Note: These reports are sent out to members only from Tuesday to Friday. On Monday, we send these reports to all but exclude any mention of actionable stocks or model signal changes.
Major averages were up but on lower volume. In economic news, nonfarm payrolls were better than expected, but the unemployment rate rose slightly from 7.5% to 7.6%, which was worse than expected. Higher unemployment, while indicative of a prolonged weakness in the economy and recession, is good for the lifespan of quantitative easing which has been the primary catalyst since it began in 2009. Don't fight the Fed.
So while price/volume action has been somewhat negative in recent weeks for the major averages and leading stocks, the general market tends to find a floor before a substantial correction takes place in this age of QEternity. Unless the sell off accelerates, the market direction model will most likely stay in cash or switch to a buy signal should renewed strength or a continuation of the longer term uptrend take place. A weak bounce is also a condition for the model to switch to a sell but this weakness would have to be pronounced since QE can cause the market to rise on unconvincing volume for prolonged periods.
Precious metals resumed their downtrend. While QE is firing on all cylinders, precious metals are telegraphing continued weakness. Many cross current exist for the PMs so it is best to stay out while they are in the midst of corrections or base building. The SPDR Gold Shares (GLD) is highly predictable but only at those rare junctures where it completes a base then breaks out. To profitably invest in the PMs, therefore, takes great patience, but this patience is rewarded most of the time as when it comes to selfish investing, patience is indeed a virtue.