Saturday Dec 24, 2011
It's been a long slog since the July sell off but the market has recovered. It had to climb the Wall of Euo Worry, and indeed there are still comments about that.
But the VIX has led the way, surely the Dollar and TLT will soon begin steeper declines.
Dow Diamonds
The Chakin Money Flow Indicator at bottom shows Wall Street Sand, money, moving back into the Dow Diamonds ETF. DIA finally closed over the resistance level at 122. It would not be unusual to see it re test that level on the reduced volume between holidays lower volume week ahead.
Market Vectors Jr
Year end tax loss selling as people dump their 'losers' will probably keep GDXJ down. It did pay a $1.59 dividend and accordingly dropped that much in price recently. Be patient, recall how long it took for gold and gold stocks to get going in 2000.
NYSE Summation Index
The recent volatility has scared most funds and individuals out of the stock market. They are slowly returning., see Money Flow in chart One on DIA. Here i put the MACD behind the Summation Index, in green. This is a powerful combination. It may well take until the new year but when this turns up we will see a stunning rally that will drag both funds and individuals back into stocks.
Follow the Leader VIX
VIX has led the stock rally as it falls back to a complacent condition. UUP the Dollar at bottom and TLT bonds are top are way over valued and should play catch up in the new year, further augmenting the rally.
So not much this next week, but I suspect a powerful rally gets underway in the New Year.
I have specifically suggested energy, energy service (RIG, XES), and GDXJ. Most investors are still wary which means there will be plenty of buying power as they pile in late to the party.
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Be sure to read our update this next week when we examine a commodity based play, in business since 1918, that is paying , yes a double digit dividend AND stands to gain from dollar weakness and commodity strength
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Well maybe not, we really are looking at such a company
So stay tuned and don't drop that subscription...
Merry Christmas from TMP
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