Except for the most recent chart below, updates of my take on the SP500 Index are noted on Twitter (follow link to right) and are included in the Weekly Wall Street Sun and Storm Report™. Subscribe at no cost here: Weekly Wall Street Sun and Storm Report™
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Have a look at the SP500 Index market timing chart below produced using Worden Brothers Charting Software (see disclaimer on "Other Resources" page:
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Updated 01-08-2012: This is the SP500 Index Video timing newsletter for the market week ending on 01-06-2012 (charting system generously provided by Worden Brothers via FreeStockCharts.com; for more see link on "Other Resources" page on blue bar to left) This is the most recent Video Issue of this S&P 500 index market timing publication. As always, it's your money and your decision as to how to invest it.Just click the arrow below to begin the video.
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1-5-2012: Subscribe to my free newsletter here to read my latest take on all 35 indices:
Updated 12-11-2011: This is the SP500Tracker™ Newsletter for the close on 12-09-2011:The SP500 is in recovery, now above the March 2009 low, but below the June 2009 low(aqua lines below). Just above here is resistance at the 200 day moving average. The market had failed a breakout at the 200 day moving average on 10-31-2011.
A further rally in the SP500 Index is predicated upon further follow through by the Europeans in getting their fiscal house in order as mentioned in the prior video (below). There are some who feel that the solution they came up with may help in the future but is not sufficient in magnitude to handle what is going on currently. If this impression spreads through the markets early in the week, we could see further weakness.
Follow the news flow, but also watch how the SP500 behaves if and when it hits the 200 day moving average again. If it goes through and closes above there, the Bulls have the ball and may keep it up through Christmas at least. January could be another ball game.
Have a look at the SP500 Index market timing chart below produced using Worden Brothers Charting Software (see disclaimer on "Other Resources" page:
11-29-2011 - Important Note The stock markets including the SP500 Index are going to turn upward even more strongly than we've already seen early in the post-Thanksgiving week as soon as the world actually comes up with a European solution. That means there is risk both in selling and in holding stocks at this point. The world must act now to stem the collapse of the stock markets. WHEN it acts will determine the ultimate low we reach. If you are selling late, please record a decision and email it to yourself as to where you will re-enter the market. Having no plan is the worst mistake investors repeatedly make. This IS 2008 all over again, despite what the press has told you, another liquidity crisis in the making requiring massive intervention on the part of the world's governments.
UPDATE 11-29-2011; 2:04 pm ET: The SP500 Index rallied on Monday due to happy talk from Germany's Merkel and the strong Black Friday sales. I mentioned on Monday that the best course was likely to see how the market opens before making firm selling plans. One approach would be to follow the market up with a stop with a bit of leeway. I would continue with that approach. Closing over the 50 day moving average is the next hurdle for the SP500 Index. Even if that happens, the market could be stopped at a somewhat higher level, for example, at the down trend line formed by the two prior highs on the daily chart. Right now that line is at 1224-1225. A close above there could bring the SP500 Index back to the October high for a retest. And then with slowing sales in the first quarter, the market could start selling off at the beginning of January.
The thing to be aware of is that Europe represents a potential tinder keg in case of fire. Translated that means that if a European bank fails, all bets could be off for the now possible Santa Claus rally as it is often called. When is the optimal time to buy? I actually checked going back to 1995 when Bill Clinton was running things.
When will the Santa Claus Rally come to town this year?
These were the optimal days to buy:
1995: 12-18
1996: 12-16
1997: 12-26
1998: 12-14
1999: 12-08
2000: 12-20
2001: 12-13
2002: 12-27
2003: 12-10
2004: 12-07
2005: 12-30
2006: 12-01 (better if bought 11-27)
2007: 12-11
2008: 12-01
2009: 12-08
2010: 12-01 (better if bought 11-30)
2011: ???
