Since 1950, the six month period between April 30th and November 1st has been much weaker than the other six months. In the 66 years through April 30, 2016, the bad period actually lost 260 Dow points while the good period gained 17,141 points. That’s pretty significant. All the gains since 1950 have occurred during that good six month period.
More recently, since April 30 of 2007, the good period has gained 4,004 Dow points while the bad period has lost 610 points.
But, be aware that significant multi week rallies can occur within the bad period and not all bad periods are negative. The one, starting after April 30, 2014 gained 809 points.
The five week moving average of the percent bears from the American Association of Individual Investors dipped under 25. Readings that low have frequently, but not always, portended weakness.
FIVE DAY RSI WAS RECENTLY OVERSOLD
In spite of some bearish considerations, we could experience some strength in the near term because of some short term gauges being oversold..
GOLD
.Gold has been in the midst of the most significant rally since mid 2013. Is this the end of the bear market? Too early to tell. It is overbought (arrow).
CANADIAN MARKETS
The Canadian market seems to have ended its bear market in mid January. It’s a resource based market and with the rally in oil and gold, it’s not a surprise.
TRADING FOR APRIL
For the month, our hotline recommendations lost .07 SSO points. The SSO itself gained .38 points. A very flat month.
From December 31, 2010 through March 31, 2016, The S&P 500 gained 808 points or 64.2%. The SSO gained 39.8 points or 167.3%. Our hotline advice resulted in gains of 67.76 SSO points beating the buy and hold by almost 28 SSO points. We can see the progress in the chart below.
FINAL THOUGHTS
In listening to the talking heads on CNBC, some commentators dismissed the “sell in May and go away” quote. Obviously, they are speaking without researching.
I think it’s ridiculous for Fed officials to be constantly making speeches that are mutually contradictory. Their desire for some publicity keeps the markets in turmoil. As Rick Santelli says, “you don’t see board members from General Electric traveling around and contradicting each other”.
With earnings rather poor, it’s hard to imagine a new upleg from current levels. We need to retreat and regroup.
INTERMEDIATE TERM
Since 1993, we have given instructions to mutual fund investors to be either 100% invested or 100% on the sidelines. According to Timer Digest, of Greenwich, CT, which monitors over 100 advisory services world wide, we are only one of four
services to have beaten the buy and hold over the past ten years.
We were rated # 1 for the past ten years at year end, 2003, 2004 and 2005. In 2006, we slipped to # 3. At the end of 2007 we were ranked # 4.
Since then, we have dropped out of the top ten for stocks, but we were bond timer of the year at the end of 2007 and 2008 which means we were ranked number 1 both years. We were rated # 1 in gold timing for 1997 and again in 2011. We were #2 in gold for the year 2014.
MANAGED ACCOUNTS
In association with Financial Growth Management, we can make available to you a low risk bond income program. Your account would be actively managed through TD Ameritrade or Trust Company of America.
Your funds will be exchanged between high-yield bond funds and money market funds based on a proprietary mathematical model. Our goal is to return 10-12% per year during a 3 to 5 year market cycle with very low risk.
If you would like more information, please contact Ray Hansen at 714 637 7784.
END OF LETTER
related by Lance Roberts M/T Ed:
