Dallas, TX
June 8, 2012, 08:00 EST		 Dr. Joe Duarte's Market I.Q.


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Intelligence, Market Timing, And Trading Strategy For Traders and Investors

It's All About The Printing Press For Stocks Now
What's Hot Today:
U.S. stocks will hopefully end the week quietly. Still, from our viewpoint, it was quite a momentous week on several fronts.

Economic Calendar
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News For Thought:

Report: Consumer debt shows signs of slowing. According to The Wall Street Journal: "U.S. consumer credit grew at a slower pace than expected in April while March figures were revised downwards, the latest indications of headwinds facing the U.S. economy."

Hit the printing presses. Spanish banks need $50 billion. According to Reuters: "An International Monetary Fund report on Spanish banks will show the country's troubled lenders need a cash injection of at least 40 billion euros ($50 billion), sources in the financial sector said Thursday. "

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It's All About The Printing Press For Stocks Now
Here Is To Hoping That The Market Ends The Week Quietly
The stock market moves into Friday with a new set of variables to deal with. More specifically, how much money are central banks willing to print to get the world economy back on track? And the answer, if you ask the trading floor cynic, just might be infinity.

China, in our opinion, sounded the bell with its so called "surprise" easing overnight. And it's clear that the Federal Reserve is thinking about how it's going to hit the presses without making it too obvious, or too nasty for the bond market. Still, it seems as if the election still holds the key.

Mr. Obama continues to slip in many polls. Thursday afternoon, on Intrade.com, he was down to the 53% area while Mr. Romney had risen to nearly a 44% chance of winning the election. Three weeks ago, Mr. Obama was at 60% and Mr. Romney was hovering near 38%.

This, in our opinion, may be the most important dynamic at the moment, the interplay between easy money and the election, bringing the pendulum away from Europe and more onto the U.S. Federal Reserve.



Chart Courtesy of StockCharts.com


The S & P 500 (SPX) closed above its 200-day moving average on Thursday while small stocks failed to make much headway.

The best scenario for stocks is that they go away quietly into the weekend and pick up some up side momentum next week. We may just see that, as the Bollinger Bands are, once again, starting to constrict around the 20-day moving average. This kind of chart pattern usually precedes a big move. The question is always what the direction will be. And of course, no one knows.



Chart Courtesy of StockCharts.com


The Nasdaq Advance Decline line (NAAD) has improved some, but was negative on Thursday. We will likely see some backing and filling here for several more days to weeks. Still, it is an improving indicator.



Chart Courtesy of StockCharts.com


The Nasdaq Hi-Lo line (NAHL) is flattening out. It is still early to tell whether this will last or not. But as with the NAAD, we are cautiously optimistic, while remaining aware of the potential danger that could lie ahead.



Chart Courtesy of StockCharts.com


Conclusion

The stock market will hopefully deliver a quiet Friday. The weekend will hopefully be without drama. And traders will hopefully come back in a good mood on Monday.

We are turning slightly positive on a trading basis.

Keep your cash ready to deploy and remain patient.

Trading Plan Review

The market is trying to move higher. This is a dangerous time to be holding any short positions. We have adjusted or short ETF sell stops accordingly. As of 6-6-12, we are almost all the way in cash with very small long positions. We are looking to add to long positions if market conditions call for it and have added several long recommendations to all of our lists.

Investors who follow our trading models should be holding large amounts of cash at this point. We are nearly 100% in our S & P timing model but have several potential longs on the list.

Our energy portfolio is in cash. Our health care portfolio is in cash.

We are in cash in gold market. We are short U.S. Treasury bonds.

When you understand the big picture, the next step is how to survive and profit from what lies ahead. That's why we recommend: "Market Timing For Dummies." and "Trading Futures For Dummies." The Trading Manuals for All Seasons. Also Available As Kindle Books.

 

Market Moves - Stock Of The Day
SPDR Technology ETF (NYSE: XLK) Is Acting Much Like The Market
Shares of the SPDR Technology ETF (NYSE: XLK) rebounded well on Wednesday but pulled back on Thursday, in action similar to the S & P 500 (SPX).



Chart Courtesy of StockCharts.com


On Wednesday, we noted that if the markets continued to move higher, XLK should participate. What we weren't sure of, at that time was whether the technology sector would mimmick the general tone of the market, or show some relative strength.

The answer, at least on Thursday was the latter. XLK, pretty much mirrored the market's moves, giving up its early day gains at the close. And why not? XLK is a well diversified technology portfolio of large cap stocks, the kind that mutual funds and big traders like to put their money in, especially when they're trying to latch on to a trend. It makes sense for portfolio managers to own something that can be reliable in a rising market, and predictable in a falling market.

XLK moved above its 20-day moving average on Wednesday, and stayed there at the close on Thursday. As we noted here on Wednesday, XLK, because of its similarity to the Nasdaq 100 index (NDX) is likely just one more good day or so from testing its 50-day moving average.

If the Nasdaq Composite and the Nasdaq 100 continue to rebound, we would expect this ETF to participate nicely. It also has some Dow Industrial Average components in it, which gives it extra pop potential from big cap mutual fund managers.

Joe-Duarte.com is your own personal trading plan, updated daily. "Market Timing For Dummies" and "Trading Futures for Dummies" offer excellent ways to put together such a plan.

For more details on how analyze intermarket relationships and how to use technical analysis in your daily portfolio managmement buy "Market Timing For Dummies" and "Trading Futures for Dummies." Visit our bookstore.

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