The returns for such purchases were wide ranging from nicely up and being a part of a longer rally to small blips up before significant declines. In the case of 2008, the massive 2009 decline to the 666 low in the SP500 Index follow the brief holiday party. From my reading of the data above, given the current sloppy political backdrop, I'd favor some chop in the markets such that the optimal buying point might not come until Dec. 7th to mid-month. Guess when the European Union is holding their meeting? December 8-9. So a dip into that meeting is a distinct possibility. That said, note that there were three data points over the past 15 years where the correct day to buy was 12-01 or even by the 27th of November in 2006.
11-07-2011: The SP500 Index is waffling around that 1249.05 number. I like to say the "market is playing with my number." What that means is that I intuited from examining the chart where an important pivot point could be. When the market goes slightly above it, then slightly below it and for example, last night, when the futures trade almost exactly down to that number, I know that the number is "my market timing number." The market action tells you outright. The failure to move up through this number definitely means there is no point in buying here. It could turn into a pivot point for a correction of unknown size.
At the same time, there is no confirmed sell signal here either for the SP500 Index. That means we are at a pivot point, waiting for a resolution. Europe is front and center as the emotional "cause" of this lack of conviction by the market, but perhaps it's also an excuse, considering the ineptitude in our own government in dealing with both the economy/jobs as well as our debt crisis.
We are not so far behind Italy, Greece and the rest in owing far too much. If the debt solution does not come to fruition from the super-committee, our credit will drop another notch and the entire system will shudder. We'll be back below the prior lows in a heartbeat.
That said, I'm not selling until I see the whites of their eyes. In market timing terms, I have to have the market tell me I was wrong to be buying on the way up in this rally first. Then I'll be a seller of the SP500 Index again. (As for gold, check my Tweets either on the right side of my market timing blog (button to left near top) or on Twitter. Gold is acting well.)
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11-03-2011: Watch the SP500 Index at the 1249.05 level today mentioned in the video below (the 3-16-2011 intraday low). The market has moved above that level at the open but is now back below. If it cannot hold there, there is no point in adding to most stock positions. Wait for a pullback.
Theoretically, the Euro rate decrease should strengthen the dollar and weaken gold in dollar pricing (would go up in Euro pricing), but that is not what is happening so far today. Gold has rallied as the "last currency" on the planet that won't be degraded by governments.
In terms of the Euro zone economy, the rate decrease should make Europe more competitive as long as the money that is made available through those lower rates is being used to stimulate growth. Also, by weakening the Euro, European product prices go down vs. the US dollar and US multinationals should give up business to European counterparts. This of course would support the Euro currency with increased money flows to Europe.
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10-19-2011: The most recent chart update and Tracker Video is below.
Have a look at the SP500 market timing chart below produced using Worden Brothers Charting Software (see disclaimer on "Other Resources" page:
10-12-2011: Current Update
There has been even more strength as Europe decides it will in fact take care of its banking and sovereign debt mess. Buying the SP500 Index at 1211 or so and using a market timing stop beneath here, would work.
But some would claim we are overbought on a market timing basis at the moment. You can see this "stretch" on the short term charts. The VIX is now moving down to test major support at 30.16 with the VIX at 30.37 as I type. That does not give us much more room before we would expect to have a bounce in the VIX (increased volatility; fear) and at least a mild pullback in the markets. The Bears are hoping for much more than a gentle market timing correction in the uptrend. And they have been right SEVERAL times over the past two months or so.
What is different now is that there is at least a path for Europe to attempt their healing. Bears say that Greece will default regardless, because other countries will not continue to pour money down an endless pit. But for now, gold is moving back up (and is a buy; see my recent Tweets) and the US dollar is moving down. The dollar coming down has halved the gains in the dollar over the past couple months which is a help to our multinational companies.
Also supportive of the rally, whether it now finally survives or not, is that the banking and housing stock indices are recovering. They made bases and moved up from them. That is very positive.
Personally, I am continuing to add across the spectrum to stocks, gold, commodities etc. as the markets make more progress, scaling in as I go. Of course, as always it is your money and your decision as to how to invest it.
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10-09-2011: NOTE: The previous market timing comments are in the Comments Block below the video. There is a recent chart up for 10-05-2011 on my Facebook page (link immediately below), but the chart on the below video is from the 10-07-2011 close. Be sure the Comments are set to "Reverse Chronological Order" using the down arrow at the top.
