Saturday, July 28, 2012

Market Comment 07 27 2012

Market Snapshot

The Bulls regain control.

Market Snapshot
Chart View

The market has been very choppy with big up and down moves.
That being said, the market has put in a series of higher highs and higher lows.
(This is the definition of an uptrend.)

Market Direction Model
Two nice upside days puts us back in rally mode.
All of this could change next week with further news out of Europe, the Feds
comments on possible quatitative easing and the very impactful
jobs report on Friday.

While I haven't written a blog post for a couple weeks, I have been actively tweaking GWM Model Portfolios to stay on the right side of the market. We have been making steady gains and limiting volatility.

Even with the positive moves Thursday and Friday we still do not have a clear path to the upside going forward. The defensive sectors such as utilities and consumer staples are attracting money. A real rally would be led by industrials and commodities.

News driven markets are unpredictable; so caution is still called for.

The markets have been rising on speculation that the economy is weakening to the point that Bernanke will pull the trigger on a new round of quatitative easing, which would be our signal to load up on stocks aggressively. If  Bernanke makes no mention of forthcoming QE in his FMOC report on Wednesday and/or if we get a bad employment report on Friday, the market will quickly head south in a big way. Either way, events this coming week will be our guide.


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