The Madison Letter: Current Update

We began to offer a buy and sell strategy via our Madison Market Timing Indicator at the beginning of April of 2007. There are now 23 open and closed winning trades to 8 closed losing trades with our market timing results. We were left with one long position TRF from our original buys before launching with Uncommon Widsom Daily. This column replaces the Morning Matters on Fridays.

madison market timing

Weekly Charts Updated

Each week we highlight charts below of the SP500, Russell 2000, NASDAQ Composite, UUP, EEM, TLT, HYG and LQD. The charts use the 50 day moving average slope indicator. When it is green we like the instrument we are tracking and when it is red we avoid the name/sector/asset class.

U.S. Equity indexes are positive now except for the Russell 2000. It continues to struggle and is at zero. The U.S. Dollar remains positive and some bond funds are negative. EEM which is emerging markets is above 0. However, HYG clicked into the red four weeks ago. We replaced CFT with LQD and that remains positive again this week. Remember what matters is the slope of the 50 day moving average not the 50 day moving average itself.

All charts are created from www.erlangerchartroom.com and if interested in using this indicator in Chart Room please feel free to send us an email by using the Contact Us section from the home page.

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$60 Trillion & IMF Scandal

Bloomberg reported this morning that the overall value of global equities has climbed above $66 trillion. Since August 7th low on the S&P 500, over $2.2 trillion has been added to the $66 trillion.

$66 Trillion

In other news IMF Head Christine Lagarde is under investigation in France for “murky business affairs” while France’s Finance Minister.

Lagarde

Morning Matters Update

There will be no Madison Letter and Market Crash Indicators today due to vacation. Both will appear on Monday. We remain with our new long position in The Madison Letter. Maintain the existing allocation to SPY in Market Crash Indicators. Enjoy the weekend.

 

The Speech

Today is all about Federal Reserve Chairman Janet Yellen and what she will or will not say when she speaks at the Jackson Hole Conference. Personally, I think too much is being made about this speech.

The reason it has become such a big deal as Federal Reserve Chairman Bernanke spurred a massive rally in August of 2010 with his Jackson Hole Speech. We note that European Central Bank President Mario Draghi will speak as well today.

Jackson Hole Preview

 

Retracements & Other Considerations

We have been highlighting the retracements in the Russell 2000 and IWM since the July high. The Russell 2000 is still below its March high meanwhile the S&P 500 keeps on ripping away.

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Through yesterday’s close the Russell 2000 has now almost moved back above all its retracements from from the May low to the July high which was also the March high. Pay attention to 115.44 which is the 38.2% retracement on IWM.

Merger Activity Up Mid Week

Mergers and acquisitions are fast and furious. This morning Bloomberg has a story that Infineon is looking to acquire a U.S. semiconductor company and that the deal could occur as soon as today.

Infineon

 

Portfolio Update

The S&P 500 rebounded higher since our last update. The Nasdaq Composite rose for a third week in a row. The portfolio is now 84% invested long, 0% short and 16% in cash, net long 84%. We are now at a value of 836.05% from 815.77% since last Tuesday.

It appears a new low is in and now the S&P 500 will challenge 2000.

We have added the price target from the Alpha Intelligence Stock Scorecard into the weekly update. Most stocks are below their price targets. ETFs recommendations can be found in The Madison Letter. In 2014, this will be updated each Friday with Market Crash Indicators.

Remember these returns are total returns with the average change for all winners and losers is 7.46% per idea. Our batting average of closed winners and losers is 70%. The portfolio is up 836.05% through last week from inception when it began at 0% in April of 2008. We began 2013 at a value of 478.60% so we had a very nice gain for 2013 ending at 732.40%. So far this year we are up 103.65 points or 14.15%. The performance on the Uncommon Wisdom Daily Portfolio Tracker is a bit higher due to dividends which they add in. We have never added in dividends so our weekly results are understated.

West Texas Intermediate (WTI) Finds Support While Brent Crude Continues to Fall

The price of West Texas Intermediate (WTI) the crude used by U.S. refiners to produce gasoline hits support while Brent Crude which is used in Europe continues to drop. Brent Crude just hit a 16 month low.

Oil Prices

 

Merger Monday

First there was a bidding war for Hillshire Brands between Tyson and Pilgrim’s Pride. Now we have a bidding war this morning for Family Dollar (FDO). Dollar General (DG) has put in a competitive bid for Family Dollar that trumps the first bidder Dollar Tree (DLTR). Another twist on Merger Monday.

Family Dollar Bid’s