Daily Market Commentary

Comments: December 30, 2007

Current position 100% Long: Rydex  OTC 2x for Monday.  Flat day for the market. Our signal strengthened considerably for Monday and we moved fully long. T-Index closed at +52.  The stock market will operate on normal hours Monday but expect light volume and probably not very much movement, but we are sometimes surprised.  New long term forecast posted today!  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.   

Comments: December 27, 2007

Current position Short: 50% Inverse OTC 2x, 50% money market for Friday.  Our short paid off with a nice gain on Thursday.  Our signal became less negative for Friday and we reduced our exposure, though we are still expecting some more down side. Our T-Index gained a bit more to +58.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.   

Comments: December 26, 2007

Current position Short: 100% Inverse OTC 2x for Thursday.  Small gains in the S&P and NDX did nothing to change our position and we remain short.  Our signal turned slightly more negative.  T-Index gained a bit to +52.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.                   

Comments: December 25, 2007

Current position Short: 100% Inverse OTC 2x for Wednesday.  Hope everyone had a nice holiday. Our signal turned negative. The Santa rally is in full force with  five consecutive up-days for the NDX.  T-Index fell off sharply on a strong jump in the rate for the 90 day notes.  T-Index closed at 50.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.                   

Comments: December 23, 2007

Current position 100% money market for Monday.  With the markets closing early and most of the professionals on vacation I do not see very much of significance happening on Monday.  Our signal vacillated near the close on Friday so we moved into the money market.  Our expectation is for a small market gain.  Happy holiday to all.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.                   

Comments: December 20, 2007

Current position 50% Short Rydex Inverse OTC 2x, 50% money market for Friday.  There could be some positive spill-over from Thursday's up market into Friday morning. I am expecting that it will be short lived and a reversal will take place later in the day.  Our T-Index was firm at +70.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.                   

Comments: December 19, 2007

Current position 50% long Rydex OTC 2x, 50% money market for Thursday.  Most indices closed flat to slightly lower.  More negatives in the mortgage and banking world are keeping the lid on Santa Claus.  The T-Index climbed back to +70 as interest rates fell.  Our signal remains a weak "long" and weak signals can be more easily influenced by current news and earning reports which is why we are only partially invested.    Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.                   

Comments: December 18, 2007

Current position 50% long Rydex OTC 2x, 50% money market for Wednesday.  We have a weak market. The early gains slipped away, but luckily they regained enough to close on the positive side.  Our signal for Wednesday remains positive, but is weak and losing strength.  The rally might last another day or two, but I am not expecting much to the upside. I believe there is a good chance of going lower as the weekend nears.  Although things could change, we may have to do without a Santa Claus rally.  Our T-Index slipped a bit to +62.3.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.                   

Comments: December 17, 2007

Current position 50% long Rydex OTC 2x, 50% money market for Tuesday.  The markets continued to fall as we remained in the money market Monday.  For Tuesday we have a mild "long" signal and have taken a 50% "long" position. I am not looking for a strong rally at this point.  Overall it looks rather gloomy.  The market is reacting to the inflationary effects of a weak dollar and fears of how far it will go.  Hyper-inflation is what normally happens to Third World countries when their currencies fall apart. But it is unlikely that we will fall into that mode since our interest rates are still low.  Our T-Index slipped a little to +70 a  strong reading.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.                   

Comments: December 16, 2007

Current position 100% money market for Monday.  Bad week for the markets, but we managed a strong gain with limited market exposure.  Monday could easily carry over Friday's negative effects and Tuesday should be a better day to enter the market on the upside.  We will need to see how Monday develops to have more confidence in our expectations.  At this point I expect strength mid week then renewed deterioration. Our T-Index closed at +82 a very strong reading and one, that in the absence of a credit crunch, would indicate a strong economy.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.              

Comments: December 13, 2007

Current position 100% money market for Friday.  With another money market signal we stay on the sidelines.  I don't expect much movement on Friday. The high inflation news today was not good, and it is well known that "real" inflation, which includes food and oil is currently much greater than the reported rates, like CPI. Real inflation hits the poor first and leads to an increase in crime.  An increase in crime erodes the quality of life for everyone.  But by pulling food and oil out of the equation the inflation that is left is the inflation that can be influenced by interest rate adjustments. And therefore it makes a lot of sense.  Looking forward, Tuesday might be a good time for another up-side move.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.              

Comments: December 12, 2007

Current position 100% money market for Thursday.  Volatile day with the markets starting off very high, going negative then a mild recovery to plus ground.  Positive news from the Fed and some bad news on the banks. Our signal turned mildly short at the close, too late to adjust our position. I expect to see Wednesday's late gain given back in Thursday's trading. T-Index continues to improve now at +73.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.           

Comments: December 11, 2007

Current position 100% money market for Wednesday.  We had a standard "sell on the news day", but the size of the move did surprise me. The .25% cut was expected. Our T-Index closed at +63 as both the 10 year and 90 day rates fell.  It looks like another rate cut is already built into the Treasuries.  I expect more negative action this week and any recovery on Wednesday could result in a pull back Thursday.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.           

Comments: December 10, 2007

Current position 75% Short Rydex Inverse OTC 2x, 25% money market for Tuesday. The Fed makes their announcement on Tuesday, but with the new "give them a hint" policy there should be no surprises. Expect a small cut.  The market has made a good run in just a few days and could be ready for a pause. Our signal and probabilities are negative. The T-Index however continues to improve. Closing at +64.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.           

Comments: December 9, 2007

Current position 62.5% long Rydex OTC 2x, 37.5% money market for Monday.  Fed meets this week and it looks like a 1/4% drop is on the table.  Our T-index is back up to +58. Expect to see choppy action in the coming week. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.          

Comments: December 6, 2007

Current position 100% money market for Friday. So it appears that the Bush mortgage plan was the catalyst for Wednesday's move and it carried over to Thursday.  No easy fix, just an extension of the game the borrowers played in the first place, "If rates go down or the house price goes up you win.  If house prices fall or rates hold or go up, you can walk away".  This will only move the problem to a later date under a different administration.  Better move is to slowly adjust rates higher over the next 5 years with final rates lower for those who don't miss payments. This would slow foreclosures and keep the valid sub primes above water. As it stands the uncertainty will push interest rates higher and restrict borrowing.  I think this rally is over.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.          

Comments: December 5, 2007

Current position 100% money market for Thursday. The strong up-day took me by surprise.  The favorable economic news probably had little to do with the move as the market had been responding in a negative way to anything that could influence the Fed to tighten. Looks like we could have one more day of upside, but I don't see it extending very much past that. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.          

Comments: December 4, 2007

Current position 100% money market for Wednesday. Looking back 10 years,  Wednesdays have the best record of going positive when the previous day was lower.  (Mondays win when the previous day was up.) That being said, our signal is money market and the probabilities are leaning lower. So we are in the money market.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.          

