7-29-2010

Just a quick mid-week update:

We have a nice looking pattern developing and in spite of today’s volatility and downward bias, we are in the midst of a good trade setup. I am including a chart of the Sp-500 index below.

Look for further decline to support zone marked on chart: 1083-1097. If that support holds we could be off to the races for 1170. We are looking for a  6.8% return or so if support holds.

Seeing the volatility and ‘meat-grinder’ aspect of the market so far this year, this may be our best opportunity to lock in an annual gain.

July 29th, 2010

7-25-2010

Just a quick  note as to probable market direction in the next few weeks. After much choppy action we are once again queued up for an attempt at breaking the downtrend that started 4-23-2010. Here is what we need to look for:

We need to first get past (on a closing basis) 1131.23. If we successfully do that, we will probably retest the trend line top channel, which is now resistance but should act as support after a break. This means after we break past 1131.23 we MAY test 1097 area again. If this is successful…I would set our sights on 1170 as a near term target and get defensive once we hit that level.

The chart is below with markets levels to watch.

July 7th, 2010

Ok folks…here we go again on the roller coaster ride of the US equity market. I can’t ever seem to recall a time when there was such a diversity of opinion about which direction the economy and the capital markets are headed.

We have some noted Ivy League economists saying we are headed for a depression. We have others trained in the same institutions saying we are well on the road to a solid recovery.

We have some noted equity market strategists telling us that we are headed for new highs in 12 to 24 months,  while others just as noteworthy are telling us we will make new lows over the next few years.

We have the well regarded “Bond King” Bill Gross telling us in early May we should be dumping our US Treasury holdings as rates are about to skyrocket past 4 %. Just a scant 60 days later and he is apparently adding to his Treasury holdings, presumably to replace the ones he dumped in May ?

When there is such a confused state of fundamental opinion, I simply offer an elegant approach. It’s all in the chart. I know some here eschew chart reading as some sort of voodoo, but I am of the opinion that along with fundamental analysis, it should be a part of everyone’s investing toolkit.

So without further adieu, here is the latest read on the equity market as measured by the SP-500 index as of the close on July, 7th, 2010:

We are going to use a simple regression trend analysis to try and find support and resistance points for the market. We are obviously still in a downtrend that started in late April and after being rejected at 1123 (look at the trend channels) we have bounced around and seem to be headed for a test of 1083 which is the next “high point” in the channel. If that fails, which I believe it will, we will look for a bounce opportunity at around 950. So far these trend channels have allowed me and my clients to stay a few steps ahead of the market and I am hoping they will help you do the same.

I encourage questions and any constructive comments about my approach which has worked in good times and bad. Here is the chart:

Downtrend Channel 1083 -or- 950 ?

6-25-2010

Ok Folks here we are again with a capital market update.  I’m going to present 2 charts of the SP-500 Index today, the chart we posted last week and the new chart as of today’s close.

Last week we noted we had some serious reservations about the rally that had taken place and drew a resistance zone on the chart that spanned from 1123 to 1140.  The verdict: We entered the zone and were soundly rejected at 1131. We have since sold down to 1067.89 (intraday Friday) and closed at 1078.75,  a 4.62% reversal. Frankly speaking the market looks like crap warmed over..same old players driving it higher and lower with 70+% of all volume coming from computerized systems owned by the trading desks of the largest US banks. More of the same until they blow it up…and they will.

Ok ..enough of my weekly ranting…we do we go from here ?

The chart on the left shows last weeks zones and the chart on the right shows where we are today. Again I have marked the resistance and support zones for us to use as a guide.

Bottom Line: If we can get through resistance at 1105, then we’ll reassess the chart. Otherwise we need to hold the support zone starting at 1040. If we fall through 1040 there’s a good probability we will end up around 995 before any meaningful rally can take place. That’s 4.3% lower than 1040 and almost 10% lower than 1105.  So we are keeping our fingers crossed that we will reach 1105 so we can get more defensive (or short the market) at that higher level. Either way..we have clear defineable areas to watch. Stay defensive until we see something else.

Here are the charts:

Rejected @ Resistance ...OUCH!

1105 or 1040...Play Defense !

June 18th, 2010

Ok folks…it’s do or die time for the ‘recovering’ bull market. We discussed last week that we were looking for a move to 1123 on the SP-500 index. Today we touched 1121 and reversed, although trade was very quiet for  an options expiration Friday. I believe we can move marginally higher with 1140 being the upper limit of what we can expect in the upwards direction. Whether we get to test that or not depends a lot on what the news of the day will be early next week (or over the weekend). If we get news that is perceived as good, we can test 1140, if not we may reverse here and head substantially lower. Either way I  believe there is not much room to run higher and we should be positioning ourselves defensively.

