My Bull and Bear Report

By Mike Turner

This week's letter could be entitled, 'The Bull AND Bear Report...' so let’s jump in.

From the Bull Side...

In the three years that we've had the time-cycle technology, I don't believe I have seen the another time where the major indexes (S&P, DJIA, Nasdaq and the Russell 200), were ALL so strongly bullish and so much in conformance with each other.

Either the cycles are completely missing the future or we could be in for a nice ride higher in the market.

From the Bear Side...

On the other hand, the Turner CrossOver Oscillator is signaling a move lower in the near term (see more on this, below). If I charted the talking heads (something that gives me shivers to think about), I'd guess it's running 80/20 in favor of a significant correction.

Quote worth Quoting Again

We must reject the idea that every time a law's broken, society is guilty rather than the lawbreaker. It is time to restore the American precept that each individual is accountable for his actions."...


Ronald Reagan

Frankly, I'm so tired of hearing how bad September is, historically, that I scramble for the remote (to mute the TV) every time CNBC pops up another one of their so-called 'guessing' experts. The thing of it is, though... they 'could' be right. Certainly, my Oscillator seems to agree with the doom-and-gloomers.

Last week, I recommended you consider buying into weakness. This week, I continue to believe that is the better course of action.

But, I don't mind telling you that I am reluctant to put all of my money to work right now. I am about 50% in cash (in my money management accounts) and may put a little to work this week, but I am not ready to jump in with both feet... not with the Oscillator screaming "Correction".

Believe me... if the time-cycle forecasts were indicating a Bearish bias for the next several weeks, I would be raising all of my stops and getting ready to add some inverse ETFs to my portfolios.

But... just... not... yet.


The Bull/Bear and Oscillator Report...

The 5-week slide from Bullishness to stronger levels of Bearishness continues with a 2-to-1 ratio of Bearish sentiment to Bullish sentiment.
The black line (sum of both new long signals and new short sell signals) is projected to move below the red line (new short sell signals) by the end of the month. This pattern has become decidedly Bearish.
However, the time-cycle trend bias charts for the broader markets have become even more decidedly and uniformly Bullish. From a time-cycle perspective, the next several weeks show there is a definite upward (Bullish) bias to the market.
This upward bias does NOT mean that there will be a Bull market. What it means is, at least as far as the time-cycle analysis is concerned, any Bearish movement in the market will likely be muted by the upward bias and any Bullish movement will likely be more exaggerated to the upside.

The trading strategy? Raise stops.

Be looking at, but not buying, broad market inverse ETFs. With the black line falling from above to below the red line, the risk is now very high that we will see some sort of near-term correction.

Buying on dips looks too risky.

Wholesale movement to cash is not recommended, unless you are the nervous-Nelly type.

Turner Bull/Bear Forecast
For the Upcoming Week

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The Turner Bull/Bear Forecast™ provides a one-week directional forecast on the market, with [-5] being the most Bearish and a [+5] being the most Bullish. This is predicated on the ratio of number of new Buy Signals to the number of new Short Sell Signals for the previous week. The assumption is investors are becoming more Bullish the more lopsided the ratio becomes in favor of new Buy Signals; and, the converse is true; the more lopsided the ratio becomes in favor of new Short Sell Signals, the more Bearish investor sentiment.

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The Turner CrossOver Oscillator™ provides an indication of the over-bought or over-sold condition of the market. The red line (New Short Sell Signals) shows a technical direction and strength (or lack thereof) of investors to push stock prices lower, triggering new Short Sell Signals. The higher the Short Sell Signals line, the more Bearish the market. The black line (Composite of both Short Sell and Long Buy Signals) is the combined impact of both the new Short Sell Signals and the new Buy Signals and is an indication of the degree of oversold or overbought condition of the market. Buying opportunities exist when the Composite of Signals line is moving higher. The higher this line moves, the more Bullish the market. Market bottoms are represented by a change in direction of the Composite of Signals line from moving lower to moving higher. Market corrections become much more likely when the Composite of Signals line crosses the Short Sell Signals line from below the Short Sell Signals line to above the Short Sell Signals line. The market is represented by the green shaded area.


The Signal Investor Portfolio...

No buying this week. The portfolio is about 96% invested.

