Intraday Comments often refer to intraday moves. I will also discuss targets that could be used for intermediate and long term investment decisions. Please read the disclaimer on the website (on blue Navigation Bar) before accessing any of the information. As always, it's your money and your decision as to how to invest it. Thank you.
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10-20-2011: (for FREE Tracker subscribers only) Sun And Storm Investing™ Tip #41
GLD is trading down within its recent range today. I would not like to see it break its base of 154.19 or there could be much more downside. Things may get dicey even below about 155.75 or so. I think as I've been writing that gold will hold up reasonably well as long as Europe is an issue, but if central banks start dumping gold, it could trade much lower for a while and then it will come back as the demand for gold exceeds supply once more.
As my gold articles (see "Read My Feed" page) have gone over in the past, gold has a tougher time when the US dollar is stronger, but there is not only dollar strength today, but also organic selling of gold. The second headwind is "liquidity." Remember that gold is not immune to a major market pullback for liquidity issues as well. When hedge funds and other traders need money, they sell anything and everything including GLD shares at times to meet margin calls.
CONCLUSION: So far the pullback in gold is OK, but we must watch the support level mentioned. It is hard to believe that the gold run is finished for good considering the imminent destruction of the Euro zone and its currency. It seems unlikely to many observers that the Euro can survive with the current structure (e.g. with Greece in the Euro Union). That will cause the US dollar AND gold to be attractive.
One final thought. You may want to consider hedging your gold position with a US dollar hedge such as UUP as long as the US dollar index holds up above it's 50 day moving average for example (be aware of the tax forms required before purchasing it; Schwab fills them out for me in my IRA at least, but taxes are due over a certain amount even in an IRA is what they told me last year. Check with your accountant and broker of course.)That way if the dollar is very strong, you are somewhat hedged to a gold pullback.
Today may not be the best time to start a US dollar index hedge if we are close to a bounce rather than a breakdown in gold. Wait for the next bounce up in the range if that happens.
Standard Disclaimer: It's your money and your decision as to how to invest it. See also disclaimer for website.
07-08-2011: (for FREE Tracker subscribers only) Sun And Storm Investing™ Tip#40
The AAII Survey shows a Bull-Bear Spread of 17.1% with Bulls at 41.77% and Bears at 24.68%. The Bulls are not at an extreme high and the Bears are not at an extreme low. Although there are only 7 data points to look at today, the range of results is very interesting, so have a look at the PDF using the download link below.
By the way, the term "expectancy" is very important in investing and trading. If you do not know the results of your system of investing or trading, why use it?
The expectancy of your approach, whether technical only, fundamental only or combined, is calculated by taking the proportion of WINS and multiplying it by the AVERAGE WIN RATE and then subtracting the proportion of LOSSES (which is 1 minus the WIN rate) multiplied by the AVERAGE LOSS RATE. The equation is the same one I use to calculate the AAII expectancy for the SP500 Index in the PDF (see link below to download). The calculations are simple and the formula is on page one of the PDF. If you have any questions, please let me know and I'll answer them for the group. Send a comment via the CONTACT ME button on the blue navigation bar to the bottom left.
If you do not know what your expectancy is, that means you do not know what on average to expect from your trading or investing. That means you are flying in the dark. Why? Because if you have not calculated your expectancy and it is negative, you are using a system designed to fail. So what would you expect, except to lose. There is hope of course. You simply need to change your system, back test it, and then move forward, now with a positive expectancy. Remember to control risk when you use your system of course. That is, use some sort of stop to protect your capital if the investment runs against you too much. Again, if you have any questions, simply contact me.
The latest sentiment data shows that the range of possibilities is huge from one big negative data point to moderate gains:AAII Review: Survey Says!
06-24-2011: 1:25 am (for FREE Tracker subscribers only) Sun And Storm Investingâ„¢ Tip#39
The stock market gyrated around today and several indices bounced off of support. The SP500 Index tested back down near the prior low as the US dollar rallied strongly and then recovered almost completely as the dollar gave back about half of its gains during the day. The SP500 Index actually hit the 200 day moving average almost precisely and bounced. I would not buy until we close above 1298.61. Buying intraday moves with the current volatility is tricky. If you do buy intraday, please consider using a stop and exiting if things reverse.
