March 15, 2012 at 09:32 AM EDT
We’re Still Having Fun But What’s Next.
Thursday, March 15, 9:30 a.m. We’re still having fun – but what’s next? Our Seasonal Timing Strategy portfolio, 100% invested in the Dow, continues to shine, making another new high yesterday, now up 16.3% since the entry in October (and after the timely exit on April 21 last year, just 5 days before the market [...]

Thursday, March 15, 9:30 a.m.

We’re still having fun – but what’s next?

Our Seasonal Timing Strategy portfolio, 100% invested in the Dow, continues to shine, making another new high yesterday, now up 16.3% since the entry in October (and after the timely exit on April 21 last year, just 5 days before the market topped out into the summer correction).

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In the non-seasonal Market-Timing Strategy portfolio, double-digit gains from the Russell 2000, the tech sector etf XLK, the Brazil etf EWZ.

Even bonds are finally really responding to our sell signal. The iShares 20-yr bond etf TLT plunged 1.8% Tuesday and another 2.5% yesterday. That’s a 4.3% two-day gain for our 20% position in the inverse bond etf TBF, more than twice as much as the exciting 2-day Dow spike.

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TLT has now declined 10.4% since its December peak, with almost half of it in the last few days. That must be shocking to investors who rushed into bonds last year thinking they are a long-term conservative safe-haven investment. They are actually as volatile as stocks in the intermediate-term, and over the years we have made as much from downside positions against bonds as from upside positions in bonds.

Meanwhile the bottom is dropping out of gold, and it looks like it’s headed for our downside target of $1,500 an ounce.

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We’re still having fun – but what’s next?

That’s how yesterday’s new issue of the newsletter begins, before launching into 8 pages of what we believe is next.

Greg and the Muppets.

No it’s not a 60’s rock band.

The resignation letter of Greg Smith, former head of Goldman Sachs U.S. equity derivatives business in Europe, is going viral.

He chose to resign publicly, publishing his resignation letter in the New York Times yesterday. He didn’t mince words about his reasons for leaving the firm after 20 years, alleging that the culture at Goldman Sachs has become “toxic and destructive”.

Some phrases from the letter:

“I attend sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about we can make the most possible money off of them.”

“A client’s success or progress was not part of the thought process at all”. 

“Persuading your clients to invest in stocks or other products that we are trying to get rid of [out of the firm’s own portfolio or inventory] because they are not seen as having a lot of profit potential.” 

“I have seen five different managing directors refer to their own clients as ‘muppets’, sometimes in in internal e-mails.”

To read his entire letter click here.

Of course the whitewashing has begun:

It’s being said that Smith was not really upper management. Well, he doesn’t claim to be. In his letter he makes it clear the culture was coming from above.

The late-night comedians had fun with it last night with jokes like “Yeah, I went to Goldman Sachs and didn’t like what they were doing so I resigned – after working their 20 years.”

That is unfair. Smith made it clear the culture was entirely different for the first ten years, with the clients’ interest the focus, and that it has changed over the last ten years, only now reaching the point that he felt he not only had to resign but try to provide a “wake-up call to Goldman’s Board of Directors”.

Probably haven’t heard the end of this yet.

To read my weekend newspaper column ‘Why Markets Ignored Jobs Report and Greek Debt Deal!’ Click here.

Yesterday in the U.S. Market.

Once again they held the Dow up while the rest of the market closed flat to down, and this time it was ridiculously obvious, with 2,258 stocks down on the broad NYSE and only 775 up, while there were 1,751 stocks down on the Nasdaq and only 801 up. That does not compute with a Dow up 16 points, and the NYSE composite index down only 0.1%.

The Dow closed up 16 points, or 0.1%. The S&P 500 closed unchanged. The NYSE Composite closed down 0.1%. The Nasdaq closed up 0.1%. The Nasdaq 100 closed up 0.4%. The Russell 2000 closed down 0.9%. The DJ Transportation Avg. closed down 1.43%. The DJ Utilities Avg closed down 1.4%.

