Can be found here: http://chart.ly/9vbd79k
Michael tiny Saul
tinymjs at gmail dot com
www.twitter.com/tinyreal
Sunday, January 30, 2011
APKT
Dark Cloud Cover right at the daily 50 day moving average
Michael tiny Saul
tinymjs at gmail dot com
GS
Stealth Bear Flag as it is still above it's 200 day moving average. Looks like that would be the first target if we get continuation to the downside.
Michael tiny Saul
tinymjs at gmail dot com
SFL
Friday trade formed a doji right near the 200 day MA. Very oversold in an uptrend.
Michael tiny Saul
tinymjs at gmail dot com
Saturday, January 29, 2011
Some more trendlines
After re-reading my last post a few times, I decided that the daily trendline I posted was not a good enough measure of the trend. Above are two more trendlines, this time from a weekly perspective.
Michael tiny Saul
tinymjs at gmail dot com
S&P 500 Daily
Multi-month uptrend line was shredded in Friday's trade, but does it mean a reversal is here? Not necessarily.
A trendline break signals the end of the current trend. From there, the trend may do one of three things: 1) resume; 2) reverse; 3) consolidate.
Usually, after we print a wide range bar like Friday's, we see some consolidation. For Monday, I will be watching for a morning range to form, looking to fade pushes either way early on. I would prefer a gap up to short back down to the lows, but a gap down needs to be watched for a long side entry as well.
After the first few hours are in, I will be watching for a later day break. The volume was big on Friday, ad this looks like the start of the correction I have been watching for over the past few weeks.
Michael tiny Saul
tinymjs at gmail dot com
An article from Paul Schatz
Paul is a top notch analyst, money manager and friend. All opinions expressed in his articles are his, and do not reflect any recommendations to buy or sell securities, options, currencies, futures or any other financial instrument not specifically mentioned.
Gold Ready for Another Run
As I mentioned in my 2011 forecast, after two fantastic years for gold, I expect 2011to be more of a digestion or consolidation year with a wide and very volatile trading range. I believe we will see $1500 at some point as well as a $100 down day during the year. When all is said and done, I think gold is going to finish 2011 with modest gains, best case scenario.
Several people have questioned why I don’t think gold has seen its bull market peak yet. As I mentioned in last week’s edition, commodities tend to see inverted “V” tops and long rounded bottoms. That’s exactly the opposite of the behavior we usually see in stocks. As a particular commodity gains steam and acceptance, it usually melts up in parabolic fashion.
The chart below shows where gold is today. IF the rally was terminal, it would have blown off to the upside (straight up) and then begin to go straight down. We’re not seeing that right now. It’s a sideways (trading range) that should eventually resolve itself to the upside.
On the far right of the chart below and the next one, you can see the two possible scenarios for gold in the short-term. I think the shiny metal either continues lower into February towards $1300 and then rallies. Or, we see a quick rally now and then another selloff next month before rallying. Either way, I believe the ultimate resolution to this range is a move back to the upper end.
I want to go back to offer examples of how gold behaves near peaks as I discussed above. Before the last rally you can see in the chart above, gold looked a lot like it does right now.
And before that, below, you can see another example of how digestion and consolidation led to another major rally.
Don’t get me wrong. This is not infallible, but it does have some solid support behind it. The hardest part is judging what’s going on in real time, not hindsight. Many times, the initial top looks like an inverted “V”, but never gets going to the downside or stops going down and begins to enter the digestion.
Case in point on the chart above was the peak you see on the far left side that has the makings of an inverted “V”. I remember turning negative on gold around $990 as I thought a major top was forming. Several months later after the bears tried and tried to make headway without success, the pattern certainly had changed to that of digestion and consolidation and I slowly went to neutral and then positive.
FYI, I will be on CNBC's The Call on February 1 at 11:05am.
Feel free to email me with any questions or comments at Paul@investfortomorrow.com or follow me on Facebook at www.facebook.com/heritagecapital and on Twitter at Paul_Schatz.
Until next time…
Paul Schatz
Heritage Capital LLC
http://www.InvestForTomorrow.com
http://RetirementPlanningConnecticut.com/
Gold Ready for Another Run
As I mentioned in my 2011 forecast, after two fantastic years for gold, I expect 2011to be more of a digestion or consolidation year with a wide and very volatile trading range. I believe we will see $1500 at some point as well as a $100 down day during the year. When all is said and done, I think gold is going to finish 2011 with modest gains, best case scenario.
