. In addition to that the volume has been week in the SPY and DJIA. A look at the On Balance Volume also shows the Nasdaq 100 is the only index that has made new highs with good volume.

The economic reports that came out this week were very neutral A New York newspaper is reporting that poll workers are having to file tax withholding forms for the first time ever. If poll workers are required to do this in all states this could give the employment numbers, that come out in October, an artificial boost.

I am waiting to see a couple convincing closes on the SPY before I will change the intermediate term call to bullish. I will send out a mid-week email if that occurs.

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.