The S&P 500 has now posted 5 positive weeks in a row; and what a week it has been, with a 2.18% gain this week alone. Based on historical data there is approximately a 97% probability that the S&P 500 will close lower this week. The expected pull back in the market could be healthy for the market, and good for longer term growth.
The S&P 500 has continued to buck many analysts expectations. However, if you recall the "Sentiment Signal" has been indicating a "Tentative Buy" period from September 19, 2011 and a stronger "Buy Period" from December 19, 2011. The signal has not wavered since November 23, 2011 and has continued to show strength. As the "Sentiment Signal" (Chart 1 below) indicates we continue to remain in a buy period. Therefore, despite what the market does it is my recommendation to keep re-balancing from short cash and bond positions into long equity positions. Based on the green dashed line below, representing the expected trend, the buy period will end about mid March (or 29 trading days). The "Super Signal" (Chart 2 below) also is confirming the market sentiment trend and has shifted direction away from formation indicating that the market is not likely to collapse in 2012. The expected trading range has narrowed to +/- 3.81% or a low of 1,293 and high of 1,396 (Chart 3 below). A move below 1,293 will indicate a significant buy opportunity.
Some Important News Last Week:
"Stern Advice: New 401(k) policies are a mixed bag" - Reuters
"Annuitizing Your 401(k)"-Wall Street Journal
"The Obama Administration took aim at the nation's retirement worries on Thursday with a series of rules and proposals addressing everything from 401(k) fees to mandatory distributions and annuities for older retirees."
"Most Facebook users get more from it than they put in, study says" - LA Times
"The Pew Research Internet Project released a report about Facebook on Friday, providing insights into the company that you won't find in its IPO filing."
"Reports: Iran successfully launches small Earth-watching satellite" - The CS Monitor
"Iranian state news reported that the Iranian Space Agency has successfully launched a 110-lb. satellite into orbit Friday, in what is being hailed as a huge achievement for the country's space program."
Authors Note: On the surface this sounds benign, but if they can launch satellites into space, Iran now has the capability to launch inter-continental ballistic missiles (ICBM). Along with a nuclear program this makes them very dangerous in the eyes of the US. We already heard rumors in the news last week that the US is trying to prevent Israel from attacking Iran (yeah right).
The S&P 500 has continued to buck many analysts expectations. However, if you recall the "Sentiment Signal" has been indicating a "Tentative Buy" period from September 19, 2011 and a stronger "Buy Period" from December 19, 2011. The signal has not wavered since November 23, 2011 and has continued to show strength. As the "Sentiment Signal" (Chart 1 below) indicates we continue to remain in a buy period. Therefore, despite what the market does it is my recommendation to keep re-balancing from short cash and bond positions into long equity positions. Based on the green dashed line below, representing the expected trend, the buy period will end about mid March (or 29 trading days). The "Super Signal" (Chart 2 below) also is confirming the market sentiment trend and has shifted direction away from formation indicating that the market is not likely to collapse in 2012. The expected trading range has narrowed to +/- 3.81% or a low of 1,293 and high of 1,396 (Chart 3 below). A move below 1,293 will indicate a significant buy opportunity.
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| Chart 1: 02/03/2012 S&P 500 Sentiment Signal (click to enlarge) |
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| Chart 2: 02/03/2012 S&P 500 Super Signal (click to enlarge) |
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| Chart 3: Week of 02/06/2012 S&P 500 Expected Trading Range (click to enlarge) |
Some Important News Last Week:
"Stern Advice: New 401(k) policies are a mixed bag" - Reuters
"Annuitizing Your 401(k)"-Wall Street Journal
"The Obama Administration took aim at the nation's retirement worries on Thursday with a series of rules and proposals addressing everything from 401(k) fees to mandatory distributions and annuities for older retirees."
"Most Facebook users get more from it than they put in, study says" - LA Times
"The Pew Research Internet Project released a report about Facebook on Friday, providing insights into the company that you won't find in its IPO filing."
"Reports: Iran successfully launches small Earth-watching satellite" - The CS Monitor
"Iranian state news reported that the Iranian Space Agency has successfully launched a 110-lb. satellite into orbit Friday, in what is being hailed as a huge achievement for the country's space program."
Authors Note: On the surface this sounds benign, but if they can launch satellites into space, Iran now has the capability to launch inter-continental ballistic missiles (ICBM). Along with a nuclear program this makes them very dangerous in the eyes of the US. We already heard rumors in the news last week that the US is trying to prevent Israel from attacking Iran (yeah right).
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