Several people have questioned why I don’t think gold has seen its bull market peak yet. As I mentioned in last week’s edition, commodities tend to see inverted “V” tops and long rounded bottoms. That’s exactly the opposite of the behavior we usually see in stocks. As a particular commodity gains steam and acceptance, it usually melts up in parabolic fashion.
The chart below shows where gold is today. IF the rally was terminal, it would have blown off to the upside (straight up) and then begin to go straight down. We’re not seeing that right now. It’s a sideways (trading range) that should eventually resolve itself to the upside.
On the far right of the chart below and the next one, you can see the two possible scenarios for gold in the short-term. I think the shiny metal either continues lower into February towards $1300 and then rallies. Or, we see a quick rally now and then another selloff next month before rallying. Either way, I believe the ultimate resolution to this range is a move back to the upper end.
I want to go back to offer examples of how gold behaves near peaks as I discussed above. Before the last rally you can see in the chart above, gold looked a lot like it does right now.
And before that, below, you can see another example of how digestion and consolidation led to another major rally.
Don’t get me wrong. This is not infallible, but it does have some solid support behind it. The hardest part is judging what’s going on in real time, not hindsight. Many times, the initial top looks like an inverted “V”, but never gets going to the downside or stops going down and begins to enter the digestion.
Case in point on the chart above was the peak you see on the far left side that has the makings of an inverted “V”. I remember turning negative on gold around $990 as I thought a major top was forming. Several months later after the bears tried and tried to make headway without success, the pattern certainly had changed to that of digestion and consolidation and I slowly went to neutral and then positive.
FYI, I will be on CNBC's The Call on February 1 at 11:05am.
Feel free to email me with any questions or comments at Paul@investfortomorrow.com or follow me on Facebook at www.facebook.com/heritagecapital and on Twitter at Paul_Schatz.
Until next time…
Paul Schatz
Heritage Capital LLC
http://www.InvestForTomorrow.com
http://RetirementPlanningConnecticut.com/
Friday, January 28, 2011
GOOG gets it's target
Trades to just below 600
PROTECT PROFITS!
Michael tiny Saul
tinymjs at gmail dot com
PROTECT PROFITS!
Michael tiny Saul
tinymjs at gmail dot com
GOOG
Approaching first target of 600. Protect profits if short!
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
Thursday, January 27, 2011
Wednesday, January 26, 2011
S&P video for Thursday, January 27th
http://chart.ly/psaajqw
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
GOOG
A stealth Bear flag here. 600 would be the first target.
Michael tiny Saul
tinymjs at gmail dot com
AIG
Doji forms at the 200 day moving average on Wednesday. watching for a bounce, but the momentum is clearly to the downside, so I'm not looking to overstay my welcome
Michael tiny Saul
tinymjs at gmail dot com
FOMC announcement Wednesday, January 26th
As we can see, there was not much volatlity related to the FOMC announcement today. All in all, from the time of annoucnement until end of day, the S&P Futures stayed in a 5.50 point range.
Michael tiny Saul
tinymjs at gmail dot com
Tuesday, January 25, 2011
S&P video for Wednesday, January 26th
http://chart.ly/beia6wo
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
Monday, January 24, 2011
S&P video for Tuesday, January 25th
http://chart.ly/6f3osyc
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
DPZ
SAC Capital disclosed a 5% Stake in Domino's Pizza. I had some last night and boy was it the grossest pizza I've ever had.
Full Disclosure: I'm nauseous just thinking about it
Michael tiny Saul
tinymjs at gmail dot com
An article from Paul Schatz
Paul is a top notch analyst, money manager and friend. All opinions expressed in his articles are his, and do not reflect any recommendations to buy or sell securities, options, currencies, futures or any other financial instrument not specifically mentioned.
There are few people on Wall Street who have truly stood the test of time in the public eye, especially with ability, confidence and independence to be bearish when the evidence pointed that way. And while there is no shortage of reasons to be critical of Merrill Lynch, retired chief strategist Bob Farrell is not among them.
Bob used to be a regular on the financial news circuit, gaining tremendous popularity on Louis Rukeyser's Wall Street Week in the 1970s and 1980s. He always seemed very genuine, credible and appropriately skeptical.
While searching online for Bob's retirement activities in hopes of inviting him to speak at a conference, I came across an old list that MarketWatch shared a few years ago.
