On The Verge Of A Global Market Meltdown

By: Stock Barometer | Tue, Aug 31, 2010
Print Email

8/31/2010 8:41:27 AM

No reproduction, retransmission, or other use of the information or images is authorized. Legitimate news media may quote representative passages, in context and with full attribution, for the purpose of reporting on our opinions. Media interested in speaking to Mr. DeVincentis should email jay@stockbarometer.com to arrange a call.

As the market tests recent lows, this test is bigger than anyone knows.

Chicago PMI

This is a huge week for economic reports, see the list below as there are many things coming up for the market to consider. Plus after the reports this morning, we have the Fed minutes coming out at 2. Always a fun one!

Here are this week's economic reports.

Week's Economic Calendar

On to the charts:

Daily Stock Barometer


Stock Barometer Analysis

The barometer remains in Buy Mode, but lows are getting tested. If these lows fail, it has major implications for the market.

As I've been saying, I am very cautious with the Fed buying bonds and manipulating markets as they are. This has me cautious during the repurchase period, which ends in mid September.

If the market holds these lows and reverses higher, it should move higher into 9/7 to 9/14 - before the larger move lower begins.

The conventional wisdom is that individual investors are running into bonds. That couldn't be further from the truth. The only one pumping up bonds here is the Fed. How can I say that? Well, for the past few years I've been studying money flow. Here's the money flow for bonds:

Taxable Bond Fund Money Flows

What you actually see is money flowing out of bonds JUST BEFORE bonds take off. So the next time they blame this on the individual investor, think again - it's not us, it's them.

The good news is that this will eventually result in a significant bounce in stocks. The question is a matter of timing.

The Stock Barometer is my proprietary market timing system. The direction, slope and level of the Stock Barometer determine our outlook. For example, if the barometer line is moving down, we are in Sell Mode. A Buy or Sell Signal is triggered when the indicator clearly changes direction. Trend and support can override the barometer signals.


Money Management & Stops

To trade this system, there are a few things you need to know and address to control your risk:

Accordingly;


Potential Cycle Reversal Dates

2010 Potential Reversal Dates: 1/19, 1/28, 3/2, 3/23, 4/7, 5/30, 6/10, 6/28, 7/10, 8/13, 9/7, 10/2, 10/27. We publish dates up to 2 months in advance.

If we do bottom here, the next likely top will be 9/7 to 9/14, followed by a larger move lower into 10/2.

My Additional timing work is based on numerous cycles and has resulted in the above potential reversal dates. These are not to be confused with the barometer signals or cycle times. However, due to their past accuracy I post the dates here.

2009 Published Reversal Dates: 1/20, 2/11, 3/7, 3/15, 4/8, 4/16, 4/27, 5/7, 6/8, 7/2, 7/17, 9/14, 10/10, 10/24, 11/12, 11/30, 12/9, 12/21, 12/29. 2008 Potential Reversal Dates: 12/31, 1/11, 2/1, 2/13, 3/6, 4/5, 4/22, 5/23, 6/6, 6/27, 7/13, 9/2, 10/3, 10/22, 11/10, 12/11. 2007 Potential Reversal Dates: 1/10, 1/14, 1/27, 1/31, 2/3, 2/17, 3/10, 3/24, 4/21, 5/6, 6/15, 8/29, 10/19, 11/29, 12/13, 12/23, 12/31, 1/11/08. 2006 potential reversal dates: 1/16, 1/30, 2/25, 3/19, 4/8, 5/8, 5/19, 6/6(20), 7/24, 8/20, 8/29, 9/15, 10/11, 11/28. 2005 Potential reversal dates: 12/27, 1/25, 2/16, 3/4, 3/14, 3/29, 4/5, 4/19, 5/2, 6/3, 6/10, 7/13, 7/28, 8/12, 8/30-31, 9/22, 10/4, 11/15, 11/20, 12/16.


Spread Indicators

Use the following spread/momentum indicators to assist in your trading of the QQQQ, GLD, USD, USO and TLT. They are tuned to deliver signals in line with the Stock Barometer and we use them only in determining our overall outlook for the market and for pinpointing market reversals. The level, direction, and position to the zero line are keys in these indicators. For example, direction determines mode and a buy signal 'above zero' is more bullish than a buy signal 'below zero'.

QQQQ Spread Indicator (NASDAQ:QQQQ)

QQQQ Buy/Sell Spread Momentum Chart

The QQQQ Spread Indicator will yield its own buy and sell signals that may be different from the Stock Barometer. It's meant to give us an idea of the next turn in the market.

