Market Timing – Weekly Stock Market Strategy – November 2010

Posted: December 17th, 2010 | Author: | Filed under: Uncategorized | Tags: , , , , , , , , , , , , , , , , , , , | No Comments »

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 Updates – Dec. ’09, Jan ’10

Posted: February 15th, 2010 | Author: | Filed under: Uncategorized | Tags: , , , , , , , , , , , , , , , , , , , , | No Comments »

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.