1. Markets tend to return to the mean over time
When stocks go too far in one direction, they come back. Euphoria and pessimism can cloud people's heads. It's easy to get caught up in the heat of the moment and lose perspective.
2. Excesses in one direction will lead to an excess in the opposite direction
Think of the market baseline as attached to a rubber string. Any action too far in one direction not only brings you back to the baseline, but leads to an overshoot in the opposite direction.
3. There are no new eras - excesses are never permanent
Whatever the latest hot sector is, it eventually overheats, mean reverts, and then overshoots.
As the fever builds, a chorus of "this time it's different" will be heard, even if those exact words are never used. And of course, it - human nature - is never different.
4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways
Regardless of how hot a sector is, don't expect a plateau to work off the excesses. Profits are locked in by selling, and that invariably leads to a significant correction eventually.
5. The public buys the most at the top and the least at the bottom
That's why contrarian-minded investors can make good money if they follow the sentiment indicators and have good timing. Watch Investors Intelligence (measuring the mood of more than 100 investment newsletter writers) and the American Association of Individual Investors Survey.
6. Fear and greed are stronger than long-term resolve
Investors can be their own worst enemy, particularly when emotions take hold. Gains "make us exuberant; they enhance well-being and promote optimism", says Santa Clara University finance professor Meir Statman. His studies of investor behavior show that "Losses bring sadness, disgust, fear, regret. Fear increases the sense of risk and some react by shunning stocks."
7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names
This is why breadth and volume are so important. Think of it as strength in numbers. Broad momentum is hard to stop, Farrell observes. Watch for when momentum channels into a small number of stocks.
8. Bear markets have three stages - sharp down, reflexive rebound and a drawn-out fundamental downtrend
9. When all the experts and forecasts agree - something else is going to happen
As Sam Stovall, the S&P investment strategist, puts it: "If everybody's optimistic, who is left to buy? If everybody's pessimistic, who's left to sell?"
Going against the herd as Farrell repeatedly suggests can be very profitable, especially for patient buyers who raise cash from frothy markets and reinvest it when sentiment is darkest.
10. Bull markets are more fun than bear markets
Especially if you are long only or mandated to be fully invested. Those with more flexible charters might squeak out a smile or two here and there.
To Your Financial Success,
Paul Schatz
President
Heritage Capital LLC
There are few people on Wall Street who have truly stood the test of time in the public eye, especially with ability, confidence and independence to be bearish when the evidence pointed that way. And while there is no shortage of reasons to be critical of Merrill Lynch, retired chief strategist Bob Farrell is not among them.
Bob used to be a regular on the financial news circuit, gaining tremendous popularity on Louis Rukeyser's Wall Street Week in the 1970s and 1980s. He always seemed very genuine, credible and appropriately skeptical.
While searching online for Bob's retirement activities in hopes of inviting him to speak at a conference, I came across an old list that MarketWatch shared a few years ago.
1. Markets tend to return to the mean over time
When stocks go too far in one direction, they come back. Euphoria and pessimism can cloud people's heads. It's easy to get caught up in the heat of the moment and lose perspective.
2. Excesses in one direction will lead to an excess in the opposite direction
Think of the market baseline as attached to a rubber string. Any action too far in one direction not only brings you back to the baseline, but leads to an overshoot in the opposite direction.
3. There are no new eras - excesses are never permanent
Whatever the latest hot sector is, it eventually overheats, mean reverts, and then overshoots.
As the fever builds, a chorus of "this time it's different" will be heard, even if those exact words are never used. And of course, it - human nature - is never different.
4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways
Regardless of how hot a sector is, don't expect a plateau to work off the excesses. Profits are locked in by selling, and that invariably leads to a significant correction eventually.
5. The public buys the most at the top and the least at the bottom
That's why contrarian-minded investors can make good money if they follow the sentiment indicators and have good timing. Watch Investors Intelligence (measuring the mood of more than 100 investment newsletter writers) and the American Association of Individual Investors Survey.
6. Fear and greed are stronger than long-term resolve
Investors can be their own worst enemy, particularly when emotions take hold. Gains "make us exuberant; they enhance well-being and promote optimism", says Santa Clara University finance professor Meir Statman. His studies of investor behavior show that "Losses bring sadness, disgust, fear, regret. Fear increases the sense of risk and some react by shunning stocks."
7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names
This is why breadth and volume are so important. Think of it as strength in numbers. Broad momentum is hard to stop, Farrell observes. Watch for when momentum channels into a small number of stocks.
