Decision Point®: Chart Spotlight 1/8/2010

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STILL NO DECISIVE MOVE

1/8/2010

Still No Decisive Move
by Carl Swenlin
January 8, 2010

EDITOR'S NOTE: Timer Digest has released their results for 2009. Decision Point Alert ranked #9 for one-year timing with a gain of +29% versus a +23% gain for the S&P 500. We ranked #6 for long-term (2 years) timing with a gain of +36% versus a loss of -24% for the S&P 500. We did not make the top five for gold or bonds.

One would think, after a three-week hiatus, that there would be plenty to write about the market. But there isn't. The S&P 500 has drifted higher in an ever-narrowing ascending wedge pattern, making little progress. Since the mid-October top, the S&P 500 has only gained about 40 points. You can see on the chart that the price index has kind of oozed above the top of the wedge, but only by a tiny amount, and certainly not decisively. In my opinion, the ascending wedge has not yet been resolved, and the most likely resolution will be to the down side.

While I think a medium-term top is a strong possibility, I have no reason to think that a long-term top is likely. My Chart Spotlight article of 12/18/2009 still reflects my view for all time frames. Our Thrust/Trend Model (T/TM) is still on a buy signal as of 3/17/2009.

Bottom Line: We have been in an extended period of low volatility, and a period of high volatility is sure to follow. That will probably materialize as a medium-term correction; however, the long-term technical outlook is positive.

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MECHANICAL MODELS

We rely on our mechanical trend models to determine our market posture. Below is a recent snapshot of our primary trend-following timing model status for the major indexes and sectors we track. Note that we have included the nine Rydex Equal Weight ETF versions of the S&P Spider Sectors. This may seem redundant, but the equal weighted indexes most often do not perform the same as their cap-weighted counterparts, and they provide a way to diversify exposure. Daily tracking of these signals is available to subscribers in the Decision Point Alert Daily Report.

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Technical analysis is a windsock, not a crystal ball. Be prepared to adjust your tactics and strategy if conditions change.

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2009 TIMER DIGEST RANKINGS FOR DECISION POINT

#9 Intermediate-Term Stocks (52-Weeks) (TD Index 129.36 Vs. SPX 123.45)
#8 Intermediate-Term Stocks (5 Years) (TD Index 147.81 Vs. SPX 92.01)

#18 Bond Timer (*TD Index: 87.7 Vs. Bonds 83.86)
#5 Bond Timer (10-Years) (*TD Index: 127.25 Vs. Bonds 127.51)

#9 Gold Timer (TD Index: 115.30 Vs. Gold 124.00)
#3 Gold Timer (3 Years) (TD Index: 181.56 Vs. Gold 169.92)
#3 Gold Timer (10 Years) (TD Index: 322.74 Vs. Gold 375.51)

#6 Long-Term Timer (2 Years) Stocks (TD Index 136.41 Vs. SPX 75.94)
#7 Long-Term Timer (3 Years) Stocks (TD Index 141.22 Vs. SPX 78.62)
#2 Long-Term Timer (5 Years) Stocks (TD Index 165.27 Vs. SPX 92.01
#5 Long-Term Timer (10 Years) Stocks (TD Index 162.51 Vs. SPX 75.90

2008 TIMER DIGEST RANKINGS FOR DECISION POINT

#17 Intermediate-Term Stocks (52-Weeks) (TD Index 111.9 Vs. SPX 61.51)

#4 Bond Timer (*TD Index: 112.32 Vs. Bonds 118.26)

#5 Gold Timer (TD Index: 126.33 Vs. Gold 104.61)

#9 Long-Term Timer (2 Years) Stocks (TD Index: 132.35 Vs. SPX 63.69)
#2 Long-Term Timer (3 Years) Stocks (TD Index: 150.38 Vs. SPX 72.36)
#2 Long-Term Timer (5 Years) Stocks (TD Index: 168.82 Vs. SPX 81.23)
#3 Long-Term Timer (10 Years) Stocks (TD Index: 159.36 Vs. SPX 73.48)

2007 TIMER DIGEST RANKINGS FOR DECISION POINT

#40 Intermediate-Term Stocks (52-Weeks) (TD Index 91.9 Vs. SPX 103.28)

#5 Bond Timer (TD Index: 105.85 Bonds 104.39)

#2 (Tied) Long-Term Timer (2 Years) Stocks (TD Index: 117.63 Vs. SPX 117.63)

2006 TIMER DIGEST RANKINGS FOR DECISION POINT

#11 Intermediate-Term Stocks (52-Weeks) (TD Index 111.3 Vs. SPX 113.6)

#3 Bond Timer (TD Index: 112.32 Vs. Bonds 97.46)

2000 TIMER DIGEST GOLD TIMER of the YEAR

*All timers and the benchmark index are assigned a starting TD Index of 100 at the beginning of the year. The amount above or below the starting index indicates the percentage gain or loss for the year.

Beginning in 2006 we began using mechanical models -- the Trend Model for Bonds, Gold, and Long-Term Stocks, and the Thrust/Trend Model for Intermediate-Term Stocks. Prior to 2006 we used discretionary signals.

Nothing herein should be construed as an offer or solicitation to buy or sell any security. Past performance does not indicate future results.

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BIO: Carl Swenlin is a self-taught technical analyst, who has been involved in market analysis since 1981. A pioneer in the creation of online technical resources, he is president and founder of DecisionPoint.com, a premier technical analysis website specializing in stock market indicators, charting, and focused research reports. Mr. Swenlin is a Member of the Market Technicians Association.

Caveat: Charts featured in the Chart Spotlight are intended as
examples of how to use technical analysis, not as trading recommendations.

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