It's Summertime and the Fed is'nt Easing

Market Direction Model



Impulse Indicator Buy Signal Negated





Trendline Analysis

Nasdaq Composite Index

60 Minute Chart
Each candlestick represents 60 minutes
Rally Fizzled



The day before Ben Bernankie's address to Congress on Thursday the headline news was:

Fed’s Janet Yellen calls for strong action to boost economy

The Federal Reserve’s second-most-powerful member is calling for aggressive action to boost the U.S. economy — hinting she might favor extending the Fed’s “Operation Twist” and launching a third round of so-called “quantitative easing.”

“I believe that a highly accommodative (Fed) policy will be needed for quite some time to help the economy mend,” Janet Yellen, vice chair of the Federal Reserve board of governors, said this evening in remarks to the Boston Economic Club. “I anticipate that significant headwinds will continue to restrain the pace of the recovery.”

The market was expecting Ben Bernankie to parrot these comments in his testimony to congress Thursday morning. That did not happen. The message was to the contrary. Bernankie stated that Fed accommodation (quatitative easing)  was not forthcoming at this time.

As you should know by now, the markets are addicted to Fed accommodation (printing money). Gold plunged, oil sold-off and the large player investors reversed course and proceeded to shave nearly 100 Dow points off the day's high to close up just 46 points.

The tone of the market has been dampened until the next market moving headline.

Addendum:

Friday Morning 06 08 2012

Our core equity defensive positions are doing well this morning.

GWM Core Equity

This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.







Impulse Indicators Fired - Short-Term Buy Signal

Daily Market Snapshot

The Bulls Assert Themselves,
But DMS is Still Less than 50% Green.
We now need a follow through day.

Trendline Analysis

Chart View

S&P 1500 Composite Index

Nice Bounce Off the Bottom

Market Direction Model

           IMPULSE INDICATORS                         MDM                      

Buy Side Impulse Indicators Fired
(Lots of Blue Kahunas)

The Woody Indicator

(Volatility Indicator $VIX)



Market volatility dropped dramatically.
We are back in the Safe Zone.



The market remains in an intermediate downtrend. However the short-term trend has reversed to the upside. The market is being bouyed by hopes that the Federal Reserve Chariman, Ben Bernankie, will open the door for QE-3 (quantitative easing - code for print more money) during his congressional testimony Tuesday morning.

As I indicated in recent blog posts, we are positioned primarily in high dividend paying defensive issues. If the market has some follow-through Tuesday morning, I will add some more aggressive positions to the mix.

The market has been very oversold so I anticipated this bounce. Up-side follow through is essential to qualify this move as something more than a short-covering rally.

This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.

GWM Model Portfolio Holdings Report III

GWM Model Portfolio Holdings

GWM Inflation Hedges Folio Holdings

The Inflation Hedges folio is currently 100% invested in the Gold ETF (GLD).
 

 

Gold Price Chart

 

 

 

Gold ETF (GLD)

Performance Statistics

 

Gold has made a trend reversal after having corrected rather strongly.
Our entry seemed to be timely.

 

Trenline Analysis

Gold ETF (GLD) 

Breaking to the upside

This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.

GWM Model Portfolio Holdings Report II

GWM Model Portfolio Holdings

 Sector Rotation Folio Holdings

The Sector Rotation folio is currently 100% invested in the SPDR Utilities ETF (XLU)

Sector Relative Strength Comparison

(Click on charts for easier viewing.)



Utilities are currently the strongest and most stable S&P Sector



Utilities ETF (XLU) Yield

(Highlighted in Yellow)

This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.

GWM Model Portfolio Holdings Report

Due to the current market conditions, the very same high dividend/defensive positions now occupy both the New America Folio and the Discretionary Folio.

We are current 60% invested in both folios.

Holdings details, including dividend payouts.

Dividend yield is highlighted in yellow.

(Click on charts for easier viewing.)



Click the graph for readable view

  
 

This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.

The Gerritz Letter

The Gerritz Letter has been published. It should be in your email inbox shortly. It is also available on the GWM web-site.

Stephen l. Gerritz, CFP

Market Snapshot 06 01 2012

(Click on charts for easier viewing.)
(Then click the large white X in the upper right corner to return to the blog)

 

Daily Market Snapshot

Market in Correction

Chart Analysis

Nasdaq Composite Index

Expect lower price ahead.

Market Direction Model

Our Impulse Indicators (the left side of the chart) represent
significant spikes in buying or selling
activity by market participants.

A cell painted blue represents a strong buying surge,
while a cell painted red represents
a strong selling surge.

Ian Woodword, the creator of the MDM, calls these impulse indicators Kahunas.
They come in two sizes, big and small.
Little Kahunas are either light blue or light red,
whereas Big Kahunas are dark blue and dark red.
The darker shades represent extreme levels of buying or selling.

You clearly can see how these impulse indicators set the tone for the market for many days to come.
Just look at the MDM (the right side of the chart).

On May 4th an entire row was painted with both red or dark red Impulse Indicators.
Notice that the MDM subsequently turned red, bearish, for a full two weeks.

The Woody Indicator

(Volatility Indicator $VIX)

Fear and Greed rule the market at extremes.
This is where the most money is made or lost in the market.


 The Woody Indicator is based on volatility and effectively
 measures and magnifies the emotions
of market participants.

Fear is generally accompanied by higher volatility.

The above analysis confirms what you have been hearing in the nightly news of late; the market is the midst of a full blown correction. The Dow Jones Industrial Average is now negative on the the year and the Nasdaq Composite Index has declined by a full 10% as of Friday's close.

Above I provided you with a little more indepth review of the inter-workings of our very effective Market Direction Model. I do this to help you gain at least a minimum understanding of the methodologies I employ and to hopefully help instill greater confidence in our processes.

Our Market Direction Model is Keeping us on the Right Side of the Market.

Our Impulse Indicators gave us a warning shot accross the bow in early May. This was my signal to begin reducing risk exposure in all GWM Model Portfolios. Going into yesterday's big decline all Model Portfolios were already positioned very defensively in high quality bonds, utilities (including phone companies) and lots of cash.

This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.