Gold failed a breakout at GLD of 151.45, which was the June high. That happened yesterday (6-22) and today gold took it on the chin. The CRB (commodity) index broke down and appears to have plenty of room to fall. The one positive was that it closed above the 200 day moving average, but I am very doubtful that the down trend will stop there.
The US dollar is in a real rally despite the spotty performance in that it is making higher lows and higher highs. There is no question that there is an up trend in place. The key resistance point that I tweeted about today was at the prior May and June highs. It must make it through there for the next buy signal. If the US dollar continues a strong rally, commodities, gold and stocks will correct. If the cause is Europe, gold will do better than the other two, but will still decline.
I'll likely make comments on Twitter as things develop. Follow me by clicking on the Twitter follow button.
Standard Disclaimer: Remember that it is your money and your decision as to how to invest it.
03-18-2011: 11:03 am ET (Time of email exclusively to FREE Tracker subscribers) Sun And Storm Investingâ„¢ Tip#38
I tweeted this morning (as DavidBDurandMD on Twitter) that Jim Cramer is telling people to sell into this SP500 rally. He does not often say to sell, so when he does, you may want to at least look up! The first resistance will be the breakdown point that I have written to you about for weeks: 1294.26. A move above there would be the first real proof that this COULD be more than a bear market rally. Then comes the 50 day moving average today at 1302.96. Above there a rally could continue.
A slight move above the 50 day moving average (1302.96) could be followed by a reversal. Such reversals are common when I market retraces as it is doing now. So if you buy on a close over 1294.26, you would set a stop as soon as the SP500 reached 1302.96.
My prior advice on scaling out and re-entering if needed still stands. Is there risk? Yes, there is risk whether you are bullish or bearish because markets bounce and fake investors out and they can bounce and keep going. As long as you know the decision points and use good stop loss exit points, you will do fine. You will preserve and grow your capital.
11-19-2010: 12:23 am ET This is Sun And Storm Investingâ„¢ Tip#37
Euro Trade Update
First, note that my comments on Investor Sentiment below turned out to be accurate. The top in the market was on 11-05, just 2 days after the post was made.
Now on to the Euro. In overnight trading the Euro looks fine as a short still. 1.3632 would be the very first sign of strength in the Euro on the 10 minute chart and the next level of strength would be a move over 1.3648 and then 1.3668.
A print at 1.3606 should bring more downside action. A print at 1.3574 would be the next break down point. 1.3564 would be the next support from there.
Make no mistake that Europe wants its currency lower. Japan is happy (look at the EWJ today) that it's currency is falling finally. This is a currency war people, not a one way Dr. Ben wins-no-matter-what game. Dr. Ben is getting some cooking lessons from the French and Germans (hopeful the German cooks are the bakers! I lived there for 6 months, so i know!)
If you think you don't have to consider currency movements, think again, because with each step down in the Euro, should the above actually take place, the world's stock markets will be stepping lower. The opposite is also true. If the dollar index drops back below 78.41 particularly on a close (follow it on MarketWatch.com as symbol DXY), stocks will rally. Well, except for Japan if the yen starts to rise again.
11-03-2010: 10:17 am ET This is Sun And Storm Investingâ„¢ Tip#36
Sentiment is Risky Now
This does not mean you should not invest or that you should sell. It means that the market COULD turn in a few days to week or so. That is what the sentiment numbers say today (see the link to the sentiment analysis here: My Sentiment Analysis Link). It also says that any gains that accrue over the next few days to a week could be lost and then some.
The worst example I found in the data was the market top TO THE DAY in 2007.
So is it the top? The AAII data are a sign, but you must in the end follow and respect the market. It means you need to have a stop on recent purchases and especially on new purchases. That is your choice of course as it's your money!
On another note, the US dollar trade officially died today. I pointed out two days ago in the paid newsletter where the breakdown point would be. It happened yesterday. Of course, this is only Day 1 below support, so it could reverse back above support and rally, but for now, we have to respect the initial vote that QE WILL work to further destroy the value of the US dollar. Sad day for savers who are being financially assaulted by the Federal Reserve in the name of saving the housing market.
