Market Data

401kTimer.com Past Signals

Mar 15, 2006:

Increased US market exposure:
Equities: 50%  and Cash: 50%

Short to intermediate trends of the US market indices continue to improve.  Even though the recent strength in the market came at lower volumes than ideal, from a pure price trend point of view, the market continues to show strength.  This is even more remarkable in the face of all the negative news that keeps coming out.  Rising rates, slowing housing market, record trade deficit, maxed out consumers, and so on, are doing little to break the market price action.  While the market shows strength, bullishness among investment advisers is actually touching recent lows (see Investors Intelligence 'II' chart).  The II numbers (Bullish 42.3% and Bearish 33%) are at levels that have signaled short term bottoms in the past. 

Feb 23, 2006:

Increased US market exposure:
Equities: 30%  and Cash: 70%

Our timing system has generated a Buy signal on SPY.  As stated yesterday, we will continue to add to the US equity position as long as the technical and sentiment indicators remain as expected.  Even though we pay attention to the fundamental aspects of the economy and the stock market, we believe that the ultimate guide is the trend.  Using a trend following methodology, we hope to take or exit positions not at the absolute extremes but close to them.  Please see our About Us page for more details on our market timing philosophy.

Feb 22, 2006:

Increased US market exposure:
Equities: 20%  and Cash: 80%

Our timing system has generated a Buy signal on Dow Jones Industrial Average ETF (DIA).  Contrary to our expectation, the market showed amazing resiliency and has continued to go sideways rather than down!  During the last few weeks, bullish sentiment has actually reduced even while the market inched upward.  As can be seen at Schaffer's Research Website, Investors Intelligence bullish & bearish sentiment numbers are now at levels that signaled short-term bottoms in the past.  Based on the technical strength of the market indices, we are now adding to the equity exposure and will continue to accumulate as long as the trend continues.

Feb 8, 2006:

Reduced US market exposure:
Equities: 0%  and Cash: 100%

We are using today's market run up to completely exit the US stock market.  Our technical indicators have generated a sell signal on QQQQ.  Even the small cap index, Russel 2000 has moved to neutral territory.  Sentiment indicators continue to show high bullishness among the market participants -- this is a contrary indicator.  As indicated in a recent article by Marc Faber, the US Equity Mutual Fund cash position is currently very low (< 4%) -- this indicates that there may not be much buying power to push the market ahead in the near future.

Feb 3, 2006 (6:00 PM EST):

The US markets are stuck in neutral.  Their back and forth movement has been excruciatingly painful.  Without a noticeable trend, it is hard to make money on either long or short side.  As we mentioned earlier, among the major averages, only the Russell 2000 had been showing a semblance of a trend.  This week's sell-off has brought the possibility that there would be a break to the downside and if so, our predominantly cash position should serve us well.  For now, we continue with our 10% US equity position and core positions in Gold, Energy, and Emerging Market Funds.  For an excellent article on why the commodities bull would continue, please see http://www.zealllc.com/2006/21bull.htm.

Jan 24, 2006 (5:00 PM EST):

Recent market sell-off has brought the major averages except Russell 2000 back to the trading range.  The small cap Russel 2000 index escaped the sell off and continues to show strength.  This is a key divergence to watch.  If the small caps also break down, we may see a lot more selling.  On the other hand, if the other averages find support at these levels and start moving higher, it may be a good time to accumulate US equities.

Given the predominantly sideways movement of the market since the beginning of 2004, holding cash has been a good move for us. With the money market funds yielding over 4%, they seem to be a good alternative to the US market that has delivered similar returns but at a much higher risk.  However, given the hidden inflation due to the ever expanding money supply, it is a good idea to hold assets that can provide an inflation hedge.  A portion of our portfolio continues to be in energy funds (e.g., FSTEX), gold funds (e.g., GLD), and emerging market funds (e.g., ODMAX).

Jan 9, 2006 (5:00 PM EST):

Increased US market exposure:
Equities: 10%  and Cash: 90%

Regardless of what we believed to be a bearish sentimental and fundamental picture, the technical trend of the market has now changed.  Major market averages are now back into uptrend.  What is really interesting is that practically everything is going up -- Gold, Oil, European Markets, Emerging Markets, and so on.  This could be due to the continued increase in money supply.  Increasing money supply could be like a tidal wave that lifts everything in its path.  (see http://davidyu.com/weekday/2006/012006/01052006.htm). Amazingly, despite increasing money supply, the economy shows no risk of inflation according to the published indicators; and the talk is that Fed is done tightening and may even start reducing interest rates!  This may be too good to be true,  but the party continues ... for now.

As a result, we are cautiously adding to the US equity positions and we will continue to accumulate as long as the up trend remains.

Market Commentary & Timing Signals for previous months:

2005

December - November - October -  September - August