4/29/2007 12:13:33 PM
The market is hitting against resistance, but how long will it hold up?
Stock Barometer Analysis
The barometer remains in Buy Mode with the continued up trend in the Qs.
The Stock Barometer is my proprietary market timing system. The direction or slope of the Stock Barometer helps determine our outlook on the market's direction. 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. The black line is a 5 day moving average of the barometer and may be used to confirm changes in direction. All the information contained in this email is considered in making our calls.
Stock Barometer Cycle Time
Monday will be day 16 in our up cycle.
The Stock Barometer signals follow 5, 8, 13, 21 and sometimes 34 day Fibonacci cycles that balance with 'normal' market cycles. Knowing where you are in the current market cycle is important in deciding how long you expect to maintain a position.
Potential Cycle Reversal Dates
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. We publish these dates up to 2 months in advance.
It looks like the momentum might have finally left for a brief time, which may cause us sideways, if not slightly lower, into May 6th.
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 cycle times. However, due to their accuracy I post the dates here. These dates are used to influence how quickly we issue a buy or sell signal.
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 based on 'other' cycle work were 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.
The following work is based on my spread/momentum indicators for the QQQQ, SPY, XAU, GLD 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. I provide the spread indicator charts at least weekly and when they deliver reversal signals. 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 & SPY Spread Indicator
The QQQQ Spread Indicator remains in Buy Mode, above zero.
The SPY Spread Indicator moved into Sell Mode, above zero.
The QQQQ and SPY Spread Indicators will yield their own buy and sell signals and may be in Buy and Sell Mode that is different from the Stock Barometer.
Gold & Silver Sector Index Spread Indicator (Index:XAU.X)
The XAU and Gold Spread Indicators remain in Sell mode, below zero. The XAU jus crossed below zero.
The dollar Spread Indicator remains in Buy Mode, below zero.
I monitor Gold in the form of GLD and the XAU as well as the US Dollar Index as a general guide to the overall health of the US Economy and the markets, as well as to assist us in the entry of positions in our Gold Stock Service.
Bonds Spread Indicator (AMEX:TLT)
The Bond Spread Indicator remains in Sell Mode, above zero.
I include bonds in our studies and use Lehman’s 20 year ETF, as the direction of bonds can have an impact on the stock market. Normally, as bonds go down, stocks will go up and as bonds go up, stocks will go down.
Supporting Secondary Chart
I have over 100 technical indicators, some that are widely followed and some that are proprietary. These indicators break down the market internals, sentiment and money flow and give us unique insight into the market. I feature at least one here each day in support of our current outlook.
Summary of Daily Outlook
We remain in Buy Mode as the Qs are hitting against the resistance line at the 46.62 price level (the 161.8% Fibonacci projection from March 14 - also the start of the current up trend). I don't think we'll be able to break above that level, but I thought that for both of the 100% Fibonacci levels as well. Not that I'm being pessimistic, but I'm not being optimistic either. Leaving the emotion out of it and sticking to allowing the system to work with us, not against us.
For now, it would seem that we have hit a top - which doesn't mean that the market will move down. It just means that sideways action will likely continue before the bears can get the momentum to balance out the action caused by the bulls.
As always, if you have any questions or comments, feel free to email me at Jay@stockbarometer.com.