Timing Outlook Falls Slightly, But Remains Positive

1. Summary

The Outlook remains in positive territory for a third straight reading, but just barely at a value of 7.0. Any drop below 7.0 would take the Timing Outlook into “neutral” territory.

March 9 continues to represent a possible end of the 16-month bear market that began in October 2007, as the S&P 500 index has stayed above its March 9 close for almost 10 weeks, rising 32% since then. In a series of 6 purchases, I have ventured about 30% of my available “stock money” back into the market via the index-tracking “Spiders” (SPY). Each purchase is backed by a tight 8% sell-stop.

2. Market Performance Since Last Outlook

New Outlook (5/14/09): 7.0 (POSITIVE)
Last Outlook (4/28/09): 7.5 (POSITIVE)

S&P 500 last time (4/28/09): 855
S&P 500 now: 893
Change: +4%

S&P 500 at beginning of 2009: 903
S&P 500 now: 893
Change YTD: -1%

S&P 500 at close 3/9/09: 677
S&P 500 now: 893
Change since 3/9/09: +32%

3. Indicators in Detail

· Conference Board Index of Leading Economic Indicators: No new report since last time. This indicator stays negative. +0

· Fed Funds Rate: No change, the Fed Funds rate remains at 0.5%. There have been 10 cuts (with no increases) since 8/07 totaling 4.75%. There is nothing more the Fed can do with interest rates to make this indicator “better.” Of course, many other Federal programs are injecting money into the economy. +10

· S&P 500 Market Valuation: According to Morningstar, the S&P 500’s P/E moves up again from 15.5 to 16.3. At a value below 17.4, this indicator remains positive. +10

· Morningstar’s Market Valuation Graph is 0.87, up from 0.86 last time. It continues to inch closer to the 0.90 level that would take it out of positive territory. +10

· S&P 500 Short Term Technical Trend: The S&P 500’s rally, which began March 10, has become somewhat choppy, but the essential chart pattern hasn’t changed. The index is above its 20-day simple moving average (SMA), and both are above the 50-day SMA. This indicator remains positive. It would drop to neutral if the index were to fall below the 20-day SMA. +10

· S&P 500 Medium Term Technical Trend: The index and its two shorter SMAs remain below its 200-day SMA. That keeps this indicator neutral. +5
· DJIA Short Term Technical Trend: Same situation as S&P 500. Positive. +10

· DJIA Medium Term Technical Trend: Same situation as S&P 500. Neutral. +5

· NASDAQ Short Term Technical Trend: The NASDAQ is more volatile than the other two indexes, and its value has dropped slightly below its 20-day SMA, while both remain above the 50-day SMA. That drops this indicator to neutral. +5

· NASDAQ Medium Term Technical Trend: Same situation as with the other two indexes. Neutral. +5

TOTAL POINTS: 70
NEW READING: 70/10 = 7.0 = POSITIVE