8. Bear markets have three stages - sharp down, reflexive rebound and a drawn-out fundamental downtrend
9. When all the experts and forecasts agree - something else is going to happen
As Sam Stovall, the S&P investment strategist, puts it: "If everybody's optimistic, who is left to buy? If everybody's pessimistic, who's left to sell?"
Going against the herd as Farrell repeatedly suggests can be very profitable, especially for patient buyers who raise cash from frothy markets and reinvest it when sentiment is darkest.
10. Bull markets are more fun than bear markets
Especially if you are long only or mandated to be fully invested. Those with more flexible charters might squeak out a smile or two here and there.
To Your Financial Success,
Paul Schatz
President
Heritage Capital LLC
Sunday, January 23, 2011
Watchlist
Below is a short (pun intended) list of stocks that have been underperforming the market this year. In my opinion, these are good candidates for further downside AFTER continuation patterns form. No ETFs are on this list.
CREE
AIG
CSTR
PAAS
JNY
STRA
IGTE
XRTX
RGLD
NETC
CPLA
TSLA
NKTR
HCBK
Some of these I have analyzed the charts on (and they have been posted), and others I’ll get to when they set up.
Michael tiny Saul
Tinymjs at gmail dot com
CREE
AIG
CSTR
PAAS
JNY
STRA
IGTE
XRTX
RGLD
NETC
CPLA
TSLA
NKTR
HCBK
Some of these I have analyzed the charts on (and they have been posted), and others I’ll get to when they set up.
Michael tiny Saul
Tinymjs at gmail dot com
Bear flag
Sitting just below its 200 day moving average. First target would be a break of 14.50
Michael tiny Saul
tinymjs at gmail dot com
Saturday, January 22, 2011
CSTR
One of the weaker names this year. May need to digest a little more, but a quick continuation move is not out of the question.
Michael tiny Saul
tinymjs at gmail dot com
Friday, January 21, 2011
Time for some blood in the streets?
Poor weekly closes for the NASDAQ, Russell and tech darlings AAPL and GOOG leave the market vulnerable to more downside next week. For those of you who have been following my posts and watching my videos, you know that I have been watching for a correction for several weeks, and I am gaining confidence that the start of that correction has arrived.
Over the weekend I will provide a list of stocks that I feel are setting up to take advantage of continued downside in the market.
Michael tiny Saul
Tinymjs at gmail dot com
Over the weekend I will provide a list of stocks that I feel are setting up to take advantage of continued downside in the market.
Michael tiny Saul
Tinymjs at gmail dot com
PII
Above the 200 day moving average leads to caution, but otherwise it looks like a nice looking pattern.
Michael tiny Saul
tinymjs at gmail dot com
Thursday, January 20, 2011
S&P video for January 20th 2011
Can be found here: http://chart.ly/i2tkwgh
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
Tuesday, January 18, 2011
S&P video for Wednesday, January 19th
Can be found here: http://chart.ly/nclbr36
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
Monday, January 17, 2011
S&P video for Tuesday, January 18th
http://chart.ly/ow58dg8
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
Saturday, January 15, 2011
Dynamite triangle
Can it see 500? Wait for confirmation, as always
Michael tiny Saul
tinymjs at gmail dot com
Pullback to the 10 day MA
Narrow range doji on Friday. Look for expansion on Tuesday, let's see if the 10 day MA is strong enough support
Michael tiny Saul
tinymjs at gmail dot com
Friday, January 14, 2011
PRST
Revisit to one of the January Effects stocks. Target if the triangle break IS CONFIRMED would be the 200 day moving average.
Michael tiny Saul
tinymjs at gmail dot com
Thursday, January 13, 2011
S&P video for January 14th 2011
Can be found here: http://chart.ly/yqblh7e
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
BIOD!
Too bad the JE model was out on the 4th trading day of January
Michael tiny Saul
tinymjs at gmail dot com
S&P video for Thursday, January 13th
http://chart.ly/pjlm3bv
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
Wednesday, January 12, 2011
Tuesday, January 11, 2011
S&P video update for Wednesday, September 12th
Can be found here: http://chart.ly/rhvla9c
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
2011 forecast from Paul Schatz
Paul is a top notch analyst, money manager and friend. All opinions expressed in his articles are his, and do not reflect any recommendations to buy or sell securities, options, currencies, futures or any other financial instrument not specifically mentioned.
