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 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.

Market Timing – Weekly Stock Market Updates

Weekly stock market updates that went out to subscribers from October 10 to the end of November 2009.

October 10, 2009

The market rebounded nicely this week. Now we have to see how
the market reacts at the resistance levels at the recent highs
in the market.

The trade date for the best 6-month strategy with MACD is
approaching this week. If the MACD is positive on October 16
we will go long. Currently the MACD could go either way by
the 16th. I will keep you posted with a mid-week update.

October 18, 2009

I am moving our stop on all open positions to 102.49. On Friday I
mentioned placing a buy stop $.05 above Fridays high. I am going to
raise that a little higher. I am adding 10% at a buy stop of 109.25.
If the market trades lower I will move the stop closer to the
previous days high.

October 25, 2009

I am moving our stop on all open positions to 103.10. If we were to
get stopped out this would be at break-even. If I do not like the
way the market is trading this week I may move that stop higher.

I try not to be a market prognosticator; I try to let the markets
show me what they want to do. The farther out you look the harder I
feel it is to predict what the market will do.

That being said something happen this week that gave me a gut
feeling similar to one I got in early March of this year. On
March 10, 2009 the SEC announced they were considering reinstating
the uptick rule. I won’t go into detail of that here, but the
S&P 500 index is up 58% from the March 9th close. This passed week
it was disclosed that the current administration’s pay czar would
limit Wall Street compensation. I will try to avoid getting into the
politics of this. Suffice it to say my gut is telling me this may
signal we are near a market top.

I do not trade on gut feelings, even though there are times I wish I
had. I will be watching how the market reacts this week and,
adjusting our stops accordingly.

October 31, 2009

I am keeping our stop on all open positions to 103.10. If we were
to get stopped out this would be at break-even.

Wow, how quickly market perceptions can change! The market was -1.9%,
+2.1%, and -2.8% Wednesday thru Friday. Needless to say volatility
is back. I thought maybe we were okay after Thursday’s market action,
but Friday changed that. Our stop at 103.10 is not far from Fridays
close of 103.56. With the market this close I do not see much point
in raising our stop. Until the market can make multiple closes above
Thursday’s high of 106.86, I will be very cautious of this market.

November 8, 2009

Well, our stop at 103.10 was hit on Monday. It was an unfortunate
fill because the low for the week was 103.08. Time will tell if
being on the sidelines is the place to be. I will need to see a few
more closes over 107 before a buy signal will be generated. I will
keep you posted.

This is a market in search of direction for its next intermediate
term move. Until the SPY breaks out of its current range bound by
103.00 and 110.50 it is anybody’s guess where the market will go.
I am seeing the development of a Head and Shoulders pattern combined
with a negative divergence in On Balance Volume. To me these along
with the recent spike in Volatility put the odds slightly in favor
of the bears. If something changes to indicate that we should be
looking to get back in, I will send out a Mid-week Update with
instructions on what to do next.

November 14, 2009

The SPY managed to close over 107 every day this week, but has not
been able to close above 110.50. If the market was not already
extremely overbought I would have probably suggested we buy earlier
this week. I am remaining on the sideline for the time being.

The Head and Shoulders pattern discussed last week was negated when
the market closed above the previous high set 10/15/09. On Balance
Volume also managed to move above the previous high. These are
positive developments, but price is king and price is indicating we
have only managed to trade .004% higher than the October high. I do
not find this very impressive at all.

Another indicator that I use quite frequently is Bollinger Bands.
They are a volatility-based indicator with expanding and contracting
bands above and below a moving average. A 20 period moving average
with bands 2 standard deviations above and below the moving average
should contain about 95% of all price movement. Anyway something I
have noticed (or maybe I read it somewhere) is that a close outside
of the bands is a good indication of a strong move in that direction.
There may or may not be a short pullback but the next major move
will likely be in the direction of that breakout. The 3 Period RSI
had 3 readings over 90 this week. Despite this strong showing the
SPY never closed within $1 of the upper Bollinger Band. I see this
as cracks in the foundation of this bull move and this is one more
reason I am going to need to see some more bullish evidence before I
get long again.

November 21, 2009

The SPY managed to close over 111 three days this week, but was not overly convincing.
I would like to see the weakness seen on Thursday and Friday carry over into next week.

The market managed to work its way a little higher before correcting to end the week. Other than a few higher closes nothing on the charts stands out. It has been difficult to watch the market move higher after being stopped out a few weeks back. This has been especially difficult when I see signs around me indicating the economy seems to be making another downturn. Unemployment in my county is over 14% and another wave of layoffs seems to be surfacing. Add to that California’s apparently unfixable budget deficits that remind me of the Titanic. I don’t think this situation will end well, layoffs and or higher taxes are imminent, and neither is good for the economy.

I do realize that the economy does not equal the stock market. How long can the two move in different directions? As difficult as it is I have to let the markets signal when it is time to get out. That time has not come yet. Therefore we will look to get back in when the markets allow us to get in, under hopefully more favorable conditions.

November 28, 2009

The SPY managed to close over 111 only one day this week. The highs for the week are even farther from the upper Bollinger Band. Continued weakness will put the market back in the decision zone. The area that will either offer a low risk opportunity to buy or signal that there is more weakness to come.

The market tested last week’s highs and was unable to do much. Then came the news late in the week that Dubai World may default on $20 billion in loans. This brought up concerns of other plausible defaults. I am not sure where all this will lead. This could be the beginning of another wave of bad news that takes the markets down. How the market reacts when it reaches support will be the first indication of what may be coming. That may happen as early as this week or it could take a month to develop. I will be watching the markets and letting you know if action needs to be taken.

Market Timing – Weekly Stock Market Update

The following emails went out over the last several weeks to our subscribers. If you would like to receive more timely market updates, go to the FREE TRIAL page and enter your name and e-mail address where it says join BuyandHoldisDead.com.

Due to the volatility in the markets I have included the current Market Update that went out to subscribers.

Weekly Market Update 10/3/09

Our profit margin took a hit this week. I have moved the stop for all long SPY positions to 101.49. This stop was sent out in a mid-week update. If we get stopped out we are sitting pretty close to break-even.

The Volatility Index or VXO as spiked higher and generated a sell signal for the SPY. This is part of the reason I am leaving our stop right below Fridays low. I don’t want to get caught long if the market decides to sell off sharply. The RSI, which is one of my favorite indicators, is very close to indicating a change in trend. On Friday the 14 period RSI closed at 43.17. If the RSI closes below 40 for more than a couple days, I would no longer be looking to buy dips.

Mid-Week update sent out 10/2/2009

The market is expected to open down another 1% today. This is on top
of Thursdays sell-off. This is not the time of year I like to see
Sentiment and economic numbers change.
I recommend exiting all long SPY position with a sell stop @ 101.49.
If the market fundamentals improve we can always get back in later.

Weekly Market Update 9/27/09

I am leaving our sell stop at 100.32. We have reached a point in this retracement where it is safe to consider adding to our long position with limited risk on the down side. I am only looking to add an additional 10% to our long position if filled we would be 30% long. I will place a buy stop at 105.46. If the market continues to make lower highs I will be lowering this stop.