Comments: December 3, 2007

Current position 20% long Rydex OTC 2x, 80% money market for Tuesday.  The markets slipped lower.  Oil remained under $90. Our signal is weak, but a small rebound looks likely.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.          

Comments: December 2, 2007

Current position 100% money market for Monday.  Looks like a lower opening with perhaps some carry over strength in the S&P.  Our signal is flat. T-Index closed the week at +46.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.          

Comments: November 29, 2007

Current position 75% Short Rydex Inverse S&P 2x, 25% money market for Friday. The market recovered from an early down turn but held mostly flat. Our signal turned weaker and we moved 75% short moving into the S&P.  Bernanke indicated that rate cuts are on the table. This came after the close and should boost shares in early trading, but it is hard to rev traders twice on the same news.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.          

Comments: November 28, 2007

Current position 19% Short Rydex Inverse OTC 2x, 81% money market for Thursday.  An overly optimistic market on Wednesday may lead some to think the correction is over. But I don't expect this upswing to carry us very far. Closing strength changed our minor "short" signal to a "money market" signal at the close, so we will exit the markets at the AM fix.  Our T-Index improved to +58.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.          

Comments: November 27, 2007

Current position 50% long Rydex OTC 2x, 50% money market for Wednesday.  We are getting some strange market behavior and I hope it plays out soon. Looking for a small continuation of Tuesdays upside.  Our T-Index continues positive at +44.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: November 26, 2007

Current position 100% money market for Tuesday.  The early strength from the Black Friday shopping numbers dissipated and the market suffered with a very negative down day.  Tuesdays often reverse Mondays direction and the weakness seems excessive, but our signal is fully money market.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: November 25, 2007

Current position 62.5% Long Rydex OTC 2x, 37.5%  money market for Monday.  We continue to hold our long position.  The market will rise of fall on the Black Friday numbers for retail, but most of the seasonal negatives are already out and Monday should be higher. Over all the market seems over-sold so we could get a good bounce going into early December. But I have no real feel for the rest of this coming week. I have yet to post a new long term forecast sorry for the delay.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: November 21, 2007

Current position 62.5% Long Rydex OTC 2x, 37.5%  money market for Friday.  Oil's surge in Asia gave the market another reason to head lower. After another wild day the market ended lower ahead of the holiday. Our T-Index strengthened to +51.  The markets will close early on Friday.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: November 20, 2007

Current position 87.5% Long Rydex OTC 2x, 12.5%  money market for Wednesday.  Wild ride for the NDX gaining 2% near the opening then giving it all up and going lower by 1.5% and finally closing up about 1/2%. Both the Nya and Spx closed above last Monday's closing lows.  We have a solid up-signal and with Wednesday being pre-holiday I expect a more orderly market and a move to the upside. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: November 19, 2007

Current position 100% money market for Tuesday. I expect that the market may have a small bounce on Tuesday to partially offset Mondays move lower. The S&P did close below last week's low, but the NDX remains about 2% above its low. I am expecting an acceleration of the down turn next week, then a recovery during December.  A new long term forecast will go up by next weekend.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: November 18, 2007

Current position 75% money market, 25% Long Rydex OTC 2x for Monday.  I expect Monday to show some roll-over strength from Friday, and expect the market to hold above the recent lows through Thanksgiving.  The following week could be a problem.  The T-Index is still strong at +40.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: November 15, 2007

Current position 87.5% money market, 12.5% Long Rydex OTC 2x for Friday.  Basically we have a money market signal, but most of our indicators are leaning positive.  The probabilities also look balanced. I am leaning a bit to the up-side with the market spending the last two days pulling back after the large bounce. Gold fell and the dollar gained, our T-Index closed at +48.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: November 14, 2007

Current position 100% money market for Thursday.  The early run up led to a stall and some late selling.  I now expect to see a few more days of floundering as the bottom process takes place. Our T-Index closed at 45.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: November 13, 2007

Current position 37.5% Long: Rydex  OTC 2x for Wednesday.  Nice 4%+ gain in the NDX.  Our signal continues long with diminished strength.  I reduced our exposure some.  I was expecting a W bottom for basing this week, but this looks like it could be a V instead.  Looking for a small follow through on the upside Wednesday. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: November 12, 2007

Current position 50% Long: Rydex  OTC 2x for Tuesday.  We spent the past three days in the money market as the NDX fell over 8 1/2%. There could be more selling especially in the morning as today's weak market, with some players on holiday, did not attract many buyers. The dollar gained pushing oil and gold lower.  E-Trade seemed to be the catalyst today as Citigroup's down grade and mention of potential bankruptcy caused the stock to lose over 55% of its value.  Our signal was a strong buy, but with the volatility high we took only a 50% position.  T-Index unchanged as bonds were closed. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: November 11, 2007

Current position 100% money market for Monday.  Looks like there will be some bottoming this week.  Probably Tuesday will show some upside with some more on Thursday. The T-Index is very positive at +53.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.         

Comments: November 8, 2007

Current position 100% money market for Friday.  Another very negative day for the NDX. The movements in the treasuries have raised our T-Index to +48 indicating to me that this drop will not continue very much longer and that we most likely will enter a sideways trading range.  I rechecked the components to my model and frustrating as it is, all the individual components were positive for the year. Then changed the way I rebalanced the model.  Previously I used a genetic algorithm for balancing. This time I calculated the % accuracy of the individual components and adjusted for exposure to the market.  This rebalancing has reduced the drawdown in both the optimized sample portion and the results portion of the data. We will also utilize the volatility as the deciding factor in setting our exposure. This should tend to keep risk at a more uniform level over time. I expect that going forward you will find our probability listing more reflective of conditions.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.         

Comments: November 7, 2007

Current position 100% money market for Thursday.  Our last four trades have cost us dearly and we have moved into the money market.  Out T-Index has gained significant ground to close at +45.  More downside expected in the markets. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.         

Comments: November 6, 2007

Current position 100% Long: Rydex  OTC 2x for Wednesday.  A strong long signal for Wednesday showing good probabilities. The falling dollar is pushing oil nearer to the 100 dollar, mark going over $97 today. A weak dollar is very inflationary in a global market.  I still expect we will soon be going lower.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.         