That is what this is really about. If they did not artificially lower rates, rates would shoot up now that the economy is a bit stronger. That would KILL housing. Here is the thing though. When you ARTIFICIALLY do anything, the change is IMPERMANENT. This will reverse and the effects in the way of inflation are very dangerous for savers and for the US economy. Chairman Bernanke is indeed playing a dangerous game that was lost by Chairman Greenspan before him.
10-15-2010: 10:20 am ET This is Sun And Storm Investingâ„¢ Tip#35
The Big US Dollar Trade!
The US dollar is about to turn. You can smell it in the smugness of the Euro traders. They are leaning by reports 98% toward the Euro away from the dollar at a time that the US dollar has returned to a massive support level formed by the 2008 and 2009 lows.
There are two ways to play this.
1. You can enter here with a partial position and exit if we make a lower low than the UUP US Dollar ETF 2009 low of 20.02 or the 2008 low of 21.85 or whatever ETF you decide to use (aggressive traders can use the double negative Euro, but be forewarned that if the currencies go up and down and go nowhere, you lose money. For example, if the US dollar moves up 10% and then down 10% vs. the Euro, you lose 1% according to my information from Charles Schwab (ask your own broker before investing in these double negative funds).
You can suffer big losses fast using double and triple negative funds, so I prefer the singles. You can set sensible stops and the movement is much closer to reality than with the 2X and 3X products.
ALSO: Note that if you trade UUP, you may have to file a K-1 with your taxes due to the structure of this product. Charles Schwab filed it for me for my retirement account. If you make a certain amount of money in an IRA, you may also owe taxes. I feel it's worth it, but please decide for yourself.
2. You can wait for the dollar to make a stronger move up, say above 22.41 (this will change over time; I'll report it in the newsletter after each market day). Perhaps even allow for a few more pennies to the upside before entering the trade.
3. Then scale in if the trade is working, because it should last for several days to weeks. The last up move lasted 12 trading days.
CONCLUSION: The dollar is ripe for a bounce. When it does bounce EVERYTHING but Treasuries/bonds will move down. The Bulls are leaning too far to the Bullish side. That is when the boat flips to the other side. Sometimes these things DO surprise us and go farther than we thought possible, so DO USE A STOP.
NOTE: Do not just place your trade and forget about it. Currencies must be traded and are NOT an investment except in usual circumstances. Those circumstances do NOT apply to the US dollar. The longer term trend for the US dollar is likely down after a short to intermediate term rally, due to the dollar destructive policies of the Federal Reserve.
As always, it's your money and your decision as to how to invest it.
FINAL NOTE: If you want to know when to EXIT this trade, please subscribe to the newsletter (one month would only cost you $8.95!) I have to provide this value to paid subscribers as you know. I hope you'll take the free 2 week trial and see how helpful following 35 different markets every day truly is!
10-01-2010: 2:08 pm ET This is Sun And Storm Investingâ„¢ Tip#34 "AAII Survey". No longer available. See more recent AAII report with the expectancy table on 7-08-2011 above (Tip #40).
09-22-2010: 7:10 pm ET This is Sun And Storm Investingâ„¢ Tip#33 in the form of a Bonus PDF Report:
Stocks, the Dollar, and Gold! Oh My!
A Study of How the Directions of the US Dollar Index and Gold Effect Stock Market Returns Over Long Time Periods
The SOX is ready to show it's hand. The SOX DID hold on to support by the close today, which gives the NASDAQ a glimmer of hope. I do NOT expect the breakout to happen, but will adjust with the market as needed. We follow the market, not our egos!
The SOX held the short term number that is in play which is the high of 26.04 in the SMH semi-conductor holders hares. The equivalent SOX level is 330.90 high on 9-02-2010. That was the last little breakout point. So it needs to stay above there to make this rally work. The SMH closed at 26.56 and the SOX at 334.24.
So both are in the clear, BUT rising in a wedge since 9-10-2010, which is Bearish. Why? Because the every time the SMH ETF rises it does so a bit less and a bit less. That is a market timing sign of weakness in the price advance.
What are the key numbers?