The average profit in each position is nearly 14%, with only one (RAX) position showing a loss. RAX is down about -0.71%. Our best holding is SNTS, which is up over +35%. The portfolio nicely beat the market last week; not bad for a down market week.

On Monday, we sold the Blackstone Group (BX). BX fell out of the Top 100 best stocks, which is all it takes for us to exit the position, which we did for a small gain.

We updated several stops (this is done every Monday before the bell, so, if you are a paid subscriber, be sure to check the portfolio each week to see how we have made stop limit adjustments.


Upcoming Events...

We are pleased to offer the following investor education webinars on advanced stock market trading. Each webinar is recorded for later playback, but only for those attendees who register.

"An Introduction to the CycleProphet System"

Wednesday, August 21 (3:30pm-4:30pm CDT)
Cost: $0.00
Join us as we take you through an introduction to the CycleProphet system. We will show you all of the tools we use to build and manage consistently profitable stock market portfolios. Feel free to ask us questions during the presentation. Click Here to Register

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"Mike's Trading Room"

Starts Monday, September 9, 2013
Cost: $500 for 4 sessions
This session is filling up quickly. You can check out the details here. Don't wait too long before signing up.

We are having a lot of fun in the current Live Trading Series. The September Live Trading with Mike is filling up and there is only room for a total of 10 attendees. If you want to get your seat reserved, you will need to register early. We will record the sessions, but the recordings are only for registered attendees.


Closing Thoughts...

I am rather excited to see how the next couple of weeks play out. If my Oscillator is right and if my time-cycle forecasts are right, then we should see a moderate pull-back in the broader market, followed by a nice move to the upside for several weeks.

I guess you would say that I am cautiously, very optimistic.

I do realize there are some headwinds in the offing... China appears to have so significantly understated its true GDP numbers as to remove all credibility in any number they supply.

The on-again-off-again tapering-tango that the Fed is dancing is becoming all but meaningless. There is the assumption by some that the Fed has already lost control of interest rates and there is little, if anything, the Fed can do to keep rates from surging higher, causing a collapse in the bond market and negative ramifications in many rate-sensitive market segments... not to mention the massive impact of skyrocketing rates on the US National debt.

Could all of the above and a myriad of other exogenous events cause the market to tumble into a race back down to 8,000 or lower? I suppose it could.

But, in spite of those 'potential' headwinds, I just don't see a falling-off-a-cliff scenario developing. Maybe I am just too naive. But, the more I come to realize what numbers I can trust and what numbers (and people and governments) that I can't trust... the more confident I am in the near-term market.

Even with the current down-turn in the market, there are no significant inverse ETFs giving a buy signal.

And, until that happens, I intend to stay long or, at worst, in cash.

I am not even close... not yet anyway... to putting money into broad-based market inverse ETFs.

I am short bonds via TBT and that trade is working quite nicely, but I am not seeing any entry point for an inverse play on the S&P 500.

Certainly that can change over the next few weeks, but at a minimum, it would take another 3 weeks of the market moving lower each week to even begin to see inverse ETFs pick up some steam with new buy signals.

Until then, I'll stay the course and look to pick up bargains on pull-backs... as I did on Monday.

Have a great week in the market!

Your bargain-hunting portfolio manager,

Mike Turner

Founder and President
CycleProphet, Inc.

P.S. If you'd like to know more about CycleProphet tools, or to subscribe, click here:  https://secure.cycleprophet.com/subscribe/

IMPORTANT!

This letter is informational only and is NOT a recommendation to buy or sell securities. Any suggested trading strategies may or may not reflect trades that I plan to make in my personal accounts and/or may be similar to trades I have made or will make in the management of my client accounts. In this venue, I do not know your financial situation and I am NOT your financial advisor. As such you should NOT attempt to buy or sell any securities mentioned in this letter unless you first obtain the advice of a trusted professional financial advisor. Buying or selling securities involves risk which often results in significant financial loss. IF YOU BUY OR SELL A SECURITY BASED SOLELY UPON INFORMATION PROVIDED HEREIN, YOU WILL MOST LIKELY LOSE MONEY.

CycleProphet, Inc., 10002 Glencarrie Lane, Austin, TX 78750 (1-888-628-5556)





Posted 08-21-2013 12:47 PM by Mike Turner