Market Timing Research

Is the Dow Jones really going up, or is this another set-up for a fall?

Long term, we don’t see how the US can escape a double dip recession. In fact, it really hasn’t left the “first recession” with unemployment at record rates. And now that census takers are being left off, retail is off, commercial real estate is off (the malls are empty) because consumers aren’t spending, new home sales are off (so don’t expect a boon in construction workers any time soon), the BP Oil spill will hit the coastal states, … frankly with all this true BAD news I don’t see where the recovery lies.

Nevertheless, the market CAN do some crazy things…for awhile until reality catches up. Here’s the best seasonal forecast of the DOW we can provide at present.

This chart does suggest a fake rally and dip by month’s end, then rally into August. By cycles analysis, August 6-13 could see a mini-top in the market, and then a decline, so stay tuned to your MACD signals or trendline breaks for signals. A long term moving average would be much too slow for what we expect.

If you’d like, you can click here to get our Factor Seasonal Trading software – and our 3 Market Timing Services – right now FREE for 14-days so you can see the forecasted trends for the stocks, ETFs, indexes or mutual funds you’re trading or investing in.

Here is the latest Dow Jones seasonal forecast, using the latest data. Seems that the market is correlating to a bullish interest rate environment, namely a lowering of interest rates, but also is more correlated to a bear market seasonal than bull market seasonal. Even so, all the factor seasonals show a small blip up right about now that usually lasts for a week or so.

The employment figures coming out Friday may change things, but the market has already pretty much digested the results of the G20 summit in Canada with governments promising to cut budget deficits over the next few years. That can only mean two things: higher taxes and less spending on entitlements. We agree with Krugman–if they go through with this, it will eventually produce a double dip recession at the least.

We’ve just completed a major new study here at Market Timing Research on volume cycles in conjunction with seasonal cycles. Using our same proprietary method for developing price seasonals, we did the same analysis for yearly volume to see if volume does indeed go up as prices go up, and down as prices drop, and to see if it could explain volatility in certain times of the year. Sure enough it does, and when there are periods of disconnect between volume and price, this may bespeak to an insecure market or periods of volatility that can be used to your benefit. The following charts shows what we’re talking about.

To our knowledge, no one has ever done this type of analysis previously or produced this type of chart before. As usual, we are market timer firsts. The stock charts suggests we should see a sharp spike UP in the market around now, though that would have to be confirmed with the lunar seasonal.

The other factor seasonal we’d like to highlight is the DJI typical price pattern in years when the government is doing everything possible to provide easy money, as the market has about an 80% correlation with this trend. You can see the forward expectations if this pattern is to hold, once again forecasting a near term bump UP against all expectations.

Naturally you can find lots of individual stocks obeying their seasonal tendencies in our monthly newsletters. Just grab a sample subscription and see for yourself all the money you could be making with this insider information.

Market timers , We’re still expecting a market turnaround at the end of this month, starting around the 24th. The market is currently following the 4 year election cycle better than any other factor seasonal, so here it is for a preview…

Presidential Cycle Seasonal Proejction

The charts this month has lots of opportunities. ATT looks good, CAT looks bad. CVX looks a bit depressed from where it should be, Citibank is on track. JPM seems like it’s ready to pop … If you are expecting bad times ahead, you’d pay attention to Disney, Walmart, Caterpillar and Dupont, and put a MACD trigger on the downward seasonal expectations. Seasonally those stocks go down; if there is a market crash, that decline on top of seasonal expectations should lead to some nice trading profits. Here’s a courtesy look at the recent DJIA newsletter with pure price projections. This type of inside information is how traders make money.

May DJIA Newsletter

Word just came out that the Wall Street banks, including Morgan Stanley, just had 63 straight days of trading profits. That’s right, not a single day in the previous quarter where their traders lost money. We also now hear that the government is going to probe those firms in a possible criminal investigation. Someone is out for blood.

We looked at Goldman Sachs previously, so how does Morgan Stanley fare? Let’s look at the factor seasonal charts…

The seasonal chart here suggests that we wait for a MACD upturn for a quick rebound in the stock, perhaps a chance for trading profits. But what about during bear markets?

Although we are expecting a severe downturn in July-August, Morgan usually holds steady during market downturns during that period. If it was a normal weakness we were expecting, the seasonal suggests Morgan would be holding its value and thus a safer BUY than we would consider without having any such information. But sine we are expecting a big drop/weakness in August, this typical chart may not hold.

In any case, you now see the power of seasonals in helping to judge a stock for trading purposes. We offer chart books of past stock performance in ALL sorts of trading environments — bull/bear markets, increasing/decreasing inflation rates, increasing/decreasing interest rates, economic expansions/recession, Democrats/Republicans in office, and so on. They are invaluable for both the Technical analyst doing market timing and fundamental trader ho is focusing on earnings and P/E ratios.

The world seems to hate Goldman Sachs right now. Rarely have I seen such vehemence, except perhaps the hate for Monsanto and its business practices which seem, to an astute observer, possible even more dangerous than what cretaed our banking crsisis.

In the case of Goldman, I suppose all that greed eventually catches up with you. With the threat of a government lawsuit that hit the firm by surprise, the stock stumbled taking Wall Street with it. But the seasonals suggest that this may soon present a great bargain hunting bottom.

Goldman Sachs Trend Projection

I spent two months in China recently and can only confirm what I always say. This century will belong to the Chinese. This is coming from someone who has lived there and visits once or twice a year for a month or so each time, talking to countless politicians, businessmen, monks, factory owners, professors, students, military men … you name it.

I’d throw in Brazil and India as two other coming powers because they also will be producers and exporters, and can grow their middle class of consumers which as yet do not have access to lots of consumer credit. Nevertheless, in my view China will be king.

China is becoming the world’s manufacturing capital before our eyes and will be that in the near future. We cannot stimulate jobs but they can. They can export. They can close in on themselves and develop internally without need of exports. They’re not shackled with expensive health care burdens, nor with union problems or expensive labor (yet) nor expensive foreign wars. Naturally they have other probems and one that I’d worry about is the potential for political problems around 2012…

China ETF Trend Projection

As to the rest of the US market …

S&P 500 Index Weekly Trend Projection

Dow Jones Industrial Average Trend Projection

NASDAQ Index Weekly Trend Projection

Today’s Factor Seasonal Charts offer solace to traders worried about this week’s market drops. Take a look at the regular seasonal trend lines (in GREEN) for all three indexes – the Dow Jones, S&P 500 and NASDAQ. Notice how January tends to see 1-2 drops before running up into February.

This is exactly the patterns we’re seeing right now in the current market action (shown in YELLOW).

S&P 500 Index Weekly Trend Projection

Dow Jones Industrial Average Trend Projection

NASDAQ Index Weekly Trend Projection

Folks, these trend projections have been running remarkably accurate all year long. And we’re seeing significant support for the two-three month trend projections (in ORANGE) for these indexes.

The Dow Jones Industrial Average seasonal trend forecasting chart for this week. The 2009 price trend is in YELLOW, the annual seasonal trend is in GREEN and the Factor Seasonal Projection is in ORANGE:

The S&P500 seasonal trend forecasting chart for this week. The 2009 price trend is in YELLOW, the annual seasonal trend is in GREEN and the Factor Seasonal Projection is in ORANGE:

The Nasdaq Composite seasonal trend projection for this week.The 2009 price trend is in YELLOW, the annual seasonal trend is in GREEN and the Factor Seasonal Projection is in ORANGE:

The Dow Jones Industrial Average seasonal trend forecasting chart for this week. The 2009 price trend is in YELLOW, the annual seasonal trend is in GREEN and the Factor Seasonal Projection is in ORANGE:

The S&P500 seasonal trend forecasting chart for this week. The 2009 price trend is in YELLOW, the annual seasonal trend is in GREEN and the Factor Seasonal Projection is in ORANGE:

The Nasdaq Composite seasonal trend projection for this week.The 2009 price trend is in YELLOW, the annual seasonal trend is in GREEN and the Factor Seasonal Projection is in ORANGE:

The Dow Jones Industrial Average seasonal trend forecasting chart for this week. The 2009 price trend is in YELLOW, the annual seasonal trend is in GREEN and the Factor Seasonal Projection is in ORANGE:

The S&P500 seasonal trend forecasting chart for this week. The 2009 price trend is in YELLOW, the annual seasonal trend is in GREEN and the Factor Seasonal Projection is in ORANGE:

The Nasdaq Composite seasonal trend projection for this week.The 2009 price trend is in YELLOW, the annual seasonal trend is in GREEN and the Factor Seasonal Projection is in ORANGE:

The Hang Seng seasonal trend projection for this week.The 2009 price trend is in YELLOW, the annual seasonal trend is in GREEN and the Factor Seasonal Projection is in ORANGE: