A Tradewinds Update

Its been quite awhile since my last post. There has not been much to say when the market has been universally in a downward trend. Now we are entering a period where we may be seeing the stabilization or even reversal of the trend.

We have had a nice run/bounce leading up to the election and then got the smack in the head reminder yesterday not to get to giddy.  In reality, the bear push back was completely to be expected. The next few trading sessions are going to be important to see if we can establish a higher-low from what we saw on Oct. 27.  If we do that and then move past the high set on Nov. 4, you can start to feel good about the long side again – cautiously.

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.

TradeWinds for Friday August 15th

If anyone is paying attention, they know that I have posted in awhile. As I have said before, without much of an audience out there, the motivation is hard to keep it up. However, I do update the TradeWinds momentum charts everyday and the TradeWinds Top 25 lists and TradeWinds BlackBox. If you have not been following those, you have been missing out on some excellent trend picking.

So where is the market at these days? Certainly the current trend is to the bull side and we think its a solid one. One reason we believe that is because its not just a blind across the board, rising tide lifts all boats kind of rally. Its selective and rotational.

Biotech, pharma and healthcare remain the leaders as we have pointed out for some time. Tech is coming on strong - loving those semiconductors. Housing and financials are rebounding but doing so cautiously. Of energy and commodities is taking it on the chin as part of the rotational pattern. I expect to see a swing back for those sectors to test if we are now in a bear market for those guys.

Our momentum charts are in the neutral zone, but getting stronger. If you look just at the major indexes, their momentum is now is the smooth sailing TradeWinds zone, as are the majority of stocks that we track. We don't publish momentum on the stocks because we are constantly cherry picking those to make sure we have a mix that is in the bull moving sectors.

The strategy is now to buy the pull backs, but with caution. We are approaching the dreaded September-October trading whitewhater. We will be careful to watch if our current upswings peaks just in time to set the take for the early fall plunge.

Happy Trading.

TradeWinds Update

I have been a bit lax on posting, but as always I keep the charts and top 20 lists up to date should you want to follow them yourselves.

After two rollercoaster days, I would say we are in a net positive position, although we still have work to do to get to calm trading waters. Our slow momentum indicator held to the flat to slightly positive tilt during the market gyrations and the number of sectors in negative tradewaters has dropped from 30 to 25 over the past week.

I think what we are seeing is some big sector rotation going on as energy is being unwound as the leader and healthcare (XLV), biotech (BBH), techs (QQQQ, XLK) and even financials (XLF) are getting more attention. This is especially true in the small cap segment of the market (IWM, IYR). My thought is once this rotation is completed we will start seeing some steady upward movement in our momentum charts. Of course this can be disrupted at any moment by a big shock from geopolitical events, oil event, or some banking industry event, so don't get greedy as this scenario unfolds.