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.