Gold plunged another $51 an ounce to $1,643.

Oil closed down $1.03 a barrel at $105.68 a barrel.

The U.S. dollar etf UUP closed up 0.5%.

The U.S. Treasury bond etf TLT plunged another 2.5%.

Yesterday in European Markets.

European markets closed mixed. The London FTSE closed down 0.2%. The German DAX closed up 1.2%. And France’s CAC closed down 0.4%.

Subscribers to Street Smart Report: The new issue of the newsletter is in the subscribers’ area of the Street Smart Report website from yesterday, and a hotline from last night.

Asian Markets Were Mixed Last Night.

The Asia Dow closed up 0.3%.

Among individual markets:

Australia closed down 0.2%. China closed down 0.7%. Hong Kong closed up 0.2%. India closed down 1.4%. Indonesia closed down 0.4%. Japan closed up 0.7%. Malaysia closed up 0.1%. New Zealand closed up 1.0%. South Korea closed down 0.1%. Singapore closed down 0.1%. Taiwan closed down 0.1%. Thailand closed up 0.6%.

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Markets This Morning:

European markets are mixed this morning. The London FTSE is down 0.2%. Germany’s DAX is up 0.3%. France’s CAC is down 0.1%

Oil is up $.24 a barrel at $105.67.

Gold is up $2 at $1,645 an ounce.

This Morning in the U.S. Market:

This week will be another fairly heavy week for potential market-moving economic reports, including Retail Sales, NY State Mfg Index, Phila Fed Index, Industrial Production, etc. To see the full list click here, and look at the left side of the page it takes you to.

There were no reports Monday.

Tuesday’s reports were that the Small Business Optimism Index rose 0.4 to 94.3 in February, its 6th straight monthly improvement, but still at a disappointing level about where it was a year ago. And Retail Sales were up 1.1% in February, about in line with the consensus forecast of a 1.2% rise. And after the close, the Fed released the results of its bank stress tests that were not scheduled to be released until today.

There were no reports yesterday.

But this mornings’ reports so far were that new weekly unemployment claims fell 14,000 last week to 351,000, while the four-week moving average remained unchanged at 355,750. And the Producer Price Index showed inflation at the producer level jumped 0.4% in February, the fastest increase in 5 months, but better than the consensus forecast of a 0.5% rise. And the Empire State (NY) Mfg Index rose to 20.2 in March, better than forecasts of a decline to 17.7.

Still to come is the Phila Fed Index which will be released at 10 a.m.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being up 30 points or so in the early going.

To read my weekend newspaper column ‘Why Markets Ignored Jobs Report and Greek Debt Deal!’ Click here.

Subscribers to Street Smart Report: The new issue of the newsletter is in the subscribers’ area of the Street Smart Report website from yesterday, and a hotline from last night.

I’ll be back with the next regular blog post on Saturday morning, as usual later than the week-day posts, probably around 11 a.m. eastern time.

Non-subscribers: We believe we can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!

Our portfolios were up an average of 9.4% last year, our Seasonal Timing Strategy up 15.8%, in a flat year (S&P 500 unchanged for year) when many, if not most, managers and funds were down for the year. We were on Hulbert’s Ten Best Newsletters of the Year list for the 2nd time in 4 years, and #4 Long-Term Market-Timer in Timer Digest’s rankings. And we are off to a great start this year. And we’re up nicely so far this year.

Market, sector, stock, gold, bond, and dollar buy and sell signals, short-sales, long-side and ‘inverse’ etf’s, mutual funds, two portfolios of recommended holdings (one modified buy and hold, and one market-timing). Street Smart Report Online provides an 8-page newsletter every 3 weeks, an in-depth 6 page interim update every Wednesday on our intermediate-term signals and recommended holdings, an in-depth 4-page ‘Gold, Bonds, Dollar’ update every 2 weeks, and special reports and hotline updates as needed. Highly regarded and in our 24th year. As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

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