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01.27.12
Sky Rocketing!

From its most recent major swing low in November, the S&P 500 has had a nine-week rally, including the last four weeks in a row. It is time for a pullback, but the market remains stubbornly bullish. We are also concerned that the last several weeks have seen flat or decreasing volume, which is bearish when prices are moving up.

In the last eight weeks the Intermediate Model has taken off like a rocket! 

One week performance +3.90%

Four week performance +28.74%

Nine week performance +38.13%

On average the model is down about 40 from the 52-week high, making this an excellent time to buy regardless of the recent gains.  And in case you’re wondering the model is up an average of 68% from the 52 week low. 

This is looking like a good time to keep an eye open for dips and making buys when they arrive!

01.14.12
Mild Good News

There are signs of stabilization in Europe this week, as highly successful debt auctions in Italy and Spain reassured investors and European Bank President Mario Draghi said the bank has averted a serious credit shortage and there are signs the economy is stabilizing. The European Central Bank continued buying an undisclosed amount of bonds to prop up the market. The negative side to all this is that in the face of even mild good news, policy makers may resist cutting interest rates further for now, and as we’ve seen over and over in the U.S., cutting rates is the best reassurance to investors of an active government that is willing to go to great lengths to avoid recession. The Bank of England missed one of these opportunities today when it kept its benchmark rate unchanged at 0.5%.  

01.07.12
Talking 'bout the Model

Last week’s Short-Term Model picks reflected a bet on silver (AGQ), global blue chips (DGT), China (HAO), Real Estate (REM) and Russia (RSX).  They were all down sharply as we bought them, in accordance with our contrarian model.  I said in that issue that it was quite difficult for me to make the selections, but all that effort paid off. Every one of these picks was up handsomely for the week.

Taking prices from the Thursday close, which we always use for tracking the performance of the picks we send out during the day on Thursday, the Model was up over 2% by late morning the very next day, Friday! Because that is a great gain for a one-week hold, we sent out a sell recommendation. But there was a lot more where that came from.  By the close on Tuesday, the next trading day after the holiday, the model was up just over 6% for the week, so if you missed the sell Friday morning, you were one happy pig the next day!

12.31.11
Adieu Armageddon

 

Last week we recommended buying the dips in Europe and Emerging Markets after the ECB announced its $641 billion Long-Term Refinancing Operation (LTRO). The ECB is lending a helping hand this holiday season to more than 500 European banks, a necessary intervention given the lack of institutional interest in subsidizing bank bonds.

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05.26.10
Dow Trading Zone

The Dow hit 9774 intraday on Tuesday, briefly undercutting the May 6 low, and then proceeded to rally for the rest of the day. This is the type of action we expect when the market is trying to establish the lower support level of a trading range.  We are looking for the market to adopt a trading range, rather than fall apart. The action of the last few days appears to confirm our forecast that 9800-10,000 is the lower support zone. Presumably, 11,000-11,250 is the upper resistance zone.
 

04.07.10
China Slowdown
The Chairman of China’s second largest bank does not want to see GDP growth in China surpass 9.5%, as he thinks it would represent a poor allocation of capital. These are encouraging words, suggesting that China’s planners want to create sustainable growth, not growth at any price.
02.24.10
Consumer Confidence

Consumer confidence numbers came in much worse than expected, hitting a 10 month low. That is a sobering figure considering that the stock market was near its lows 10 months ago. In other words, the 60% rise in the equity market is not boosting confidence on Main Street.

 

Of course, anyone tuned-in to the conditions on Main Street could have forecast the disappointment for the rank and file. The grassroots U.S. economy is flat on the mat due to a tight business and personal credit environment, contraction in the public sector and unmitigated unemployment/underemployment. U.S. bank lending fell 7.5% last year, the largest yearly decline since the 1940s.

02.24.10
Consumer Confidence

Consumer confidence numbers came in much worse than expected, hitting a 10 month low. That is a sobering figure considering that the stock market was near its lows 10 months ago. In other words, the 60% rise in the equity market is not boosting confidence on Main Street.