One of the most worthless yet enjoyable topics of the year is the pundits annual forecast. An unusual amount of time is spent discussing this in the media, but after January, no one ever reviews again nor seems to care. I usually end December with an idea of what I see ahead and then adjust according to how many others agree with me. As longtime readers know, I don't like to be in the majority as that group is typically wrong.
Before I get to my forecast, which is not my annual "Shockers" list due out later this month, let's do a quick review of what I envisioned for 2010.
Stock market - I thought we would see a generally flat market, somewhere between -5% and +5%, not the 15% we so gladly enjoyed! I thought the April peak would stand for the year. Stocks did go higher at the end of the year, but that call was pretty much correct. I forecasted a double digit decline, but thought it would unfold in Q4. We saw a 16% hit during the summer.
Long-term treasuries - would be a surprise leading asset class. They actually melted up through August and then melted down through November, finishing up 9%.
Dollar - I was bullish the dollar in 2010 and it gained a whopping 1.37%.
Gold - I was positive on gold and it gained 29%.
Inflation - It's been the same forecast for 2010, 2009, and 2008. Inflation remains under wraps and not problematic.
Economy - I thought GDP would hang in above 0% during the first half and slip back into negative territory later in the year. I was right on the first part, but wrong on the second part.
Bernanke & Co. - Short-term rates would not be touched in 2010 and they are still in the same spot as they were 12 months ago.
So now, let's get to my forecast for 2011. The sooner I get it out there, the sooner I can be proven wrong! As always, I had a lot of fun thinking about it and creating it, although it has no bearing on how we manage money for our clients.
Stock market - We are now in the 3rd year of Obama's term (presidential cycle) and traditionally, it's the most bullish of all with an average return of 17% and only one down year in the past 70 years. When you examine the stock market decade by decade (decennial pattern), you find that the first few years of the decade tend perform worse than later in the decade. That's two nice contradicting pieces.
Let's add the almost uniformly bullish predictions from Wall Street into the mix with the average strategist forecasting double digit returns. USA Today ran a front page piece last month with the headline "5 Wall Street Heavyweights Say It's Time To Get Back Into Stocks".
Even former Merrill Lynch honcho and usually skeptical Richard Bernstein sees a 15-20% return for stocks. That's shocking and worrisome! Can it be that easy? I have research dating back to 1990 and that group has been uniformly wrong roughly 75% of the time, although they hit the bulls eye in 2010. Kudos!
For 2011, I think the stock market will end the year modestly in the black, but only in the mid single digits. I envision corrective behavior in the spring with a more significant correction in late summer to fall. I haven't done enough sector work yet, but given that almost everyone hates healthcare and utilities, I'll take those two sectors as winners in 2011.
Long-term treasuries - After attempting to rally in Q1, bonds resume their slide during the first quarter and into Q2, but firm up during the second half of 2011.
Dollar - I remain bullish on the greenback over the long-term, even if we see another selling wave back to the old lows. Ultimately, I think the dollar index will hit 100 and the euro will slide back below 100 on its way to oblivion.
Gold - Clearly, after back to back strong years, gold is due for some pause to digest, in the short, intermediate and long-term. That can take shape in many ways. I think 2011 will bring a significant increase in volatility and I would not be surprised to see a $100 down day during the year. When all is said and done, I believe we will see at least $1500 hit during the first half of the year, but not another vertical assault like we saw in 2009 and 2010. Based on history, the year should end up with modest single digit returns, best case scenario, but outperforming its cousin, silver. Should that roadmap unfold anywhere close, that could set the stage for a monster blow off to the upside in 2012. But that's getting laughably ahead of myself.
Inflation - Unlike the past few years, I see headline inflation percolating a bit, especially during the first half of the year, but the core (excluding food and energy) remaining tame.
Economy - If this was a "normal" recovery, GDP should explode higher this year, but especially during the second and third quarters. I just can't subscribe to the "normal" recovery theme. The economy has been juiced with free and easy money for years and once that spigot is turned off, similar to what FDR did in 1937, I believe we are in for trouble.
Thankfully, Congress learned from their predecessors' mistakes in 1937 and did not allow taxes to increase in 2011. In fact, by cutting the payroll tax for 2011 and 2012 by two full percentage points, I have to upgrade my take on the economy to a better than just plodding along at 2%. Don't underestimate how much not raising income taxes and cutting payroll taxes will do for the economy and markets!
