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Market Timing

Thursday, July 16 2015

I received an email today from a loyal MIPS member and his opening line was "Up, Up, and Away!!!".  As Robert explained, he is thinking (and hoping) that the acceptance of the aGreekment by the Greek Parliament will clear the slate for worldwide markets to go up from here.  I am in the same boat, but at this point, I would say "Up, Up, and Away???"

As I told Bob, the 3 "Things" controlling the market that I mentioned in one of my recent blogs (see below), have all dissipated.
  1. The Greeks caved in,
  2. China "fixed" its stock market bubble problem by "outlawing" trading, and
  3. Aunt Yellen repeats that there will be rate hikes later, but they will be small and gradual (thank
      you, Aunt Yellen).

I will remain hesitant until the recent rise in the SPY "plays out".  In the graph below, you will see that the SPY has risen from $204 on 7/7/15 to $212 on 7/16/15.  That's about +4% in 7 trading days.  And, the SPY moved into what we call "No Man's Land" today. 

The real challenge lies at the all-time high resistance level in the SPY at $213.8 (from two months ago on 5/20/15).  We are now less than 1% below that level, but would need to break above it with some degree of "force" (like maybe a big "gap" up), and stay above it for a while. 

If that happens we can expect some significant gains; but if not, the outcome will most likely NOT be pretty.
Either way, MIPS will "map out" what we should do,  so we should make money either way.
STAY TUNED !!!






==================


<<< Previous Blog >>>
            7/2/2015



MIPS Members:

Here we go again.  The markets are trading back and forth, with no clear direction. That is because there IS no direction, other than sideways.  And, as we have said many times before, sideways or flat markets result from uncertainty amongst everyone in the market.  The volatility you see in flat market comes from the floor traders that can trade with up to $200 billion in a very short time period.  Their time horizon is in minutes/hours, NOT days/months like us.  The floor traders can trade long in the morning and short a few minutes/hours later, often more than one round-trip per day. The ignorant little "day traders" usually get whipsawed trying to trade in these types of markets.

The uncertainty in the recent past has been about "nothing".  The market has been mainly focused on things going on in Greece, China, and the Fed.  The events surrounding all of the above are all very important, but most likely have very little long-term ramifications for the USA. 

Greece
There are really only two choices in the current Greek situation, and neither will greatly effect the USA.  Why? Because, the GDP for Greece is less than that of most states in the USA and even less than some of our larger cities. Where Greece can affect the USA/Europe/the World is if it causes great pain in the Euro Zone.  I don't see that happening; but, of course, it could.

China
After a stock market "bubble" of almost unbelievable growth (kind of like our 1990-2000 tech bubble), the China market fell over 25-35% in the last 3 months.  About 85% of the stocks on the China stock exchange are owned by the "little guys", who have been coming in to the Chinese markets in record numbers (mostly on margin).  Of course, that is a recipe for disaster. The Chinese gov't. handled it this way - they made it against the law for big guys to trade for several months.  Simple in a communist state, but not so here.  Anyway, short-term this stopped the slide and their markets have even bounced back almost to their "pre-crash" levels (no harm really done outside of China).

The Fed
The Fed has been awfully quiet and timid about raising interest rates even just a little.  Aunt Yellen, the STOCK MARKET HERO, is not going to do anything to upset our markets, so you can rest easy here (at least for 2015).  Of course, the press will probably scream "Disaster" when the Fed first raises rates, even if only by 1/4 of 1%; but it should not get much attention from investors or cause any noticeable pain.

Here is where we stand now:
So there you have it... nothing out there now to upset our markets, but the big guys and the press can make a big issue out of any news (no mater how important or unimportant), and put the market on a new trend of their choosing (up or down).

In the graph below, you will see that the market dropped about 4% in the ten trading days between 6/8/15 and 7/7/15, and has bounced back some since then.  The market movement in the next few days will depend on what happens in Greece, and then it will go on from there on the next wave of useless news. 

