Earnings Season is upon us again and now we get to see if fundamentals trump the Bernanke taper. Ahhh... for the good 'ol days when we could look at the economy, forecasts, global socio-economic issues, ascending/descending triangles, support/resistance lines, etc., to make informed and educated decisions about trading and investment strategies. Now, we have to deal with life-changing exogenous events and hope our time-cycle forecasts can cut through the fog of politically motivated economic manipulations.
But, such is life for the long-term investor who trades one week at a time. This week looks to have more bricks than helium balloons (a nod to my Market Commentary today). All of the broad market cycle forecasts indicate this week has more downward pressure in play than upward pressure (see SPY chart, right). I am looking for a near-term market top, but I have a lot of inverse ETFs in play right now and am not looking to increase that exposure yet.
The first big company to report earnings (Alcoa) beat estimates for both earnings and revenue, but both numbers were well below the year-ago numbers. Hard to call that kind of a 'beat', much of a bellwether for the quarter. Many more earnings reports will come flooding out over the next few weeks. We may find that real economic news will prove to be reliable enough to make solid trading decisions.
Quote worth Quoting Again
A government big enough to give you everything you want, is big enough to take away everything you have... The democracy will cease to exist when you take away from those who are willing to work and give to those who would not... Thomas Jefferson
Here's my take...
I think the general trend intensity for the rest of the month is to the downside. As such, selling into strength is likely to be a better course of action. Gold could drift a bit lower, but now might be a good time to buy into weakness when it comes to the gold miners.
Silver could also drift along at current prices for few more weeks, but now might be a good time to start legging into small silver positions.
The trend intensity for oil is definitely to the upside for a month or more with as much as a 10% gain possible.
With the exception of the Utilities sector, all of the major market Sectors look weak to very weak for the next 30 days or more.
The Bull/Bear/Oscillator Report...
The Bull-Bear sentiment increased a bit this week in favor of the Bulls with a 2-to-1 Bullish indication. The Turner CrossOver Oscillator has become a bit more Bullish, as well. The trend of the red line (total number of new Bearish indicators) has flattened out and the black line (combination of Bearish and Bullish signals) has suspended its previous precipitous move lower. Even the S&P 500 has reversed course (for the moment) and is now trending slightly higher again. But... the fly in the ointment is the time-cycle trend probability forecasts. They are uniformly Bearish for the rest of this month. Earnings season for this quarter begins this week... bad news could put a significant damper on the Bullish sentiment. High risk plays are shorting and selling premium. But, it could be even riskier to be betting long and strong. Small and short seems to be the better course of action for this week.
Turner Bull/Bear Forecast
The Turner Bull/Bear Forecast™ provides a one-week directional forecast on the market, with [-5] being the most Bearish and a [+5] being the most Bullish. This is predicated on the ratio of number of new Buy Signals to the number of new Short Sell Signals for the previous week. The assumption is investors are becoming more Bullish the more lopsided the ratio becomes in favor of new Buy Signals; and, the converse is true; the more lopsided the ratio becomes in favor of new Short Sell Signals, the more Bearish investor sentiment.
The Turner CrossOver Oscillator™ provides an indication of the over-bought or over-sold condition of the market. The red line (New Short Sell Signals) shows a technical direction and strength (or lack thereof) of investors to push stock prices lower, triggering new Short Sell Signals. The higher the Short Sell Signals line, the more Bearish the market. The black line (Composite of both Short Sell and Long Buy Signals) is the combined impact of both the new Short Sell Signals and the new Buy Signals and is an indication of the degree of oversold or overbought condition of the market. Buying opportunities exist when the Composite of Signals line is moving higher. The higher this line moves, the more Bullish the market. Market bottoms are represented by a change in direction of the Composite of Signals line from moving lower to moving higher. Market corrections become much more likely when the Composite of Signals line crosses the Short Sell Signals line from below the Short Sell Signals line to above the Short Sell Signals line. The market is represented by the green shaded area.
I just listened to a Ronald Reagan speech against socialized medicine. It is a fascinating speech that was recorded when Reagan was a private citizen. The reason I bring this up is I was thinking about the way the White House decided they could delay implementing a major portion of Obama-care and was doing a little research on the potential economic impact this could have on the economy in the not-too-distant future. I ran across this speech, which I don't recall that I ever heard before. As an aside, I find it fascinating that our government can just choose which laws to enforce and which ones can just be "delayed"...
Even if you're not a Ronald Reagan fan, the history that he brings into the speech is an interesting juxtaposition to what is happening in our country now. I was particularly fascinated with how he dealt with the emotion of providing or not providing free healthcare to those who cannot afford it. It's worth a listen. He is surely missed by many; of which I am one.
Have a great week in the market!
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