Ed Note: Recently, Mark has gone from Bull to Bear now to Neutral in Stocks
TIMER DIGEST SIGNALS:
Stocks – Neutral –
Though there are plenty of reasons to be cautious on the markets ahead reverberating the ‘Sell May and Go Away’ cliche, the market is far from dead and may yet have a couple of upside surprises up its sleeve. A ‘Key Reversal’ to the upside Wednesday coupled with a decline in the U.S. Dollar and renewed strength in the Commodity markets were the triggers. We still have potential buyers here into the end of the month and into June, so let’s see which way the wind blows. That said, I wouldn’t call last week’s rally try anything to write home about, especially with regard to the statistical preference for a positive market around the U.S. Memorial Day holiday. And, it’s true markets sometimes move in the opposite direction of their short-term trend ahead of holiday weekends. What I have decided to do? I am neutral here and watching. Stepping back, I believe there will be a Plunge Protection Team shakeout and that shakeout will afford Ben Bernanke an opportunity to ignite a QE3 or some form thereof which will drive equity and commodity prices substantially higher in the next 6 to 18 months.
Gold – Bull –
Again, you have to watch the Dollar! Gold is within striking distance of a new all-time high, Platinum, Palladium and Copper are catching up quickly and Silver could easily see a retest of recent highs (if not new highs) simply because the weak sisters were shaken out. I am not discounting the risk that we could get a correction in all these markets as ‘seasonal’ factors kick in, but right now the tape is positive and most traders are cautious.
Bonds – Bullish –
Bonds should work higher this summer as money flees the stock market during an inevitable correction, but may also work higher as Ben Bernanke continues through June (and possibly longer) to prop up the bond market knowing full well its collapse spells doom for his hoped-for economic recovery.
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