Please review the chart below as I have marked the resistance and support zones clearly. Look for movement into and out of these zones for clues as to ultimate direction.

Make or Break Time for SP-500

June 11th, 2010

Another volatile week in the markets. Following a very bad last Friday sell-off, we actually recovered somewhat this week with a gain of 2.51%.

Here is what you need to know:

I believe we have entered a new bear market (in spite of the weekly gain).

Any recovery should now be used to re-position portfolios appropriately. I believe after a brief recovery here (my target is 1123 on the SP-500) we will head down for the next couple of months.

We may still have a bullish run afterwards that again provides some recovery into late August…don’t be fooled, this may be the last time to re-position.

So here is what you need to know in numbers:

1) We are looking for a target of 1123 on the SP-500 as a place to begin re-positioning portfolios for a coming bear market.

2) We may not make 1123. If the market reverses here and breaks 1062 on the downside, that will make things a little more difficult but bear market just comes a little earlier in that case.

Below is an annotated chart showing critical levels:

Subscribers to The Portfolio Navigator will be getting portfolio changes this weekend (Sunday, June 13th) in the June issue that will get them ready for the carnage to come. If you want to stay out of trouble and keep your cash for better opportunities down the road, become a subscriber by clicking below:

Subscribe to The Portfolio Navigator Today !.

June 4th, 2010

Another harrowing day in the equity markets…. Again going to keep it short and sweet as I don’t want to dilute the message.

We got a double whack today when an Hungarian official admitted publicly the country’s finances are a mess and were probably manipulated by the prior administration. The implication was that they are in danger of defaulting. Who cares…Hungary ? Are you kidding me ? It’s of course the damn banks again as they are up to their swill limit in Hungarian swill (debt). These guys spent the last decade with their heads stuck in the pig trough and didn’t realize you need to come up for air ..

Anyway here is the point I want to make:

Where we are today: SP-500 Close: 1064.88

Critical Levels: We are in a dangerous band that stretches from 1056 to 1106. We have already violated mid term up-trends. If we decline any further, I believe this bull cycle is over.

The small horizontal line at 1134 represents a short term recovery target at which I would recommend taking risk off the table. If we don’t get there..then I hope you have some balance in your portfolio to start with.

Below is the annotated chart:

Critical Levels !!!!!!

5-28-2010

Starting with today’s post I’m going to keep future market commentary posts short and sweet. The reason is we are approaching a critical juncture and whether it happens now or a few months from now I don’t want anything to get lost in translation.

Where we are:                       SP-500 : 1089.41

Critical Next Steps:

1.  Consolidation of lows between 1067 and 1073

2.  Move higher to 1125 to 1145

If we the steps above come to pass then it would be an opportune time to reduce risk by reducing equity exposure. I believe the market may test 1050 to the downside. If that test fails….look out below…target 935.

A chart follows:

May 15th, 2010

I think the equity market is in a very precarious position at the moment. While we were made to believe that the global banking titans (Central Bankers) had cleared up the mess from 2 years ago that destroyed Lehman and Bear Stearns, the reality is (big surprise) that very little has changed. The world is awash in debt and under current economic circumstances, many countries will be forced into effective default because they will not be able to pay back what they borrowed. While I am still  hopeful (not optimistic) that the equity market can stabilize here, I think the combination of a global failure in leadership AND the apparent control of our stock exchanges by the same bankers that are in the middle of this filthy mess, leads me to believe otherwise.

In the short term, look for some stabilization at 1100 on the SP-500. If we get a substantive bounce back to the 1175 area…..take some risk off the table if you have not done so already.

Here is a chart as of Friday’s close.

May 7th, 2010

I’m going to keep this short and sweet today as The Portfolio Navigator newsletter will be out this Monday, May 10th. Subscribers will of course get a full and detailed analysis of recent market action coupled with new recommendations to take advantage of current opportunities.

The capital markets got bushwhacked this week. As we have been calling for a controlled correction for about a month now, we got it and more (unfortunately). The markets were skittish as the EU has been reticent to effectively deal with the sovereign debt crisis (Greek, Portugal, Spain,  Italy, etc). This set the stage for a decline which accelerated when apparently there was some computer or system issue (either purposeful or accidental) that caused the market to drop nearly 10% intra-day between 2:40 and 3 PM yesterday before recovering to finish with a 3.24% loss on the day. Whatever the cause or catalyst, we must reset our thinking based upon the action that occurred. Our previous support level was 1150, which has been breached. We now look at 1036 as ultimate support for any bullish scenario to continue. Hopefully we might find some immediate support around 1080 or so. After such a violent and unexpected series of events, we need to wait a few days to see where the market ends up. Below is a chart to ponder:

Support the Bull or Feed the Bear ?