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9-18-2011: SP500 Index Market Timing: Nearing Resistance
The party needs to either continue in earnest or we'll see yet another pullback and retest of the lows.
Have a look at the SP500 Index chart below produced using the software of Worden Brothers at FreeStockCharts.com:
Investors have pushed the SP500 index up to a retest of 3 key technical points at this juncture:
1. The late August high (second blue line above the current price).
2. The April 2010 high (first blue line above the current price).
3. The 50 day moving average (downward curved white line) is just above the current level.
4. There is further overhead resistance denoted by the aqua colored horizontal lines above the 50 day moving average.
These are the key market timing landmarks on the chart.
CONCLUSION: The market faces some important market timing resistance at this point in the mini-rally. An SP500 Index turn down here with a meaningful spike in the volatility index would indicate another retest of the lows is in order unfortunately. This is a trader's market still, bent on reacting to each bit of news.
Futures are down at the moment as I write this and if they open where they now are, the picture will turn somewhat negative. The SP500 index futures are now at about 1192 (10:17 pm ET). Things can change. The US may resume leading other world markets up come morning. Stay tuned on Twitter (see link to upper right)
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9-12-2011: SP500 Index Market Timing Key: The Ascending Triangle
The ascending triangle is formed by the lid indicated by the horizontal white line and the white uptrend line from the prior low.
See the SP500 Index chart below produced using the software of Worden Brothers at FreeStockCharts.com:
The current formation means that investors are buying at consecutively higher levels during the sell-offs. That itself is bullish. When a market sells off and investors wait for prices to drop to the prior low to buy, they are saying that they are not willing to pay more than the best recent prices.
But when investors say they are willing to buy at higher and higher prices, that means enough investors are climbing on board to join the earlier buyers to keep the triangle building upward and because the volume usually falls as the prices make their way up, investors are not selling their previously bought positions.
Then comes the upside breakout - or failure of course, but the bias is up with this pattern. Volume has been declining in the current pattern for the SPX as is appropriate.
The interesting catch is that for the SP500 Index itself, there was a failed breakout above the lid of the triangle. For that reason, you could call it an upward channel rather than an ascending triangle, but either way, it is bullish. Because the breakout failed, I am claiming that the first high defines the triangle’s lid, which was equaled on the last rally. Now we’ll see if the breakout comes and if it holds.
CONCLUSION: I suggested on Friday via Twitter that you could buy the SPX on a trading basis. If you lack much in the way of stock exposure, this could be an opportunity, but if you need to protect capital, use a stop loss at some point you are comfortable with below the uptrend line (the rising white line forming the base of the triangle.
I would NOT buy if the SP500 Index is below the uptrend line when you read this. At 12:10 pm on 9-12-2011, it is BELOW that line. If you want to be a bit more conservative, wait for the next close above that line and choose your exit point at the same time. Yes, read my Buying Checklist if you have not. The key to successful investing and trading is KNOWING YOUR EXIT POINT WHEN YOU ENTER.
The Bears would want me to mention these points before concluding. Working against us here are two major factors:
1. The possibility of re-recession.
2. European banking system failure with collapse of the Euro.
These are the things that we cannot logically protect against. The charts for now have a Bullish market timing bias in the chart formation noted above. If this pattern breaks down, we'll likely retest the prior low and then go to the summer 2010 lows. Set your stops according to your risk tolerance and time to retirement. As always, it's your money and your decision as to how to invest it.
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*** Note: The slow signal is generated in such a way as to trigger more slowly as a market turns either from up to down or from down to up. If you invest or trade only based on the slow signals, you will give up more as the market turns down and turns up. That is, you will tend to sell later and buy later. The strongest markets are of course those that are in double BUY or double SELL mode in regard to both short to intermediate and long term signals.
The best use of the information in the SP500Tracker™ Newsletter as well as the regular Wall Street Sun and Storm Report™ is to use it in a way that works for you and that fits with your investment philosophy.
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