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Market Timing

Tuesday, April 07 2015

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Here we go again...  "Bad Economic News = Good Market News"
Getting kind of old, isn't it?  But, at least, it is very predictable.

Again, with the terrible new jobs report, the market reacted to what it thought Aunt Janet would think, instead of the ramifications of the bad news on our economy.  This can't go on forever, but it can as long as the Fed supports it.  Remember, the Fat Kats like the Fed's free money (actually our money); and they will do whatever they can to keep it rolling, like supporting the up market up to make Yellen look good and to keep her in line.

The good news for us is that the SPY bounced off of its 100-day EMA to the upside again today.  See the orange ellipses in the graph below.  This is the 3rd time this has happened in the last 3 weeks, but this will not continue to go on much longer.

If the SPY is going to break out of its very long "No-Man's-Land" pattern at 209, and challenge its all time high at 212.2 again, it needs to keeps going up from here.  A fail here would not be good.  I think that it will, but I trust MIPS' guidance much more than my own.  So, we wait again.  Stay tuned...

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The only good news that I could muster up out of the last 2-3 weeks of "market noise" was that:
   1) the Fed is still "dovish" with regard to raising interest rates,
   2) the Fed still "rules",
   3) relatively low volume says that it was not the Fat Kats causing last week's minor sell-off, 
   4) the SPY closed up above its 100-day EMA in the last two "attacks", and
   5) this sideways trading pattern is getting "long in the tooth".

From this, one could expect a market bounce-back going forward, if not an SPY run-up to above $209.  But, of course, it's anybody's guess from here, so let's simply follow MIPS' advice.  Stay tuned !!!

BTW, these "sideways trading patterns" do not last forever. Many times, they break out in the same direction that they went in (up, in this case).  And, the longer the time in a sideways pattern, the bigger the market move after the breakout.


Posted by: Dr. G. Paul Distefano AT 02:11 am   |  Permalink   |  Email

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