Comments: November 5, 2007

Current position 100% money market for Tuesday.  Citi bank was the main cause of Mondays dive, but the partial recovery late in the day will probably not carry over very far.  We have moved into the money market. Our T-Index is now at +30. The S&P most likely doubled topped at the 1550-1560 level and I expect will swing back down to the mid to lower 1400's and bring the NDX off its highs.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: November 4, 2007

Current position 50% Long: Rydex  OTC 2x for Monday.  After a disastrous week it looks like more to come on Monday as Musharraf seizes emergency powers in Pakistan.  This should get oil over the $100 mark and send the markets lower. Citigroup's 8 to 11billion dollar loss didn't help. But maybe Citigroup's Prince will also get $160 million as a good-by present. Too bad all this bad news came after Friday's closing bell.    Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: November 1, 2007

Current position Short, 37.5% Rydex Inverse Dynamic OTC for Friday.  Very bad day for the longs.  I was expecting the roll over on Friday, but it came early.   Oil went over $96 per barrel a few dollars short of the $100 that I mentioned would be the trigger. Most likely we will have some more, but limited downside action on Friday.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: October 31, 2007

Current position 100% Long: Rydex  OTC 2x for Thursday.  So far we have the first portion of our Oct 29th forecast. The Fed cut rates, the market went higher and the dollar fell moving the Euro to a new all time high and oil climbed (new record over $94 a barrel). What is left is oil hitting the $100+ mark causing the market to roll over. For the time being we continue to have a strong signal and have moved 100% long.  (Cut and past error yesterday showed our "50% OTC" as "50% S&P", my apologies.) T-Index moved higher to +23.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: October 30, 2007

Current position 50% Long: Rydex  OTC 2x for Wednesday.  Strong up signal going into the Fed meeting.  But because it is a Fed meeting we held back 50% in the money market as protection.  The market is balanced between the climbing tech stocks and the declining financials.  Our T-Index is holding at +16.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: October 29, 2007

Current position 100% money market for Tuesday.  One possible scenario for the next two week period would be for the Fed to cut rates...leading to gains in the stock market and a drop in the dollar.  The drop in the dollar would help push oil up to/over $100 per barrel which then would lead to a sharp pull back in the stock market... First up, then down.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: October 26, 2007

Current position 100% Long: Rydex Dynamic OTC for Monday.  Strong signal with strong up-side probabilities would suggest some carry over from Friday.  T-Index holding most of the week in the mid teens and closed at +17.  Moves of greater than 1% were seen in five of the last six days.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: October 25, 2007

Current position 100% Money market for Friday.  Microsoft's excellent earnings announced after the close should give the market a boost on Friday.  Our T-Index closed lower at +16.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: October 24, 2007

Current position 100% Money market for Thursday.  Volatility has returned to the marketplace. Making trading very dangerous.  We have moved into our most protected mode of trading only the strongest signals. Our T-Index remains positive at +22. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: October 23, 2007

Current position 50% Long: Rydex  S&P500 2x for Wednesday.  Very strong move on the NDX. We have a long signal, but don't think the NDX move can continue so have moved into the S&P. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: October 22, 2007

Current position Short, 50% Rydex Inverse Dynamic OTC for Tuesday.  Apple had very good earnings after the close so the tech sector could continue hot.  Which in turn could prove us wrong on the NDX direction. Most other indicators favor the down side.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: October 21, 2007

Current position 100% Money market for Monday.  A lucky glitch during our order entry on Thursday afternoon allowed us to escape Fridays severe down market, and we spend the day 99% in the money market.  We moved 100% into the money market on the close Friday as our signal moved fully flat. Fundamental still good on the surface.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.        

Comments: October 18, 2007

Current position 38% Long: Rydex Dynamic OTC for Friday.  With only  a mild "long" signal going into Friday we held back to only 38% exposure. There is another major change in the dynamics brewing, as more government controlled investment funds move into the stock market.  This is a good and bad thing. The more blending between countries and corporations the less likely there will be any wars, other than terrorism. The bad news is that workers will suffer with governments less likely to protect the worker rights.  Employee earnings will gradually fall well behind inflation and the middle class will suffer. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.      

Comments: October 17, 2007

Current position 100% Money market for Thursday.  The NDX started high and dropped as expected, but then it recovered most of the early gain.  The Dow slipped a bit as the FXI, China index, gained almost 10% as it continues in its blow-off phase.  Our T-Index gained ground to close at +22.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.      

Comments: October 16, 2007

Current position Short, 25% Rydex Inverse Dynamic OTC, 75% money market for Wednesday.   Good Earnings from Yahoo and Intel have stirred the aftermarket and should easily carry over to the open. The jump looks too large to sustain and most likely the market will retreat from the early highs although a good chance the market will close higher. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.      

Comments: October 15, 2007

Current position Short, 25% Rydex Inverse Dynamic OTC, 75% money market for Tuesday.  Our T-Index has drifted lower over the last few days, coming down from a peak of +42 to its current +13 and now in danger of going negative soon.  Our signal turned mildly short and we have taken a small negative position.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.      

Comments: October 14, 2007

Current position Long 50% Dynamic OTC, 50% Money market for Monday.  Our new Earthlink high speed DSL connection is working well. We scored a small gain for the week and have gone 50% Long for Monday our signal is not very strong, but we are looking for some positive carry over from Friday. Our calculated probabilities look overly optimistic. Both our T - Index and the Vix are at about +18.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: October 11, 2007

Current position Short, 25% Rydex Inverse Dynamic OTC, 75% Money market for Friday.  Sorry we missed yesterday's posting. Earthlink was supposed to have our new super high speed DSL upgrade installed with only 20 minutes down time.  Our Fax line was turned off for 24 hours and the DSL was cut off for 18 hours. So beware.  Some nice words about Linksys tech support, they reworked the modem settings to accommodate changes in the DSL in record time.  Our small short position paid off after the early market strength wilted. We continue to have a small short signal and held our position.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: October 10, 2007

Current position Short, 25% Rydex Inverse Dynamic OTC, 75% Money market for Thursday. *** Late posting DSL Down

Comments: October 9, 2007

Current position 50% Long: Rydex Dynamic OTC for Wednesday.  The early pullback dissolved after the Fed comments offered no surprises.  We have a weak long signal and have moved 50% long. T-Index closed at +26.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: October 8, 2007

Current position Short, 75% Rydex Inverse Dynamic OTC, 25% Money market for Tuesday.  The NDX helped us out on Monday as it slowly climbed and closed on the high.  I expect some down side Tuesday as we have a strong negative signal. The T-Index is holding up well and stable at +28. I expect that any pullback will be mild.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: October 7, 2007

Current position 100% Long: Rydex Dynamic OTC for Monday.  The market is strong and when measured by earnings or the T-Index is not in danger of a strong correction. It is, however, overheated when measured by its current momentum and so small pull backs should be expected, probably this week. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: October 4, 2007

Current position 50% Long: Rydex Dynamic OTC for Friday.  Friday's pending job report froze the markets and they closed little changed. We have a minor long signal and moved 50% long.  I would not expect an overheated labor market under these poor housing market conditions.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: October 3, 2007

Current position 100% money market for Thursday.  Big drop in the China market as measured by the FXI -5.29%.  Expect to see more such interruptions during this blow off phase. Unfortunately the large drops will have an influence on the US market since the US multinational corporations now do more than 50% of their business overseas. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: October 2, 2007

