Yesterday was not an uplifting day in the markets as an early rally faded, and the major indexes closed near their lows of the session. We have become almost accustomed to last hour rebounds just as we’ve seen last Friday, but no luck this time.
The Dow closed below the 10k level for the first time since November as fears about European debt problems persisted, despite the G-7 trying to put a positive spin on developments over the weekend.
These issues are not likely to disappear by next week so I expect more market uncertainly along with confusion leading to choppy activity. We may be going sideways with a slightly negative bias meaning that the potential of a trend line crossing to the downside is a real possibility.
Our trend tracking indexes (TTIs) confirm that we are within striking distance of moving back into bear market territory.
As of today, the domestic TTI hovers only +2.31% above its long-term trend line, while the international TTI is clearly knocking at the bearish door with a position of only +0.33% above its respective trend line.
If you follow along on your own, you too should have been stopped out of most international holdings. If not, be sure to review your sell stop trigger points.
Comments 6
Ulli,
I wonder if you would care to comment on something Jim Cramer said on his show last night. To paraphrase him, "If you are thinking about G7, credit default swaps and the PIGS, you are missing out on what really matters, companies that are doing so well that the are reporting big jumps in earnings and they can safely increase their dividends". I know your standard line is just to watch the market, have buy and sell points, etc. etc. I was just wondering if you believe people in general aren't overloaded with information of dubious value and missing what really matters-profits.
PS-All cash and bonds for two weeks now. I'm not complaining about being whipsawed anymore.
Ulli,
I like Just Chuck, have been out of the market since toward the end of January, 2010 and have such a relaxed feeling just waiting till the next signal from my timing service, which could possibly be a short signal instead of a buy depending on what developes. The news from Cramer or anyone else doesn't mean much to me as to me personally it is all just noise and the smart money has already acted on it before we have a chance anyway. I attended the "World Money Show" in Kissimmee, Fl. near Orlando this past week and sit thru lectures and heard lots of opinions, everyone has one and most were negative on the market for the near future. I met Hilary Kramer, whom I see as a quest on the Nightly Business Report from time to time and she gave me her book for free that she wrote and then autographed it. She is a very interesting lady and very smart.
T.M.
Do yourself a favor and stick to what Ulli advocates – objectively follow the trend signals and use trailing stops. Jim Cramer is what I call a "pump monkey", who bragged about (in his earliest book) front-running his TV comments by buying/selling appropriately before commenting on TV. Even if he weren't pumping something, at best he's one among God knows how many commentators expressing an opinion.
Stay objective rather than following some Guru's latest comments. You'll end up ahead of the game that way.
Trying to track who has what profits, how real they are, how sustainable, how long they will last, how well the company is valued in the market, and etc., etc., is way too time consuming and has too many ways it can go wrong when trying to put money on the information – for me anyway. I too think of it as noise that may be intriguing, but I'm not acting on it.
I understand the comments about J.C., and in no way do I follow him, or even watch him reguarly. I have even heard that his picks have a below average record.
However, I do admit to paying $18 for his latest book at BJs Warehouse, mostly because his books always have several dozen holds on them at my local library. I am intrigued by his theory (new?) that stocks with a high dividend yield have a type of floor or support under them that keeps them from falling too far. The thinking goes that if a $50 stock yielding 4% falls to $40, the yield jumps to 4.8% (if my math is right) and the stock with that yield creates more buyers because they can't pass up that yield. Comments?
I knew a guy who advised people to buy extremely high-dividend stocks. I asked him if he thought those dividends were sustainble. He assured me they were.
It wasn't long until those dividends were cut.