Federal Reserve - As the voting members of the FOMC turnover, expect the Fed to mirror Washington and get stuck in gridlock. Bernanke loses some internal power with Kevin Warsh sliding more towards the hawkish side and Plosser and Fischer coming back to dissent and push a more neutral stance once QE2 runs out by June. Keep a close eye on the two year note as the markets may force Bernanke's hand later in 2011 to take action he clearly won't want to take.
Unemployment - Sadly, the jobless recovery continues and unemployment stays stubbornly elevated above 8.75%. I think it's going to take a second recession to cleanse the system and get put unemployment on a path back to 6% or lower sometime later this decade.
Natural Gas - Surprise! Surprise! Finally, the bulls take control and natural gas ends up as one of the top performing assets of the 2011.
So that's it. Another fearless forecast in the books. I may add some items next Friday as I continue to read, research and digest, but I think you get the picture. As always, I am eager to hear to your comments. Please don't be shy about emailing me!
One of the most worthless yet enjoyable topics of the year is the pundits annual forecast. An unusual amount of time is spent discussing this in the media, but after January, no one ever reviews again nor seems to care. I usually end December with an idea of what I see ahead and then adjust according to how many others agree with me. As longtime readers know, I don't like to be in the majority as that group is typically wrong.
Before I get to my forecast, which is not my annual "Shockers" list due out later this month, let's do a quick review of what I envisioned for 2010.
Stock market - I thought we would see a generally flat market, somewhere between -5% and +5%, not the 15% we so gladly enjoyed! I thought the April peak would stand for the year. Stocks did go higher at the end of the year, but that call was pretty much correct. I forecasted a double digit decline, but thought it would unfold in Q4. We saw a 16% hit during the summer.
Long-term treasuries - would be a surprise leading asset class. They actually melted up through August and then melted down through November, finishing up 9%.
Dollar - I was bullish the dollar in 2010 and it gained a whopping 1.37%.
Gold - I was positive on gold and it gained 29%.
Inflation - It's been the same forecast for 2010, 2009, and 2008. Inflation remains under wraps and not problematic.
Economy - I thought GDP would hang in above 0% during the first half and slip back into negative territory later in the year. I was right on the first part, but wrong on the second part.
Bernanke & Co. - Short-term rates would not be touched in 2010 and they are still in the same spot as they were 12 months ago.
So now, let's get to my forecast for 2011. The sooner I get it out there, the sooner I can be proven wrong! As always, I had a lot of fun thinking about it and creating it, although it has no bearing on how we manage money for our clients.
Stock market - We are now in the 3rd year of Obama's term (presidential cycle) and traditionally, it's the most bullish of all with an average return of 17% and only one down year in the past 70 years. When you examine the stock market decade by decade (decennial pattern), you find that the first few years of the decade tend perform worse than later in the decade. That's two nice contradicting pieces.
Let's add the almost uniformly bullish predictions from Wall Street into the mix with the average strategist forecasting double digit returns. USA Today ran a front page piece last month with the headline "5 Wall Street Heavyweights Say It's Time To Get Back Into Stocks".
Even former Merrill Lynch honcho and usually skeptical Richard Bernstein sees a 15-20% return for stocks. That's shocking and worrisome! Can it be that easy? I have research dating back to 1990 and that group has been uniformly wrong roughly 75% of the time, although they hit the bulls eye in 2010. Kudos!
For 2011, I think the stock market will end the year modestly in the black, but only in the mid single digits. I envision corrective behavior in the spring with a more significant correction in late summer to fall. I haven't done enough sector work yet, but given that almost everyone hates healthcare and utilities, I'll take those two sectors as winners in 2011.
Long-term treasuries - After attempting to rally in Q1, bonds resume their slide during the first quarter and into Q2, but firm up during the second half of 2011.
Dollar - I remain bullish on the greenback over the long-term, even if we see another selling wave back to the old lows. Ultimately, I think the dollar index will hit 100 and the euro will slide back below 100 on its way to oblivion.
Gold - Clearly, after back to back strong years, gold is due for some pause to digest, in the short, intermediate and long-term. That can take shape in many ways. I think 2011 will bring a significant increase in volatility and I would not be surprised to see a $100 down day during the year. When all is said and done, I believe we will see at least $1500 hit during the first half of the year, but not another vertical assault like we saw in 2009 and 2010. Based on history, the year should end up with modest single digit returns, best case scenario, but outperforming its cousin, silver. Should that roadmap unfold anywhere close, that could set the stage for a monster blow off to the upside in 2012. But that's getting laughably ahead of myself.
Inflation - Unlike the past few years, I see headline inflation percolating a bit, especially during the first half of the year, but the core (excluding food and energy) remaining tame.
Economy - If this was a "normal" recovery, GDP should explode higher this year, but especially during the second and third quarters. I just can't subscribe to the "normal" recovery theme. The economy has been juiced with free and easy money for years and once that spigot is turned off, similar to what FDR did in 1937, I believe we are in for trouble.
Thankfully, Congress learned from their predecessors' mistakes in 1937 and did not allow taxes to increase in 2011. In fact, by cutting the payroll tax for 2011 and 2012 by two full percentage points, I have to upgrade my take on the economy to a better than just plodding along at 2%. Don't underestimate how much not raising income taxes and cutting payroll taxes will do for the economy and markets!
Federal Reserve - As the voting members of the FOMC turnover, expect the Fed to mirror Washington and get stuck in gridlock. Bernanke loses some internal power with Kevin Warsh sliding more towards the hawkish side and Plosser and Fischer coming back to dissent and push a more neutral stance once QE2 runs out by June. Keep a close eye on the two year note as the markets may force Bernanke's hand later in 2011 to take action he clearly won't want to take.
Unemployment - Sadly, the jobless recovery continues and unemployment stays stubbornly elevated above 8.75%. I think it's going to take a second recession to cleanse the system and get put unemployment on a path back to 6% or lower sometime later this decade.
Natural Gas - Surprise! Surprise! Finally, the bulls take control and natural gas ends up as one of the top performing assets of the 2011.
So that's it. Another fearless forecast in the books. I may add some items next Friday as I continue to read, research and digest, but I think you get the picture. As always, I am eager to hear to your comments. Please don't be shy about emailing me!
S&P 500 video for Tuesday, January 11th
Can be found here: http://chart.ly/w3uaq7d
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
Monday, January 10, 2011
TAP and THS
Both are oversold in an uptrend. Watching them both for tradable bounces
Michael tiny Saul
tinymjs at gmail dot com
Sunday, January 9, 2011
S&P 500 video for Monday, January 10th
Can be found here: http://chart.ly/4fkuxls
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
VFC
Oversold in an uptrend and approaching it's 200 day moving average
Michael tiny Saul
tinymjs at gmail dot com
SUI
Nice looking weekly triangle, but volume is light so extra caution
Michael "tiny" Saul
tinymjs at gmail dot com
Saturday, January 8, 2011
If you need to contact me
Please e-mail me. Leaving comments is cool, but I may not be able to have a conversation via the comment thread.
thanks!
Michael tiny Saul
tinymjs at gmail dot com
thanks!
Michael tiny Saul
tinymjs at gmail dot com
Bull flag
APC is in a nice looking bull flag here. 80 would be the first target if confirmed.
Michael tiny Saul
tinymjs at gmail dot com
Friday, January 7, 2011
S&P video for Friday, January 7th
Can be found here: http://chart.ly/i46bob4
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
AZO
Overdone to the downside for now in my opinion. That does not mean there won't be more to come, but I'm watching for a bounce here. A good place to watch is the low end of Thursday's candle for an entry, which allows a tight stop and re-entry if you desire
Michael tiny Saul
tnymjs at gmail dot com
Thursday, January 6, 2011
Possible short
We are above the 200 day moving average, but the doji at the 50-day could setup a nice short term short trade. Be careful as the MACD just crossed as well. WAIT FOR CONFIRMATION!