Current position 100% Long for Wednesday.  The US markets closed with the smallest of losses.  We have a strong signal for Wednesday and have gone 100% long. The potential amplitudes do not look very large, but the probabilities look high. This market is being dragged along by the China and emerging markets as well as the falling dollar. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: October 1, 2007

Current position Short, 25% Rydex Inverse Dynamic OTC, 75% Money market for Tuesday.  Another strong day as investors not only ignored the bad news from Citibank, they pushed the stock higher (up over 2%).  When companies have large write offs and the write looks like a non reoccurring problem the stock is often a very good buy as large corporations tend to write off more than necessary so as to get all the bad news out of the way in one move.  This allows earnings to appear even better going forward. USB had the same situation today and their stock was up over 3%.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 30, 2007 

Current position 100% Money market for Monday.  The markets did pull back after the 5 day run and may be in for another day retreat on Monday. Our signal is for the money market. The credit crunch problem seems to have vaporized as the current VIX reading is 18 and spent the past 6 days below 20.  The past seven trading days has seen a tightening in the range of our T-Index now at +36. This indicates that stability has returned, at least temporarily to the markets.  Please pick up your free password so you can read about our longer-term forecast, just posted this week.

Comments: Sept 27, 2007 

Current position Long, 50% Rydex Dynamic OTC, 50% Money market for Friday.  With five positive days in a row the NDX looks like it is ready to make six. Our signal gained strength but I am hesitant to increase our exposure in light of the five day run. So we remain at 50%.  The China market as measured by the FXI was up over 3% today as the gains accelerate.  Large one day changes in that market often lead to a pause that can effect the US markets.  Please pick up your free password so you can read about our longer-term forecast, just posted this week.

Comments: Sept 26, 2007 

Current position Long, 50% Rydex Dynamic OTC, 50% Money market for Thursday.  China market FXI over 1% today as the probable blow-off continues. The US market is in the end-of-month, beginning-of-month, better than average gain time frame, so the US markets should continue to go higher near term.   Please pick up your free password so you can read about our longer-term forecast, just posted this week.

Comments: Sept 25, 2007 * New long term view posted yesterday.

Current position Long, 50% Rydex Dynamic OTC, 50% Money market for Wednesday.  The early weakness wore off and most markets ended higher. The probable blow off in the Chinese indexes could potentially drag the US markets along with it both on the up-side and down side. Read about it in our long term view.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 24, 2007 * New long term view posted today.

Current position Short, 50% Rydex Inverse Dynamic OTC, 50% Money market for Tuesday.  Our position turned short for Tuesday.  There is good strength in the markets so I believe the markets will not halt for very long. Most of the indices closed lower On Monday, but the NDX had a small gain. The EEM and China indices continue to blast higher. It appears that the Chinese markets are in a blow-off phase. By comparing the chart of the FXI to the NDX the symmetry would be equivalent to November of 1999 on the NDX and about 4+ months from the top. Unfortunately we can't rely on exact time symmetry but expect to see a problem over the next six months or so. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 23, 2007

Current position 20% Long Rydex Dynamic OTC for Monday.  The market appears to be overextended, but the signal is still positive, but not strong. We took a small long position. Our program update is complete and the Vix index has come back down so we will be increasing our exposure going forward. Our T-Index closed at +43 and it is now on solid ground  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 20, 2007

Current position 100% Money market for Friday.  Our T-Index is now +42. Another large daily change in that index.  Since  Standard and Poor's riled the markets July 10 with negative news about the sub-prime mortgages our T-Index has had a case of the jitters with large positive and negative daily changes. The last time we saw those kind of large changes was back in December of 2000. Then the changes marked a short term bottom and the market climbed higher for a month and a half before starting another leg of that long term decline.  The 10 day moving average of these T-Index changes hit a peak on August 29th one day after the last significant bottom in stocks. I would not look for a replay, but large one day changes in the T-Index often coincide with market directional changes.  These changes represent very large amounts of money switching into and out of bonds and bills. They represent changes in thinking about inflation and the future state of the economy.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 19, 2007

Current position 75% Money market, Short 25% Rydex Inverse Dynamic OTC  for Thursday.  We have a mild short signal, and after the recent surge the market looks ready for a small pull back. Our T-Index closed at +26 and it appears that money is now flowing out of the 10 year notes as interest rates climb for the third day. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 18, 2007

Current position 100% Money market for Wednesday.  I am looking for a lower market going into the weekend.  I don't believe that the Fed 1/2% cut will save the economy since rates are not the problem. The T-Index looked good going to +20. The dollar is falling and that is not good for the average American, food and oil prices are bolting higher. Expect a shift in consumer spending away from big ticket items like furniture and appliances.  Our probabilities are balanced for Wednesday at 50%, but the amplitudes favor the down side. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 17, 2007

Current position 37% Long Rydex Dynamic OTC for Tuesday.  With the Fed meeting on Tuesday our strong positive signal is somewhat suspect and we have reduced our exposure to compensate. Our T-Index has pulled back to +12. The next Fed meeting is on October 31. I would expect the volatility to relax by that time as interest rates have a chance to absorb the news and Fed action.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 16, 2007

Current position 75% Long Rydex Dynamic OTC for Monday.  We have a medium strong up signal, but the Fed meeting should dampen any dramatic moves. Our T-Index is at +18 and once again gaining in strength.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 13, 2007

Current position 63% Money market, 37% Long for Friday.  Fridays historically are down days. We do have a long signal and have reduced our exposure. After the Fed announcement on Tuesday we may see some reduced volatility. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 12, 2007

Current position  75% Rydex Inverse Dynamic OTC, 25% money market for Thursday.   We have a strong "Short" signal for Thursday.  Probabilities are good for a move to the down-side, but I am uncertain as the the size of the move.  Our T-Index strengthened to 14 still low and volatile.  The 90 day bill rates are low but holding above their lows while the 10 year note rates a in a more steady decline. The 10 year notes are either saying that inflation is not a problem or that the economy is about to get worse and probably a bit of both.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 11, 2007

Current position 85% money market, 15% Rydex Inverse Dynamic OTC  for Wednesday.  Our T-index fell to +6 as the market had a strong gain. Over the past 6 days the market moved 1.5% higher, then lost that, and moved 1.5% lower then moved back to where it started.  Much confusion little progress in either direction.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 10, 2007

Current position 100% money market for Tuesday.  The market is very unstable at this point.  Over night the markets went lower only to rally at the open then fall sharply going negative, then closed mostly flat. Our T-Index climbed to +11.  Our signal closed very flat.  We are waiting for more signal strength. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 9, 2007

Current position 100% money market for Monday.  Still a difficult market as the economic conditions swing quickly as seen in the credit markets. Our T-Index closed the week at +10 but had dipped below zero twice within the past ten days. The payroll data was very bad and although that should mean that the Fed will cut rates, the current fear is that a rate cut will not be enough.  We are being very selective in taking our positions.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 6, 2007