1. If the SMH closes above 26.65, that would be a breakout ABOVE the wedge.
2. If the SMH closes below 26.00 or perhaps 25.87 if you want a wider stop, it could cause the rally to fail.
I've written recently about how the SOX and NASDAQ and even the SPX or S&P 500 follow the SOX, so either they BOTH need to move up or they will come down together. With this information, you could profit whether the SOX continues up in its current rally or fails.
09-03-2010: 12:56 pm EDT TIP #31 Market Timing Commodities and the GLD ETF: Commodities are the Secret Alternative to Gold Well someone else knows about it too, but I wanted to share it with you. I will bet you find it exciting to hit on investment "concepts" that have the real potential to make you money. Commodities represented by an ETF that generally tracks the CRB index fairly closely (e.g. DJP) are up 0.72% at 12:56 pm while GLD is DOWN 0.12%.
EVEN IF GOLD BREAKS OUT, you may be able to make about the same in commodities, because they should remain strong too as the economy recovers and may outperform gold. The CRB index is represented by such ETFs as DJP or RJI. Check them out for yourself and pick the one that looks most behind the CRB (has the best discount to net asset value) and that has the lowest expense ratio.
I told my subscribers last night exactly where to enter as our next buying point. This spot in the CRB's climb may not be the perfect buying signal. It's close though and the opportunity to make money in a renewed commodities rally would pay for your subscription over and over again, IF I am right. You can access that information and see if my newsletter is useful to you in pointing out huge profit AND loss opportunities by signing up on the "Subscribe" page for a 2 week FREE trial.
Why should you bother? I got my subscribers into gold on the breakout above $328 per ounce. You know the "rest of the story."
Subscribe and if you don't find it useful for any reason, no hard feelings. I always appreciate it when someone takes a look at what I write.
8-31-2010: pm EDT The range of consolidation for the SPX is 1039.83 to 1065.21. Remember that markets can sometimes "play" with a level and close or move just barely above or just barely below a key level and you have to ask for more evidence of strength or weakness generally if the close or the intraday move is very close to the signal point.
So for example, if the SPX closes at 1065.51 barely above our range of consolidation, you may want to wait a day to have the market "prove itself to you." Yes, you may then enter a bit late and then your downside risk from your buy point increases. You have to make your own judgment in the end on how much risk you will take both in terms of buying early and buying late.
But I would say that when the market decides about the current range we are in, the move will likely come intraday and you may have to enter/exit as it's happening to optimize your Reward: Risk ratio. If you simply cannot do that, because, well, work for a living, as some of have to now and then, just do the best you can, or use the cheapest broker you can find to follow your trades for you. There is a balance in life of course, and sometimes we give up a some money for a lot of freedom and happiness.
8-24-2010: 3:02 pm EDT There is a push and pull going on at the first support of 1056.88 that I thought would be the initial target for today and it has been. Now if we don't hold or we are only off a few more points, you may be lulled into thinking we cannot go lower. We probably will. Bear markets can be nasty that way by drifting down gently while "no one is watching." Trillions were lost that way in 2008-2009. So respect your stops, scale out if needed and back in if also needed. Get the Passive Shorting concept down, but SCALE IN or OUT depending on which way this market turns and depending on how invested you are right now (per the E-book that anyone reading this should have access to; if not, ask via customer service, because I can't mail things without the opt in step of your request.)
If you are under-invested, this could turn into a rally but I would only buy positive progress in scaling fashion should we move back up through the number mentioned above. Use the same approach for other indices that move with the SPX of course, but do it based on their particular equivalent support level.
8-24-2010: 9:13 am EDT Here are the short term targets again. I've added the Flash Crash May 6th low to what I wrote last night:Potential Bearish Targets for S&P 500 from 8-20-10 close of 1071.69: these are just theoretical targets at this point. (There are a few more extreme targets that were mentioned in last night's newsletter.) The point is to realize that the market may seem low now, but can go lower. That is the nature of Bear markets. Review the Passive Shortingâ„¢ page on this site and plan your stops accordingly. * Mid-July low: 1056.88, -1.38% * Flash Crash Early May low: 1040.78, -2.88% * Early July low: 1027.37, - 4.135% * 50% retracement: 943.29, -11.98%
The futures are already through that first target. We could drop sharply after the open or just grind down all day long. You will have to decide whether you sell only based on a close vs. selling intraday.
