Posted: April 14th, 2011 | Author: admin | Filed under: Uncategorized | Tags: Business Inventories, Commodities Prices, Consensus Number, Consumer Sentiment, Corporate Profit, Earnings Season, Economic News, Employment Situation, Hand Business, Headline Number, Market Timing, Midweek, Profit Margins, Retail Sales, S Market, Stock Market Strategy, Underemployment Rate, Unemployment Benefits, Unemployment Rate, Volatility | No Comments »
Weekly stock market strategy updates that went out to subscribers during March 2011. To receive current weekly update sent to your email, click on the FREE TRIAL link at the top of the page.
Midweek Update 3/1/11
The bounce from last weeks low was even weaker than I had
anticipated. For this reason I recommend exiting your SPY
position on the close today. We will maintain our Quarterly
ETF portfolio until the end of the quarter.
Weekly Market Update 3/6/11
The big economic number this week was the Employment Situation. The headline number dropped from 9.0% unemployment to 8.9%. I contend however that unemployment continues to flat-line and not improve. As I have stated previously as soon as someone uses up their unemployment benefits they are no longer considered unemployed even though they are still not working. To get a better picture of the employment situation I look at the underemployment rate which is currently at 19.9% and has been rising as the unemployment rate has been declining.
I exited our SPY position this week. Volatility has returned and I suspect we will soon see a correction in the markets. Increasing gas and commodities prices will have to put a squeeze on corporate profit margins and earnings season is only a few weeks away. I see the upside as very limited at this point and the risk of being exposed to a sell off to high. Having the bulk of our investments waiting for a buying opportunity I think is the prudent thing to do.
Weekly Market Update 3/13/11
There was not a lot of economic news this past week. What there was did not appear overly bullish to me. Retail sales came out right on the consensus number. On the other hand Business Inventories saw a slight up tick and, Consumer Sentiment dropped rather dramatically.
The technical picture for the U.S. market has deteriorated this week, with the sell off that occurred Thursday. If the SPY closes above 133 it would go a long way toward reversing the technical damage. I wouldn’t be at all surprised to see a test of the 132-133 level before seeing the sell-off continue. The unknown this week is how the markets will react to the natural disaster in Japan. The status of the nuclear reactors is still minute-by-minute so the outcome and any market reaction are uncertain.
Weekly Market Update 3/20/11
Inflation is starting to show in some of the economic releases. The Producer Price Index year on year rate is up 5.8%. Meanwhile the year on year rate change for the Consumer Price Index is 2.2%. This is more evidence of my thesis that profit margins are being squeezed. Businesses are finding it hard to pass along their increased cost to the consumer.
As I mentioned in the mid-week update, I am changing the intermediate term market call to bearish. If we are entering a new down leg in the markets it is better to look to sell rallies. If your primary investment vehicle is a 401k, shorting may not be an option. If that is the case cash or money market might be your best option. If SPY can rally to the range of 130.50-132.00, I may look to short the SPY. SDS is the Proshares Ultrashort S&P 500 etf. It has a market exposure of –200%. I am not suggesting using leverage. What I usually will do is trade half the amount I am looking to short to get a market exposure of –100%.
In the mid-week update I also mentioned my stock/bond model might trigger a sell signal. Well the market bounced enough that the model just missed triggering a sell signal. It is definitely in a cautionary zone and could easily trigger a sell signal this week.
Weekly Market Update 3/27/11
What a difference a week makes. The market has bounced faster and higher than I would have expected. The sell-off that occurred went a long way towards reducing some of the downside risk that I have been concerned about the last few months. The market needed a breather and got it. Sentiment and Technical indicators are now considerably less risky than they were 3 weeks ago.
So where does the market go from here? My intermediate term call is still bearish and the SPY will probably need a couple closes near 134 to make that a bad call. On a short term basis the market is overbought and approaching resistance. We are at what I think is a critical point that could determine the direction over the next 3 to 6 months. If the market can shrug off the fact that we are overbought and continue higher than the intermediate and long-term trend still looks bullish. On the other hand I think a more likely scenario will have the market begin to sell-off this week to possibly retest the recent lows.
Not much to report in terms of economic numbers this past week. The main theme was the housing market keeps getting worse. This coming Friday is the employment situation and this number always has the potential to set the trend for the coming weeks.
Posted: March 13th, 2010 | Author: admin | Filed under: Uncategorized | Tags: Bounce, European Union, Fears, Free Trial Link, Fridays, Gap, Intermediate Time, Lows, Market Timing, Members Of The European Union, Monday Morning, Pullback, Rebound, Rsi, S Market, Spy, Stock Market Strategy, Stock Market Updates, Stocks, Time Frame, Trades | No Comments »
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.