Current position 100% money market for Friday.  Most markets closed higher.  I expect to see the markets leaning higher on Friday although some poor earnings reports have taken the market lower after-hours.  Our T-Index returned to positive closing at +4, rather meaningless at this level.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 5, 2007

Current position 75% money market, 25% Short: Rydex Inverse Dynamic OTC  for Thursday.  We increased our short position to 25% as our T-Index once again turned negative. The economy as measured by the slope of the interest rate curve continues to bounce between positive and negative and is reflecting the uncertainty in the market place.  Home sales fell significantly in July year over year, August should be much worse. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 4, 2007

Current position 85% money market, 15% Short: Rydex Inverse Dynamic OTC  for Wednesday.  The market is now over bought by most measurers, we are holding our mild short position.  Our T-Index, still bouncing from positive to negative and back closed exactly at zero.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: Sept 3, 2007

Current position 85% money market, 15% Short: Rydex Inverse Dynamic OTC  for Tuesday.  The current market conditions are beginning to make a lot more sense as I rebalanced my program.  The market is still giving off readable signals. From an economic point of view we have survived the 100 billion + dollars a year draining of our capital to fight a useless war for about 5 years. This is much more than will be lost on the sub-prime melt down.  The zero down sub prime fiasco hit its high (sales) in 2004 and went flat for two years into 2006.  With the teaser rates expiring in 2-3 years about 1/3 of the loans expire in 2007 with another 1/3 for 2008. So the real estate mess will continue into 2009 with some effects felt into 2010.  Over the next few weeks I expect to see a trading range market going forward staying below the previous highs and above the previous lows.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: August 30, 2007

Current position 100% money market for Friday. Most markets were lower, the tech heavy NDX showed a gain. All markets were positive and negative during the day as the uncertainty continues. We remain on the sidelines. Monday markets will be closed.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: August 29, 2007

Current position 100% money market for Thursday. Wild markets. Lots of uncertainty.  Currently investors are looking to get on board prior to the Fed meeting. Last month the markets peaked 13 days prior to the Fed meeting. Wednesday was also 13 days prior to the next Fed meeting. Our T-index soared again closing at +25. There are a lot of hidden issues at this junction and I continue to advise caution.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: August 28, 2007

Current position 100% money market for Wednesday.  We have a mild "short" signal, but with the market zooming lower the risks of a reversal out weighed the potential gain so we stayed in the money market. The Fed comments did not indicate a cut and the market cried. The EEM doing so well last week gave up over 4% but is still about 6.5% above its lows.  The S&P lost over 2% Tuesday and is now less than 2% above its previous low, so we shall probably get a test this week. Our T-Index remained negative, but improved to -2.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: August 27, 2007

Current position 100% money market for Tuesday.  Our T-Index has turned negative once again.  This comes after a 8 day positive ride where it reached a +91. The paper (bills, bonds, commercial paper) markets are still in turmoil. Fear is still a large player and is will most likely rattle the markets for the next few months as more bad news emerges. Our signal is mixed with no real preferences, though Tuesdays do tend to reverse the Monday trend.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: August 24, 2007

Current position 80% money market, 20% Long: Rydex OTC 2x for Monday. The recent market activity is indicating that most investors believe the worse is over and the market has returned to normal.  I am not so sure. Yes the Vix has trimmed back 1/3 from it high and the EEM has out-performed the NDX over the past three days, but I am hesitant to say all is well.  The credit squeeze is still on although finding hard data to program is difficult. I remain cautious. Most likely going forward near term I will be looking for more "sure thing" days for 50% or greater exposure.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: August 23, 2007

Current position 40% Short: Rydex Inverse OTC 2x for Friday.  The CEO of Countrywide made a good case for the housing market leading the country into a recession. And said the credit crunch was a panic, but the panic made it real and it has not let up. And said that the Fed move would do little to actually change anything. Not an upbeat report. Our signal turned fully negative and we are now 40% short. The Vix index has fallen 6 days in a row showing a building of optimism in the market place, but that is not always a good thing. Still focused day by day as long term is a rather gray area at this time. Bank earnings coming out in September should show some sub-prime assets marked-to-market and that should be a drain. Easy money helped may companies grow, now we should, at the least, see a slowdown in earnings.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.   

Comments: August 22, 2007

Current position 85% money market, 15% Short: Rydex Inverse OTC 2x for Thursday.  We have a negative leaning "money market" signal.  There could still be a little more gusto in the markets since they are recovering from a sharp drop. The NDX has now put four days of gains together making the rally look real. The T-bills and Vix are also recovering.  I would like to see how the market reacts to the next negative shock. It has been quiet the past few days. The after-market did have a big jump on news that B of A pumped $2 billion into Countrywide.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.     

Comments: August 21, 2007

Current position 25% Long: Rydex OTC 2x, 75% money market for Wednesday.  We found ourselves on the wrong side of a mixed market Tuesday with the Dow down and NDX up. I continue to use caution as we step through this mine field. 90 day interest rates are the topic of conversation as they moved from over 3.5% Friday to under 3% Monday on money market fears, and back to under 3.5% on Tuesday after Dodd spoke.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.     

Comments: August 20, 2007

Current position 50% Short: Rydex Inverse OTC 2x, 50% money market for Tuesday.  Monday's feeble rally has moved our indicators more firmly negative. In addition to our Short signal we have uncovered a 14 year inter-market pattern that indicates a significant down day for Tuesday.  Never-the-less we continue cautious with only a 50% exposure. I doubt that the Fed would act again so soon after their Friday cut. There has been a big shock to real estate and business in general. You can't tell by looking at the 90day T-bills now under 3% or the 10 year notes, but commercial properties and apartment houses no longer "work" as investments at the current price levels as interest rates have soared. This is leaving property on the market while buyers and sellers re-adjust their views. Under these conditions of false liquidity we can't depend on the optimistic view of our T-Index now at +91. So once again it makes sense to navigate day by day.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.     

Comments: August 17, 2007

Current position 25% Short: Rydex Inverse OTC 2x for Monday. Our position for Monday may seem counter intuitive considering that the market managed to regain strength throughout the day, but we will have to see how it unfolds. Regardless of Monday's direction there is already a strong probability that Tuesday will be lower. So far our accounts show a gain of about 1% for August but it has been a rough 2007. I don't believe that the Fed's actions will realistically change anything, therefore I continue cautious. The Fed made its move, pulled the rabbit out of the hat so for the next week or two we will have to figure that their hat is empty. The "false liquidity" I spoke of yesterday remains the same. The Vix remains high, showing continued fear. Our T-Index is now very strong at +46.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.     

