The Gerritz Letter

The August 1, 2010 issue of The Gerritz Letter has been published. It should be in your email inbox now. If you do not see it, check your junk or spam mail folder and mark it as not junk mail.


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Market Breakout or Fakeout

Since the middle of May the market has been in a sideways trading range with a downside bias. The bulls are now gaining an upper hand in the bear / bull battle.

The stock market is poised to rally for the short term. While short term the market has turned positive, the intermediate term is still bearish. A tradable rally may be at hand, but volatility is high and the sustainability of a potential market advance remains in question.

I am cautiously optimistic.

Market Comment 07 22 10

The market was up nearly 2% on Thursday. Breadth was 90% to the upside. Good earnings reports from a number of companies appeared to have been the catalyst.

The S&P 500 broke above it's trendline (T1) decisively. Furthermore, it closed above it's 50 day moving average after many failed attempts. In the daily chart we now have established a higher low, the first step of a potential market reversal to the upside.

Key resistance is at 1100 (R1). A break above resistance would force the bears to cover their short positions, and in the process their forced buying would propel the market higher. A further push above 1130 would give a very strong indication that the bear has been beaten back.

Click here to visit the GWM Web-Site.

S&P 500 Turns Back at the 50-Day Moving Average Again

Wednesday, July 21, 2010 at 02:21PM

For the fourth time since the 'flash crash' in early May, the S&P 500 has tried and failed to rally significantly above its 50-day moving average. First, it was debt concerns out of Europe (5/13). Then it was the negative reversal following China's statement to let the Yuan appreciate (6/21). Then it was weak earnings reports from the Financials and a weak Michigan Confidence report (7/16). Today, it was Bernanke's testimony that preceded the sell-off. Bulls had been hoping that strong earnings would be the catalyst to take the S&P 500 to the other side of its 50-day, but so far the bears (and Bernanke) are having none of it.

Source: Bespoke Financial

Market Comment 07 19 10

2nd quarter earnings and the outlook for IBM disappointed the street. Futures are pointing to a lower open for the market.

SPY (ETF for S&P 500 Index) will likely retest the late June and early July lows again.

We continue to avoid exposure to stocks in favor of bonds.

GWM Web-Site

Market Comment 07 16 10

The Stock market remains in intermediate downtrend.  I expect the volatility to continue with the flow of news, both good and bad. Today's market slump was attributed to a decline in the Michigan Consumer Sentiment Index. Consumer confidence has been waning since the first of the year.

Our income / bond funds continue to perform well. Futhermore, our model portfolios have no exposure to stocks currently.

Bear Market Rules are in place. Share prices are below both the 50 and 200 day moving averages.

Visit the GWM Web-Site

Market Comment 07 13 10

The market is rising, but on very low volume. Additionally, both share price and the 50 day moving average is below the 200 day MA. This is the definition of longer term down trend.

Declining volume suggests a lack of the type of enthusiastic buying that is necessary to sustain a major uptrend. The futures market indicated a strong open on Wall Street Tuesday morning, but unless volume increases, I think we should remain a little skeptical about this advance in stocks.

Fortunately, the low-volatility bond/debt/income funds we own are trending up as well..