Michael tiny Saul
tinymjs at gmail dot com
January Effect Results
BWEN Entry 2.15 Exit 2.33 Win
BIOD Entry 1/3 size 2.01 2/3 size 1.95 Exit 1.88 Loss
CBC Entry .51 Exit .63 Win
GIGM Entry 1.53 Exit 1.53 Breakeven
UQM Entry 2.18 Exit 2.68 Win
SPMD Entry 8.24 Exit 11.89 Nicest Win
REVU Entry 1.08 Exit 1.18 Win
OSBC Entry 1.75 Exit 1.78 Win
PRST Entry 1.99 Exit 2.15 Win
GRNB Entry 3.64 Exit 3.20 Loss
HAFC Entry 1.11 Exit 1.21 Win
DVOX Entry 5.04 Exit 5.09 Small Win
FBP Entry .45 Exit .36 Loss
HPQ Entry 42.25 Exit 44.88 Win
CSCO Entry 19.93 Exit 20.95 Win
BAC Entry 13.34 Exit 14.44 Win
MSFT Entry 28.01 Exit 28.82 Win
AA Entry 15.25 Exit 16.36 Win
JNJ Entry 62.05 Exit 63.21 Win
PFE Entry 17.59 Exit 18.18 Win
MRK Entry 36.20 Exit 37.06 Win
WMT Entry 53.74 Exit 53.96 Small Win
JPM Entry 42.61 Exit 44.48 Win
Record: 19 Wins 3 Losses 1 Breakeven
Results are based on either: Entries given in class or close of 12/28/2010 and exit based on 4PM close or if near highs at 12 Noon Eastern on 1/6/2011
Your results may have varied, these are hypothetical results
Michael tiny Saul
tinymjs at gmail dot com
BIOD Entry 1/3 size 2.01 2/3 size 1.95 Exit 1.88 Loss
CBC Entry .51 Exit .63 Win
GIGM Entry 1.53 Exit 1.53 Breakeven
UQM Entry 2.18 Exit 2.68 Win
SPMD Entry 8.24 Exit 11.89 Nicest Win
REVU Entry 1.08 Exit 1.18 Win
OSBC Entry 1.75 Exit 1.78 Win
PRST Entry 1.99 Exit 2.15 Win
GRNB Entry 3.64 Exit 3.20 Loss
HAFC Entry 1.11 Exit 1.21 Win
DVOX Entry 5.04 Exit 5.09 Small Win
FBP Entry .45 Exit .36 Loss
HPQ Entry 42.25 Exit 44.88 Win
CSCO Entry 19.93 Exit 20.95 Win
BAC Entry 13.34 Exit 14.44 Win
MSFT Entry 28.01 Exit 28.82 Win
AA Entry 15.25 Exit 16.36 Win
JNJ Entry 62.05 Exit 63.21 Win
PFE Entry 17.59 Exit 18.18 Win
MRK Entry 36.20 Exit 37.06 Win
WMT Entry 53.74 Exit 53.96 Small Win
JPM Entry 42.61 Exit 44.48 Win
Record: 19 Wins 3 Losses 1 Breakeven
Results are based on either: Entries given in class or close of 12/28/2010 and exit based on 4PM close or if near highs at 12 Noon Eastern on 1/6/2011
Your results may have varied, these are hypothetical results
Michael tiny Saul
tinymjs at gmail dot com
HPQ
Into it's 200 day moving average. PROTECT PROTECT PROTECT!
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
S&P video for Thursday, January 6th 2011
http://chart.ly/abhyhkk
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
Wednesday, January 5, 2011
Thursday January 6th
The 4th trading day of 2011 is Thursday, January 6th. For my January Effect model (others vary)this is the last day to hold the January Effect stocks. the model looks for intra-day strength to sell into. However, for my records, I will use Noon Eastern if we are positiver in the S&P at that time, and end of day if not.
This is just a guideline, not a recommendation,. Remember, it's your money, you make the decision. I will not be commenting on any of the stocks after Thursday unless a fresh setup appears.
I will do a recap after the close on Thursday.
Michael tiny Saul
tinymjs at gmail dot com
This is just a guideline, not a recommendation,. Remember, it's your money, you make the decision. I will not be commenting on any of the stocks after Thursday unless a fresh setup appears.
I will do a recap after the close on Thursday.
Michael tiny Saul
tinymjs at gmail dot com
BAC, SPMD
BAC through it's 200 day moving average SPMD ;) $12 next level to watch PROTECT PROFITS!
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
Tuesday, January 4, 2011
SPMD update
A nice pause day on Tuesday. The next level to watch is 11.22.
Michael tiny Saul
tinymjs at gmail dot com
BAC
Heading to it's 200 day moving average. Be careful if you are long as this is likely to be resistance of some sort (mild or big).
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
S&P video update for Wednesday, January 5th, 2011
http://chart.ly/5ov8umo
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
Be sure to actively manage any and all positions
Monday was a nice day for the Bulls, but it can change just as quickly. Don't put blinders on and think that we "have to" go higher. The market doesn't respond well to "have to"s.
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
S&P 500 video for January 4th, 2011
http://chart.ly/quouh8c
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
Monday, January 3, 2011
SPMD, X
Nice moves in both of these posted her eion the blog. A good idea to PROTECT profits if you are in them
Michael tiny Saul
tinymjs at gmail dot com
Michael tiny Saul
tinymjs at gmail dot com
Sunday, January 2, 2011
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