Gold Spread Indicator (AMEX:GLD)

Gold Buy/Sell Spread Momentum Chart

Want to trade Gold? Use our signals with the Gold ETF AMEX:GLD. Gold gives us a general gage to the overall health of the US Economy and the markets.

US Dollar Index Spread Indicator (INDEX:DXY)

USD Buy/Sell Spread Momentum Chart

Want to trade the US Dollar? Use our signals with the Power Shares AMEX:UUP: US Dollar Index Bullish Fund and AMEX:UDN: US Dollar Index Bearish Fund.

Bonds Spread Indicator (AMEX:TLT)

Bond Spread Momentum Chart

Want to trade Bonds? Use our signals with Lehman?s 20 year ETF AMEX:TLT. The direction of bonds has an impact on the stock market. Normally, as bonds go down, stocks will go up and as bonds go up, stocks will go down.

OIL Spread Indicator (AMEX:USO)

Oil Buy/Sell Spread Momentum Chart

Want to trade OIL? Use our signals with AMEX:USO, the OIL ETF. We look at the price of oil as its level and direction has an impact on the stock market.


Supporting Secondary Indicator

Oil Leading Indicator Chart

We daily monitor hundreds of popular and proprietary technical indicators that break down market internals, sentiment and money flow to give us unique insight into the market. We feature at least one here each day in support of our current outlook.


Summary of Daily Outlook

We are in Buy Mode, looking for the markets to move higher into 9/7 to 9/14.

Overnight, the move lower in the Nikkei was strong and has influenced our markets by causing lower prices in overnight trade. The dollar is slightly weaker, bonds are bouncing - Gold is pulling back slightly and Oil is hanging on to its short term uptrend.

S&P futures are going to open near lows. The 1040 level has been getting tortured here and is the line in sand for the markets. This is the 5th day that the market will be testing this level, so if it can hold and advance, I expect a couple weeks of bullishness. If not, then look out below.

If you look at the oil Leading Indicator chart, you will see that there is a bounce on our horrizon. If that bounce plays out now or later, that's the big question. However, after the bounce, the longer term downtrend in oil will resume - I'll be playing that in DTO - feel free to play along...

The key to the strength scenario are the dollar and bonds. If the dollar can move lower and the strength in bonds can reverse, this market has energy to run.

There is a plethora of economic activity today and this week, so if you can join us in the chat room, we'll walk you through how the market will move on an intra day basis. Don't forget, access to our chat room is free with your subscription (and a subscription to any of our services) and I'm in there every day to answer your questions.

Here are the indices pivots for today's trade.

Indices Pivot Points

These levels can be important for both day traders and investors. How? Well, if you are going to take a stock position, it's always best to get the most efficient entry. Understanding that there are key pivots during the day and key levels that futures traders look for, will help you figure a better entry price (instead of just buying at the open). Combine these levels with the timing of the economic reports on the list at the top of the page, and you can really catch some nice swings in the market. More efficient trade entry increases your relative profit per trade.

I'll be in the chat room from 9:30 to 10:30 (EDT) this morning if you have any questions.

If you have any questions or comments, email me at Jay@stockbarometer.com.

Regards,

 


 

Stock Barometer

Author: Stock Barometer

www.stockbarometer.com

Stock Barometer is completely independent. We have never and will not ever accept compensation from any company whose stock we recommend.

Our goal is to make you money. We offer you the tools and information to do so and leave it to you, the individual investor, to apply them in the best way possible.

Important Disclosure: Futures, Options, Mutual Fund, ETF and Equity trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures, Options, Mutual Funds or Equities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this Web site. The past performance of any trading system or methodology is not necessarily indicative of future results.

Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.

Investment Research Group and all individuals affiliated with Investment Research Group assume no responsibilities for your trading and investment results.

Investment Research Group (IRG), as a publisher of a financial newsletter of general and regular circulation, cannot tender individual investment advice. Only a registered broker or investment adviser may advise you individually on the suitability and performance of your portfolio or specific investments.

In making any investment decision, you will rely solely on your own review and examination of the fact and records relating to such investments. Past performance of our recommendations is not an indication of future performance. The publisher shall have no liability of whatever nature in respect of any claims, damages, loss, or expense arising out of or in connection with the reliance by you on the contents of our Web site, any promotion, published material, alert, or update.

For a complete understanding of the risks associated with trading, see our Risk Disclosure.

Copyright © 2004-2014 Investment Research Group, Inc.
d/b/a www.Stockbarometer.com. All Rights Reserved.

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

SEARCH





TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/