Comments: August 16, 2007

Current position 10% Long: Rydex  OTC 2x for Friday.  The current market conditions remind me of a story about a man going into a grocery store to buy bananas.  He asked the grocer "How much?"  The grocer replied $2.00 per pound. "That's outrageous said the man, "Joe's grocery has them for $1.00 a pound, but they don't have any right now."  "That's outrageous." Said the grocer, "When I don't have any bananas I charge only 50 cents a pound". A very good friend and trader said it best "false liquidity". When we look at the low interest rates along with the normal interest rate curve and positive earnings we say these are perfect market conditions. But we have "false liquidity" we do not have any bananas.  The sub-prime mortgage fiasco has moved into the third stage.  Stage1: was the failure of the mortgage companies and the realization of the fraud that was perpetrated by the banks as they unloaded shaky sub-prime loans as high paying securities on unwise buyers. (See my "long term comments" of October 7, 2006 when we laid out this problem for you 10 months ago.) The Second stage was the collapse of some hedge funds who had leveraged themselves into the sub-prime paper by borrowing from banks to buy it. This set up the third stage where we are now.  A tightening on lending in general (Goldman Sachs pulling out of financing MGM's films, Cadbury rethinking their sale of their beverage division, etc..), a shift out of more risky securities into less risky areas (switch out of the emerging markets) and a selling-off of good assets to obtain the needed liquidity.  This third stage puts what is happening in the market back into perspective. Because of the false liquidity condition the values that we normally use to evaluate the markets and economy no longer hold true. We are at levels that would normally scream "BUY!!", but the unknowns such as: "How long the credit crunch last?  Will these problems jam us into a recession?  And how many more belly-ups will we see before it is over?" are all valid concerns that are hidden from view by the false liquidity. The bright side is that when the dust clears there will be many securities that will be strong buys. Food companies with good current earnings should do well. Among the airlines (a highly leveraged group) those that must borrow will suffer while those with strong balance sheets should do well as oil prices will most likely come down. So this brings us back to our signal which is "long" for Friday.  Until we feel more comfortable we will adjust our position to the strength of our signals and err to the low side on exposure. The first rule is not to lose any money, and we want to trade when we are confident that we have the actual probabilities on our side. Again I say watch for the VIX index to come back down. Look for a retreat of about 1/3 off the high as a signal of normality. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.     

Comments: August 15, 2007

Current position 37% Short for Thursday, exit at morning fix.  Our T-Index closed at +16 marking the only positive thing for Wednesday.  Wednesday's drop was not so much on news as a general fear that the economy may take a sharp dive, already buy outs have been slowed ,but what if even home buyers will have to substantially increase their down payments to satisfy lenders fear of over optimistic appraisals?  Fear breeds fear and this market may need a steeper stock market decline on large volume to get back in gear. The risk is also to the short side as any indication that the Fed will somehow stabilize things will produce a sharp upside.  Caution seems to make the most sense. Our signal changed twice over the day and ended for the money market when it was all over.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.    

Comments: August 14, 2007

Current position 75% Long for Wednesday.  Our signal strength calls for 100% long, but since the daily changes are twice what they were last month, and the market is now more news driven I felt it was prudent to go only 75%.  The T-Index slipped slightly to -7, as the interest rates on the ten year notes fell.  Today's driving news was Sentinel Management Groups refusal to provide redemptions to its money market accounts, they oversee $1.5 Billion. Followed by Thormburg Mortgage's losing almost half its value prior to halting trading.  The market seems to be buoyed by news one day and swamped the next.  We will try to step through the mine field and only place trades when we feel we have a distinct advantage.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.          

Comments: August 13, 2007

Current position 100% money market for Tuesday.  A day of confusion for the markets. Like Friday the markets closed mixed with different indexes going in different directions.  Fear is still in control with many ready to jump long or short with the crowd. Our signal continues in the money market.  I expect the markets to linger one more day and then turn higher on Wednesday.  But the news is driving the markets and the Vix is still high. Our T-Index reversed itself and closed at -5. The Emerging market index (EEM) etf was strong while the small caps were weak (RUT).  The Fed and European Central Bank continued to pump money into the banking system.  Lets watch.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.         

Comments: August 10, 2007

Current position 100% money market for Monday.  Another wild ride on Friday, as the markets plunged through last week's lows, then were saved by the Fed adding liquidity to the markets.  As the Banks with cash hike up their rates to the banks without cash, the Feds efforts are somewhat limited. Over the past two days the European Central Bank injected a total of $215 billion into the banking system and one must wonder why so much. What is the real reason and what is the problem that is waiting to show its head?  In the US the S&P and RUT closed higher as the NDX, NYA and DJI closed lower. Our signal turned mixed and we moved fully into the money market. The only bright sign was our T-Index which made a spectacular move from -25 on Thursday to close at +4 Friday. Generally we see small single digit moves. Now the yield curve has moved back to normal, giving the economy an all clear signal if there wasn't that sub prime black cloud hanging overhead. The market anticipates, the actual economic damage is yet to come. It looks like more downside during the coming week. The recovery off the lows Friday would have been more reassuring had most of the indexes closed higher.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.         

Comments: August 9, 2007

Current position 37.5% Short: Rydex  Inverse OTC 2x for Friday.  With the economy ready to turn in either direction, the daily news is having a greater influence on the daily market changes (plus or minus), and the magnitude of those changes have more than doubled over the past four weeks.  This makes trading more dangerous, as without a clear economic trend the markets will exaggerate the importance of each item resulting in the wild behavior we have recently witnessed.  The small caps managed to hold on to most of Wednesday's gains, unlike many of the other sectors that suffered. The emerging markets had a particularly bad day as money left that sector seeking safer ground. Expect a test of last Friday's lows this Friday as most markets are less than 1% away.   Our probabilities and our signal have turned negative and we moved into a partial short position.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.         

Comments: August 8, 2007

Current position 100% money market for Thursday.  The markets are still skittish. They had a substantial pull back from earlier gains, then rallied for a decent gain at the close.  The VIX which had fallen earlier in the day closed off only slightly and remained well over 21. I want to see it back around 16.  The small caps as measured by the RUT closed up over 2.75% and the emerging market index (EEM) closed up about 3%. I don't see much more in the way of gains for Thursday, and expect weakness in the small caps and the Financials. The new problem for the markets is the fact that China holds about 400 billion dollars in treasury notes and bonds. The US is trying to force China to revalue the Chinese Yaun. A 10% revaluation would cost China 40 billion dollars and slow their grow. So obviously China is not willing to risk a double whammy. They may move the assets to Euro dominated assets or cash out completely. That would allow the revaluation with only half the sting. It would also unfortunately cause our dollar and bonds to fall and push our interest rates way up, slowing our economy and in turn then, slowing down the Chinese economy. But we are dealing with egos here as well as businessmen so nothing can be assumed as unreasonable.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.         

