TradeWinds for Week Ending September 19

I don't have any unique insight to explain last week's market events, nor any crystal ball as to what the next week will bring. I am a big believer in the momentum indicators that we track, but when the market is gyrating the way it has, its hard to read the charts.

Our indicators say that the market is still in bear territory but we are seeing swing to the upside, in normal times that would be a cautiously optimistic sign to the bull side investors.  Our best sectors still appear to be Housing and Financials, if you can believe it. I am actually liking the second tier banks that have held up well since they have little exposure to the Big Mess, and could very well come out the winners - look at BBT for example. TOL is also looking nice in the housing sector.

The only advice I am going to give this week, is be careful out there.

TradeWinds for September 18th

It has been quite awhile since my last post. I know there are a few faithful fans out there who check the site from time to time. I try to keep the main charts updated each day, but since I never got a the readership I had hoped for I slacked off on the posting. I personally believe in these momentum indicators and watch them faithfully for my own investing purposes. Hopefully some of you have discovered the value as well.

I don’t have any unique insight into the market of the economy. Its hard for any investment system to work when fear is in control of the markets because the patterns that we count own get disrupted by irrational movements. The only good thing that I can say at this point is the obvious that the market is way oversold. Our moderate momentum indicator has dropped below –2.0 (-2.5 for just the major indexes), which is an extreme not normally reached. There should be some kind of bounce here. For that bounce to be sustained we are going to need to have the financial world settle down and get away for the bail out of the day headlines.

I would urge a bit of caution of jumping on the gold and silver bandwagon.  GLD and SLV ETFs still have very negative long term momentum indicators, although improving based on yesterday’s big jump.  Before yesterday GLD was down about 30% from its peak and SLV was down about 50%, so its hard to tell just yet whether this is a panic fueled bounce for these metals or the beginning of a new trend. The duration of the financial turmoil will certainly play a part in this.

I am sitting tight on my holding right now and selling options selectively to raise cash. This crisis will pass like all the others, its just a matter of when.