Sunday, March 20, 2016

Weekend ... March 19-20, 2016

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The Fed's Dilemma:

Image result for images  painting into a corner
On Wednesday last week, the Fed published one of its most dovish statement since Janet Yellen has become the chair.  In its statement, the Fed effectively ruled out any interest hikes in the foreseeable future and hence painted itself into a corner.   If they hike interest rates in the US, then the US dollar would appreciate significantly which would cause oil prices to fall and hence increasing a massive default of energy backed debt.  If they don't hike, as seems to be their plan for now, they would suppress growth in European and Asian economies.  It seems that the Fed thinks that the US economy is vulnerable and it could go into a recession later this year or early next year.

I think the Fed is going to be watching 2016 first quarter earnings and forecast in early April and hope that the US economy is accelerating its anemic growth.  If earnings and forecast are disappointing, then stocks would suffer significantly which would signal a coming recession in late 2016 to early 2017.

Long Term Outlook (Weeks to Months):

SGS_LT Market Timer Status:  SHORT 
Short as of close of Dec 11, 2015
SGS_LT is a Long Term (weeks to months) Timer
Current Long Term Portfolio (2016)
Past Long Term Portfolios (2008-2015)

Longer term (weeks to months) picture has not changed.   Unless companies report spectacular earnings and forecast, indices would suffer until the Fed announces another round of QE.

Short Term Outlook (Days to  to Weeks):

sgs_st  Market Timer Status:  short 
Short as of  1:00 PM on Feb 18, 2016
sgs_st is a Short Term (hours to days) Timer

Shorter term, SPX is at extreme overbought level.  Chances are good that SPX sells off this coming week to back test its recent resistance levels such its 200 and 100 D-SMA.

MY Plan:

No change. I've have done two short sells of SPY and QQQ.  I am still waiting to see how SPX behaves as it sells off to back test important resistance around 2020 to 2000.

SPX: S&P 500 Index    D-SMA: Daily - Simple Moving Average
DJI: Dow Jones Industrial Index    D-EMA: Daily - Exponential Moving Average
DJT: Dow Jones Transportation Index    PDL: Primary Downtrend Line
NAZ: NASDAQ Composite Index    PUL: Primary Uptrend Line
RUT: Russell 2000 Index    ADL: Active Downtrend Line
OEX: S&P 100 Index    AUL: Active Uptrend Line
NDX: Nasdaq 100 Index    DTL: Dynamic Trend Line   
TUL: Tentative Uptrend Line   TDL: Tentative Downtrend Line  

Disclaimer: The views expressed are provided for informational  purposes only and should not be construed in any way as investment advice or recommendation.  Furthermore, the opinions expressed may change without notice.

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