Comments: August 7, 2007

Current position 100% Long for Wednesday.  The Fed held fast, and with rates as low as they are that was the smart move. Lowering already low rates would not help the economy.  The government will however have to provide some temporary financing to solve the Sub Prime problem or face turning a fair chunk of the US into another Detroit. Temporary financing would prolong the problem, but letting it dissolve slowly is better than seeing major crisis in many cities over the next 12 months. Given enough time the markets would adjust. Having to absorb many defaults and abandoned homes at once would result in a domino effect on rental units and jobs.  For now we have a strong "long" signal. The EMM has shown improvement and that should help the rally gain legs into Thursday.  The financial also gained, but they may lose steam as investors sell off into strength.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.         

Comments: August 6, 2007

Current position 100% money market for Tuesday.  Even though Monday may have been a successful test of the bottom I believe this market still has a few jolts left in it. Tuesday is FED day and today's rally was in anticipation of a rate cut or downward bias. But rate cuts at this low level do not really have any effect on the economy. The VIX index is still above 20 and the emerging markets are still dragging relative to the US indexes.  Lets wait a bit before deciding it is all clear.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.         

Comments: August 3, 2007

Current position 75% money market, 25% Short: Rydex Inverse OTC 2x for Monday. We closed out our small 25% long position at the morning fix before things got too nasty.  I was expecting a test of the lows in the coming week but it arrived Friday afternoon with the S&P and NYA making new lows. The DJI and NDX held above recent lows, but their turn could come early in the week.  The market is now oversold, but I don't think we have seen the bottom. The problems in the US have contaminated the Emerging markets and they are leading the charge lower. The I-Shares Emerging market ETF is down over 11% from its high, the Dow off almost 6%. The NDX 100, -6.5% and the S&P -7.7%. Relative improvement in the EEM over the other indexes would be a good positive sign that  sentiment was improving. Our T-Index closed the week at -33.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.         

Comments: August 2, 2007

Current position 75% money market, 25% Long: Rydex  OTC 2x for Friday.  We will exit our 25% long position at the morning fix and move fully into the money market. I believe the S&P may have found a good bottom at 1455, but the market still has the jitters and more than two up days in a row is probably too much to ask for.  Next week might bring another test of the lows.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.         

Comments: August 1, 2007

Current position 100% Long: Rydex  OTC 2x for Thursday.  We have a very strong "long" signal for Thursday.  The probabilities are strong and unless lightning (like the American Home Mortgage problem) strikes twice in the same place we should be able to move forward. Wednesday's market spent most of the day below ground and basing with a strong upsurge at the close when buyers decided that it wasn't going to crack. Our T-Index is at -31, but the 10 years bonds are still very low at about 4-3/4%; showing that there is still a substantial amount of liquidity.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.         

Comments: July 31, 2007

Current position 37% Short: Rydex  Inverse OTC 2x for Wednesday.  A very disappointing day for us as the Nasdaq 100 opened up 1% only to have American Home Mortgage (AHM) announce that they could not meet their margin calls on bad loans and would most likely have to liquidate their holdings and go bankrupt.  UBS, Bear Stearns and Bank of America and Barclays may have loaned billions to the mortgage company and J P Morgan had provided them with a credit line. AHM lost 90% of its value Tuesday and the fall out may take some time to sort out.  It is reported that AHM did not do sub-prime loans. The Nasdaq 100 ended closing down over 2%.  Unfortunately we can not predict tomorrow's actual news events.  We have taken a small negative position for Wednesday in line with our forecast.    Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.         

Comments: July 30, 2007

Current position 75% Long: Rydex  OTC 2x for Tuesday.  We have a strong enough signal to go 100% long, but the current situation does warrant some caution and we pulled back to only 75%. This is our first trading signal after 5 days in the money market.  Probabilities are strong that Monday's short lived dip marked at least a short term bottom. The corporate bond yields reversed last week's trend along with the emerging market index and the basic materials index. The stock indices closed off their highs, but all had good gains.  I posted a new long term forecast over the weekend so take a look.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.                    

Comments: July 27, 2007 ... long term forecast updated and posted 7/29

Current position 100% money market for Monday.  Although we made only a few dollars from the money market for our accounts this week we did escape the down draft that knocked over 5% off the S&P since Monday.  Our T-Index closed the week at -24 while the 10 year notes closed well under 5%. I will discuss some of the current problems and their long term implications in our Long Term Forecast posted 7/29.  This is our fifth money market signal in row, something that is rare for us.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.                 

Comments: July 26, 2007

Current position 100% money market for Friday.  It looks like there could be a small recovery adjustment on Friday, but I expect that the problems plaguing the markets might just carry over into Monday. The good news is that there should be some end of the month buying starting on Tuesday and we may be back to "normal" by then. Today's markets came well off their lows of the day, and a retest of those lows is customary.  We had already moved our accounts into the money market Monday afternoon and remained sheltered there all week avoiding the emotional roller coaster ride while waiting for a clear signal and direction.  The sub-prime problem reminds us of the 80's junk bond scandals.  But there is still cash available for qualified borrowers so we do not have a full credit squeeze.  Another strong contributing factor to this down turn is worry over a global slowdown, the I-Shares emerging market index fell about 4.75% today, now down about 7.5% since it made a new high on Monday. The Dow Jones US Basic Material Index, very relevant for a view of future economic world activity is down almost 9.5% over the same time frame. Looks like it is time for a long term update.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.             

Comments: July 25, 2007

Current position 100% money market for Thursday.  More volatility related to sub prime, corporate bond rates and foreclosure news.  Our signal remains in the money market, which seems to be a good choice as investors try to sort out the news.  Ten year note yields fell again as money flowed into the government bonds, providing more potential for pushing the markets higher when investors are ready.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.             

Comments: July 24, 2007

Current position 100% money market for Wednesday.  Corporate bonds, which were not fully accounting for risk dropped while the US 10 year notes gained ground in a "flight to quality".  The market did not like the bond activity or the prior overnight activity in foreign markets and dropped significant amounts. Our T-Index which relies on the slope of the yield curve fell to -26. The economy would be headed into tough times, but is saved by the low yield on the 10 year notes indicating sufficient liquidity. And that liquidity is what was questioned today because the corporate bonds were showing that liquidity was drying up, a conundrum.  So we must continue to watch the bonds.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.             

Comments: July 23, 2007

Current position 100% money market for Tuesday.  With the 10 year notes marginally below 5% there is enough liquidity around to keep the economy buzzing. Our forecast for Tuesday is mixed and we moved fully into the money market. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.             

Comments: July 22, 2007

Current position 50% Long: Rydex  OTC 2x for Monday.  Although our T-Index plunged to -19 the yield on the 10 year notes also plunged to close at 4.96, negating any influence that an inverted yield curve would have on the economy.  This is because the lower interest rates indicate sufficient liquidity and abundant capital eliminates the worry over the yield curve. Basically if the yield stays low, the market has more up-side to go. We are long 50% but will watch the ten year notes carefully.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.             

Comments: July 19, 2007

Current position 100% money market for Friday.  The Dow closed above 14000 Thursday.  Our T-Index held firm at -12.  The aftermarket is down significantly indicating a lower opening on Friday. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.             