But, we still need to know how to trade this market; and for that we will depend upon the MIPS signals.

Current MIPS Signals    (MIPS Members only)
MIPS 1,2,34 Signals...  http://www.mipstiming.com/current_signals
MIPS/Nitro Signals.....  http://www.mipstiming.com/current_nitro_


 

Posted by: Dr. G. Paul Distefano AT 09:37 pm   |  Permalink   |  Email
Monday, July 13 2015

Re: Announcement from the European "Liars" this morning...

Bull S... Deal
Agreement finally reached in Greek financial crisis
After months of acrimony, European leaders announced a breakthrough early Monday, avoiding an exit from the euro and a global financial crisis.

Reality
This Agreekment is not a final deal.  It is an "agreement" just like their last 100 agreements; that is, "to Agree to try to Agree again".  For the deal to actually happen, the Greeks must start doing their part by Wednesday of this week in order to "start formal negotiations".  What the heck was the "deal" that they all announced this morning, an "informal agreement"?  And, after that, any "formal" deal will have to be passed by the Greek parliament and many other Eurozone members. What kind of a "deal" did they announce today ?

Needless to say, the Greek public is very disappointed with this current deal, as the terms are much worse for Greece than the deal the public voted "IXO" against in their recent referendum. This could have a VERY negative impact on the Greek Parliament's vote to accept such terms, so this is not the end.

The "Greek deal" is still up in the air.

Posted by: Dr. G. Paul Distefano AT 09:42 pm   |  Permalink   |  Email
Sunday, July 12 2015

Here we go again.  The markets are trading back and forth, with no clear direction. That is because there IS no direction, other than sideways.  And, as we have said many times before, sideways or flat markets result from uncertainty amongst everyone in the market.  The volatility you see in flat markets comes from the floor traders that can trade with up to $200 billion in a very short time period.  Their time horizon is in minutes/hours, NOT days/months like us.  The floor traders can trade long in the morning and short a few minutes/hours later, often more than one round-trip per day. The ignorant little "day traders" usually get whipsawed trying to trade in these types of markets.

The uncertainty in the recent past has been about "nothing".  The market has been mainly focused on things going on in Greece, China, and the Fed.  The events surrounding all of the above are all very important, but most likely have very little long-term ramifications for the USA. 

Greece
There are really only two choices in the current Greek situation, and neither will greatly effect the USA.  Why? Because, the GDP for Greece is less than that of most states in the USA and even less than some of our larger cities. Where Greece can affect the USA/Europe/the World is if it causes great pain in the Euro Zone.  I don't see that happening; but, of course, it could.

China
After a stock market "bubble" of almost unbelievable growth (kind of like our 1990-2000 tech bubble), the China market fell over 25-35% in the last 3 months.  About 85% of the stocks on the China stock exchange are owned by the "little guys", who have been coming in to the Chinese markets in record numbers (mostly on margin).  Of course, that is a recipe for disaster. The Chinese gov't handled it this way - they made it against the law for big guys to trade for several months.  Simple in a communist state, but not so here.  Anyway, short-term this stopped the slide and their markets have even bounced back almost to their "pre-crash" levels (no harm really done outside of China).

The Fed
The Fed has been awfully quiet and timid about raising interest rates even just a little.  Aunt Yellen, the STOCK MARKET HERO, is not going to do anything to upset our markets, so you can rest easy here (at least for 2015).  Of course, the press will probably scream "Disaster" when the Fed first raises rates, even if only by 1/4 of 1%; but it should not get much attention from investors or cause any noticeable pain.

Here is where we stand now:
So there you have it... nothing out there now to upset our markets, but the big guys and the press can make a big issue out of any news (no mater how important or unimportant), and put the market on a new trend of their choosing (up or down).