The tricky part is that we may be in a trading range, so that the point you sell at can become the bottom. You could "scale out" per my E-Booklet in steps as an alternative to selling everything at the open for example, which is probably not the way to go. Often there are rallies back and you can sell into those and then sell more near the close if there is no recovery.
As I've said, it was easier to sell at the August highs that double topped (review that link if you have not), but don't have "failure to sell" regret or you won't do what you may have to do to protect your assets. You can always re-enter higher, even if you sustain a "loss" relative to the recovery in the market that gets a bit ahead of your buying back in. Review the second part of the Passive Shortingâ„¢ to be aware of the risks of "selling late" in the game.
If the market holds the first target and bounces, you will look smart for having NOT sold. If the market just plunges down all day and closes at the lows and continues down the next day, you'll look smart having sold at the open.
There is not great answer for where to sell in the next day or two. The easy selling points in April and at the August high are gone now. They may return but we can't truly say when. Now you just need to manage your losses as best you can, perhaps scaling out instead of selling all at once and getting back in if you are faked out in this move, and we simply ascend back into the trading range we've been in since the May 6th Flash Crash low.
8-17-2010: 12:30 pm EDT I like betting against long bonds here for a trading bounce in the "inverse ETFs." Those of you who are traders know the vehicles. This position is only appropriate for traders in my view. Why? Because I would not take a long term position against bonds. That has failed over and over. But for now, things are too stretched to the downside in yield; bonds have rallied a bit too much. The charts are stretched. I believe the 30 year could move back up to at least a yield of 3.406% if not 3.462%. Then you may simply want to take profits and move on. Traders have an opportunity to make money here.
If the 30 year bond, which you can track easily, makes a NEW low below 3.715%, close out your short position in bonds (or inverse ETF).
8-16-2010: 4:15 pm EDT
TIP#30: The US Dollar vs. Gold The US dollar could make it almost back to 83.90ish, but probably not in one swing. Another in-between dollar index target would be 83.45.
Why could the dollar pause? The currencies making up the dollar index have found some support, so there is a possibility of some dollar weakness at least on a short-term basis which would fuel a further rally of gold possibly back to the last major high.
If the dollar is just pausing insignificantly in the middle of a strong move, then gold will be under pressure in US dollar terms even if endogenous gold buying picks up. They cancel each other out as explained in the earlier "TIP." If you want to re-read that simply go to the "Sample Issues" webpage on the button bar to the left and scroll down to "Other Interesting Issues."
It is true that technically, the move today is positive for the trade in gold in US dollar terms. The point is that dollar strength can eat up some of the possible gains.
8-16-2010: 11:03 am EDT Here are links that you will need to view the second parts of TWO "Tips" issues. The first is the follow up to my Passive Shortingâ„¢ page on the Navigation bar if you need to refer back to it. The second is the follow-up on Discretionary Trading Errors. You can find the original link here:
Jack's Unfortunate Discretionary Trading Error - Part 1
Here are the two links you need to read the second parts in reverse order by date:
All the other "TIPS" are on the Sample Issues page although they may not be numbered with a TIP number.
You will have to re-enter the password again for some of the reports, because some "Tips" were set up originally as PDF files.
In accessing these reports, you are consenting to the disclaimer for the website, which can be accessed on the button bar to the left at the bottom. It basically says, you must take sole responsibility for your investing and trading decisions and consult an advisor if appropriate for you. My closing line from years ago was "It's your money and your decision as to how to invest it." That is still true today!
8-9-2010: 4:17 pm EDT The market got as high as 1129.24 today with overhead resistance at the June top of 1131.23. I wrote a short piece on the FOUR things that you can do at double tops to invest and/or trade. The link is on the Sample Issues page at the bottom under "Other Interesting Issues."
7-23-2010: 10:06 am EDT GLD number of 117.50 is definite R. Just went to 117.47 and stopped dead. There is a downward wedge in GLD that could play out to the UPside if we can get through 117.50. You may want to allow for a little wiggle room for market makers when you set your buying point. Meaning add a bit to 117.50, rather than buy 117.50, because the market makers may come in and pick your trade off with a bunch of other people who set tight stops and then the market may simply sell off from there.