Comments: July 18, 2007

Current position 25% Short: Rydex Inverse OTC 2x for Thursday.  We held our partial short position, however Ebay reported stronger than expected earnings after the bell and this could push the market higher.  The yield curve did flatten further moving our T-Index to -12. The market recovered much of its earlier loss, but the emerging markets are having a difficult time and could slow the up-side in the US markets.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.             

Comments: July 17, 2007

Current position 25% Short: Rydex Inverse OTC 2x for Wednesday.  Our T-Index held below zero (-5) while the ten year notes rate climbed to 5.08. I expect to see the yield curve become more normal as the ten year note's yield climbs. But we have been waiting for that for a long time. The aftermarket is sharply lower.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.             

Comments: July 16, 2007

Current position 100% money market for Tuesday.  The interest rate curve flattened today with the 10 year rates falling faster than the 90 day rates. Our T-Index slipped to -6.  Signals are mixed and I expect there will be a good deal of churning and catch up, as traders switch stocks. Should be more topping action prior to any resumption of the rally. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.             

Comments: July 15, 2007

Current position 37% Long: Rydex  OTC 2x for Monday.  This has been an exceptionally difficult week for us.  We will exit the long position at the first fix.  As best I can tell, and as I explained this past week, traders were very connected to the changes in the slope of the interest rate curve.  Had the curve not been at an important junction we most likely would not have see that type of market action (in my opinion). So the recent action does appear to be an aberration to normal market movements.  Our T-Index bounced between greater than, and less than zero telling us the economy could go either way. The growth in S&P earnings which are estimated to slow going into September are now estimated to be on an upwards curve going into 2008.  But much does depend on the interest rates.  With corporations now deriving at least half their income from foreign sources, the dollar I believe, may have become less of a factor, a weak dollar now translates into more income from abroad.  A strong dollar was generally linked to a strong US stock market. The emerging market forces are now more of an influence as our market is now more influenced by the direction of the emerging market trends. To this end I have completed an emerging market module to add to our arsenal of influences that make up our signal.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.             

Comments: July 12, 2007

Current position 75% Short: Rydex Inverse OTC 2x for Friday.  Our signal remained short, as once again the yield curve made a strong improvement moving our T-Index to -1.  And -1 is basically flat.  Thursday was much stronger than expected and pushed the market into over-bought territory on our indicators.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.             

Comments: July 11, 2007

Current position 75% Short: Rydex Inverse OTC 2x for Thursday.  Wednesday's market was all about the yield curve.  Each time the 10 year yield increased the curve became more "normal" and the market went higher. The T-index which monitors the yield curve improved to close at -4.  Our signal however, became more negative and we held our "short" position into Thursday.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.             

Comments: July 10, 2007

Current position 75% Short: Rydex Inverse OTC 2x for Wednesday.  Standard and Poors got the markets upset with more negatives on sub-prime mortgages.  Sending banks and home builders lower followed by the general market and pushed the long term government bonds higher.  This caused our T-Index to plunge closing at -8 and our closing market signal to go negative.  Normal trading patterns for the market would be a higher Monday, pullback on Tuesday and continued higher on Wednesday, but the large drop to negative in our T-Index changes the perspective.  With the 10 year notes are above 5% and the T-Index below zero, our overall outlook is negative.  This could change at any time that interest rate conditions improve, as we saw the same thing happen as recently as July 3rd, when our T-Index was again at -8.  Looks like some choppy days ahead.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.             

Comments: July 9, 2007

Current position 50% Long: Rydex OTC 2X for Tuesday. Monday's lack-luster day may have been good for the market as it allowed rotation and could be all the pause necessary for another push higher.  Our signal weakened, but remained positive and we reduced our exposure to 50%. Our T-Index slipped a little but also remained positive at +3. Emerging markets looked strong. Expected direction still "up".  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.             

Comments: July 6, 2007

Current position 100% Long: Rydex OTC 2X for Monday.  Our signal is strong for Monday, but with five gains in a row for the NDX we should expect a pull back some time next week, so maybe Tuesday.  Our T-Index strengthened to +4 and the 10 year notes climbed higher.  Continue to keep your eyes on the overseas markets and the T-Index for clues as to when this bull market will break. So far, so good. Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.             

Comments: July 5, 2007

Current position 100% Long: Rydex OTC 2X for Friday.  We continue to focus on the T-Index and the implications for the economy and stock market. Thursday the index jumped from -8 to +1, somewhat relieving our fears for the market fundamentals.  A second concern going forward are the gyrations of the emerging market indices especially the Shanghai Index which has fallen 16% over the past few weeks. As the global economy link tightens we shall see more interactions between our indices and those of China. We continue to have a "long" signal, but the probabilities have flattened for Friday.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.           

Comments: July 3, 2007

Current position 100% Long: Rydex OTC 2X for Thursday.  Rydex has renamed the funds that we trade. We will refer to them as OTC 2x and Inverse OTC 2x. These refer to the Nasdaq 100 with 2x leverage and the inverse of the Nasdaq 100 with 2x leverage. Rates rose on both the 90 day bills and 10 year notes pushing our T-index down to -8 and raising the 10 year note over 5%, a very bad combination.  For Thursday at least, other factors are more positive, leaving us with a generally strong positive signal. These forces could get us through the week. Be cautious going into next week if the T-Index remains under water with the 10 year notes over about 5%. Have a happy 4th.   Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.         

Comments: July 2, 2007

Current position 50% Short: Rydex Inverse OTC 2X, 50% money market for Tuesday. The market made a sharp gain early on, then spent the rest of the day trying to go higher.  The NDX made about 10 separate attempts to go much over the 1953 level and finally closed over 1954. The slope of the yield curve flattened leaving our T-Index at -4. The 10 year notes closed slightly under 5%. Overall we see this secession's actions as negative for the market. With a flattening yield curve I would like to see the 10 year notes go even lower to reassure everyone that enough liquidity exists in the markets, but the 90 day bills have been climbing for over 2 weeks.  With Tuesday a shortened day, there may still be some early month buying, but the interest rates are in focus and most likely will determine the market direction for the rest of the month.  Please pick up your free password so you can read about our longer-term forecast, and download the free "T" index software.         

For earlier comments made in 1st half of 2007 

For earlier comments made in 2nd half of 2006 

For earlier comments made in 1st half of 2006 

For earlier comments made in 2nd half of 2005 

For earlier comments made in 1st half of 2005 

For earlier comments made in 2nd half of 2004 

For earlier comments made in 1st half of 2004

For earlier comments made in 2nd half of 2003

For earlier comments made in 1st half of 2003

For earlier comments made in 2nd half of 2002

For earlier comments made in 1st half of 2002

For earlier comments made in 2nd half of 2001

For earlier comments made early in year 2001

For earlier comments made in year 2000

Don't confuse brains with a bull market.

-----Humphrey Neil