In the graph below, you will see that the market dropped about 4% in the ten trading days between 6/8/15 and 7/7/15, and has bounced back some since then.  The market movement in the next few days will depend on what happens in Greece, and then it will go on from there on the next wave of useless news. 

But, we still need to know how to trade this market; and for that we will depend upon the MIPS signals.

Current MIPS Signals    (MIPS Members only)
MIPS 1,2,34 Signals...  http://www.mipstiming.com/current_signals
MIPS/Nitro Signals.....  http://www.mipstiming.com/current_nitro_


 

Posted by: Dr. G. Paul Distefano AT 09:30 pm   |  Permalink   |  Email
Sunday, July 05 2015

In case you have not heard by now, the results today (Sunday) of the Greek vote for the Refurendum below ended with a large majority (61%) of the Greek citizens voting "NO" !!!

Refurendum:
   1) YES, accept more austerity conditions laid out by the European lenders (higher
       taxes, pension cuts, etc.) in exchange for extended credit, or
   2) NO, reject the offer (and hopefully negotiate a better deal from its lenders).

Their socialist Prime Minister, Alexis Tsipras, strongly urged the Greek people to vote "NO"; thus (in his mind only) putting him in a better position to negotiate a better deal with his European creditors.  Most likely, the outcome will be just the opposite.

Needless to say, the rest of the world thinks this "NO" vote could lead to a disaster for Greece [financial ruin, exit from the Euro (Grexit), etc.].  If all of this mess affects Greece only, the worldwide ramifications may not be too bad; but if this type of behavior spreads to the other PIIGS countries (Portugal, Italy, Ireland, and Spain), it could lead to a worldwide crisis and stock market crashes throughout the rest of the world.

To this end, the e-mini futures are down tonight (Dow -200; SP500 -25, Nasdaq -50).  

And, the MIPS2, MIPS3, MIPS4, models are all "SHORT" as of the EOD on 6/29/2015 !

Posted by: Dr. G. Paul Distefano AT 10:48 pm   |  Permalink   |  Email
Thursday, July 02 2015

This is a re-visit of my blog of Mar 15, 2015
- see updated graph below !!!
- are we getting close to the end ?
- is Grexit going to be the final catalyst "IF" it defaults ?
- do we need to get out now ?
Wait for MIPS to tell us what to do (stay tuned) !!!

================================================
 

 
C O N F ID E N T I A L

From Paul D.
- this is simply my opinion / observation and it has nothing to do with our MIPS models...

Expect a market crash before August 2015 ???
In the graph below, you will see that it took 11-12 months of sideways trading for the market (the SPY) to "top out" in both 1999-2000 and in 2007-2008. 

My opinion is that this is roughly how long it takes for the big guys (Goldman Sachs, Morgan Stanley, UBS, etc) to liquidate the holdings that they want to dump at the top (call me and I will explain this). For example, it would take months for a big guy to sell 100 million shares each of GE and Walmart and Merck, etc without driving their prices through the floor. And, at the top, they hold 1,000's of positions just like that.

In the graph below, you can see that in 2014-2015 the market has basically traded sideways for 6 full months through Feb 2015, or 7 months counting March 2015 [it has been10 months now through June 2015; and the SPY is sitting on, or breaking through, the long-term trendline].  So, after 7 months in this sideways trading pattern, if the market stays in this relatively flat range for a few more months (highly likely), I believe that a Big Crash will come in July or August 2015 (most likely July 2015).  If not, we could see the S&P 500 at 2500 or higher before the big crash finally comes.  [New - The end of July 2015 will mark the 11th month this sideways market has been in effect.  Previous crashes happened after "topping" for 11-12 months !!! ]

This definitely does not mean that the MIPS models see the market the same way that I do (thankfully), so let's be patient while the market makes up its mind and MIPS follows it.   Stay tuned ...
Updated on 7/01/2015

Posted by: Dr. G. Paul Distefano AT 01:51 am   |  Permalink   |  Email

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