StreetSmartPost

Subscribers to Street Smart Report: There is a new in-depth Gold, Bonds, Dollar, Inflation Update on your website from yesterday.  And the in-depth mid-week ‘Markets Signals and Recommendations’ report will be on your website later today.

Note to Non-Subscribers:

I am going to break our rule of not providing our signals on the free blog because it would not be fair to paying subscribers.

However, there is an unusual situation regarding our Seasonal Timing Strategy in which it would not be fair to keep the information from non-subscribers.

Many of you have read my books and are aware that the normal re-entry signal for STS takes place on October 16, if short-term MACD is on a buy signal as of the close on that date.

But the market’s seasonality has been oddly out of synch this year. The market plunged 25% in January and February to its March low, when STS was in the market for what is usually its favorable season. STS then gained most of that back in the rally off the March low, but was still down 7% for the year when it exited for the market’s usual unfavorable season, and did not make much from interest on cash when out. Meanwhile, the market continued to rally in what is usually its unfavorable season, into an unusually overbought condition above its long-term 200-day m.a.

So as October 16 and the potential re-entry signal for STS approached last week we told subscribers that we were probably going to intervene this year and recommend not following the re-entry signal if it was triggered. And when it was triggered as of the close on Friday, we issued a special hotline saying we were intervening and would delay the re-entry.

Our reasoning was that if the rally continues and we re-enter a few days later it won’t make much difference, but it would make a huge difference if STS re-enters just in time for an overdue and normal correction back down to retest the support at the 200-day m.a.

So, although the remarkable performance of STS was achieved by strictly following its entry and exit rules, this time we are going to use our other strategy, our Market-Timing Strategy, currently neutral on the market, to determine when the STS re-entry will take place.

After considerable thought, we decided we should let non-subscribers who have read my books and may be following the STS strategy on their own by watching MACD, know that we have intervened on the re-entry this time, due to what we believe is the dangerously overbought condition of the market, and likelihood that profits will likely come from downside positions before long. And recommend that the re-entry signal not be followed just yet.

Performance of STS over last 10-years to Dec. 31, 2008, through two serious bear markets, by strictly following its entry and exit rules:

Data includes dividends and interest on cash.

Commentary:

Third-quarter earnings continue to come in mostly reporting sales or earnings declines, but declines that were “less worse” than Wall Street’s low estimates, and so are reported as coming in “better than expected”, with the actual declines rarely mentioned.

But yesterday the market seemed to decide it was not going to fall for that interpretation of earnings this time around, or perhaps it was the continuing bad news from the housing industry.

But in any event the market closed down, not as impressed with Apple’s earnings after all.

And this morning it’s been more of the same in the pre-open trading, with numerous companies reporting earnings or sales decline, but being reported as “beating expectations”, but markets in Europe are down, as are pre-open indicators in the U.S. Perhaps a mood change?

Yesterday:

The market was negative right out of the gate, with the Dow down 100 points by mid-day. It did claw itself back halfway by the close but still closed down for day.

Yesterday’s intraday chart:

The Dow closed down 50 points, or 0.5%. The S&P 500 closed down 0.6%. The NYSE Composite closed down 0.9%. The Nasdaq closed down 0.6%. The Russell 2000 closed down 1.4%. The DJ Transportation Avg. closed up 0.2%

Last night:

Asian markets were down last night, still tracking with whatever the U.S. market does.

Among individual countries;  Australia closed down 0.2%. Hong Kong closed down 0.3%. China closed down 0.5%. India closed down 1.2%.  Japan closed flat.  Singapore closed down 0.7%. South Korea closed down 0.3%. Taiwan closed down 0.7%.

This morning:

European markets are down, about 0.8% on average.

Oil is down $.74 a barrel at $78.38 at the moment.

Gold is down $3 an ounce at $1,052 at the moment.

In the U.S.:

This week’s potential market moving economic reports continue. To see the full schedule of the week’s reports click here, and look on the left side of the page it takes you to.

Our pre-open indicators are somewhat negative, pointing to the Dow being down about 25 points or so in the early going, probably not meaningful as to direction.

Weekly patterns: This is a week after a positive options expirations week, and the week after tends to be negative.

Interesting Chart of the Morning:

I’m sorry, but once again I’m running late and have a lot to do for subscribers today, so don’t have time to include an interesting chart this morning.

Please scroll down to see recent ‘Interesting Charts of the Morning’.

To read my weekend newspaper column titled ‘Will 3rd Quarter Earnings Support the Rally?’ click here! .

Subscribers to Street Smart Report: There is a new in-depth Gold, Bonds, Dollar, Inflation Update on your website from yesterday.  And the in-depth mid-week ‘Markets Signals and Recommendations’ report will be on your website later today.

Non-subscribers to Street Smart Report: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, you might want to consider a subscription to our independent research. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe?

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