Kevin Spires, CFA, FRM
(Bellaire Capital Management, LLC was long SPY in client accounts at the time this piece was written)

The SPY ETF (S&P 500 Index ETF) is at a critical juncture.  The 200 day moving average (blue line in the chart at the left) and the upward trend from last October are converging near current price levels.  A drop of the SPY below the 200 day moving average might cause a wave of additional selling.

Summer sell offs have a tendency to over shoot, so I would cautious about entering buy and hold positions - even if the 200 day moving average should hold.  I am expecting the market to have difficulties making new highs until after the November elections.

Disclaimer:
This information is neither an offer to sell nor a solicitation to buy securities. Forecasts, estimates and opinions stated are my own and the data presented is for educational purposes only.  Investments involve risk unless otherwise stated. Past performance is not a guarantee of future results. Be sure to first consult with a qualified tax and/or financial adviser before implementing any strategy discussed.

Kevin Spires, CFA, FRM
(Disclosure:  Bellaire Capital Management is long SPY on behalf of its clients at the time this post was written)

SPY (an S&P 500 Index ETF) has dropped 5 out of the past 6 days and is starting to look very weak technically.  The jobs report last Friday really took the wind out of its sails.

There is potential for more downside in the near term.  The recent lows in early June and the 200 day moving average are potential downside targets.  Likewise, the Stochastic Oscillator I like to follow (bottom panel of the chart to the left) still hasn't indicated oversold conditions.

Overall, it is probably too early to establish new longs.  There is more downside risk in the short run and until the market enters oversold conditions, lower prices look likely.

Disclaimer:
This information is neither an offer to sell nor a solicitation to buy securities. Forecasts, estimates and opinions stated are my own and the data presented is for educational purposes only.  Investments involve risk unless otherwise stated. Past performance is not a guarantee of future results. Be sure to first consult with a qualified tax and/or financial adviser before implementing any strategy discussed.

 

Kevin Spires, CFA, FRM
(Disclosure:  Bellaire Capital Management, LLC owned SPY on behalf of its clients at the time this post was written)

Despite the weak ISM Manufacturing Survey this morning, stocks are relatively unchanged on the day.  If stocks can hold above 135 on the SPY (1350/1355 on the S&P 500), then they are poised for a push towards 140 on the SPY. 

I am agnostic about direction at this point.  I would probably sell if the market rallied further, but probably be a buyer if we approached the recent lows.  I don't expect a conclusive breakout either way until later this fall, so playing the range looks like a winning strategy at this point.

Disclaimer:
This information is neither an offer to sell nor a solicitation to buy securities. Forecasts, estimates and opinions stated are my own and the data presented is for educational purposes
only.  Investments involve risk unless otherwise stated. Past performance is not a guarantee of future results. Be sure to first consult with a qualified tax and/or financial adviser before implementing any strategy discussed.

Kevin Spires, CFA, FRM
(Disclosure:  At the time this post was written, Bellaire Capital Management was long SPY on behalf of its clients)

In the immediate aftermath of the Obamacare decision, the equity market has increased its daily loss, now down over 1%.  I expect a further test of the 200 day moving average and then another attack of the recent lows.

I would not expect the current sideways market to be resolved, up or down, until the 2012 elections are over in November.  Given the sharp divide between the two parties on how to resolve the budget deficit, I would be surprised if anything short of massive Quantitative Easing leads to a sustained market uptrend before November.

Disclaimer:
This information is neither an offer to sell nor a solicitation to buy securities. Forecasts, estimates and opinions stated are my own and the data presented is for educational purposes
only.  Investments involve risk unless otherwise stated. Past performance is not a guarantee of future results. Be sure to first consult with a qualified tax and/or financial adviser before implementing any strategy discussed.

Kevin Spires, CFA, FRM
Disclosure:  Bellaire Capital Management, LLC was long SPY on behalf of its clients at the time this report was written

With the refusal of SPY to break above the July 2011 highs, it looks like the stock market may want to test the 200 day moving average again.

With the 200 day moving average now up to 130, that is probably a good test of support for the market at this time.  I don't think that a sustained rally is in the cards so I would not be surprised if 130 does not hold.  The 127.5/128.0 level may be a better place to enter a new long, but don't be surprised if the market tests lower levels.  Tight stops on new longs is probably a good idea at this time until the uncertainty about the U.S.'s fiscal policy is resolved.

Disclaimer:
This information is neither an offer to sell nor a solicitation to buy securities. Forecasts, estimates and opinions stated are my own and the data presented is for educational purposes only.  Investments involve risk unless otherwise stated. Past performance is not a guarantee of future results. Be sure to first consult with a qualified tax and/or financial adviser before implementing any strategy discussed.

Kevin Spires, CFA, FRM
(Disclosure:  Bellaire Capital Management was long SPY on behalf of its clients at the time this was written)

The Stock Market (represented here by SPY, the S&P 500 Index ETF) has rallied up from the 200 day moving average back towards 135.  The last time the market was at this point, it was breaking down through the bottom of the upward channel the market had been in since last October.  If the market can close back above 135 on the SPY, it has a decent chance of running all the way back up the 140. 

The market may be getting a little ahead of itself and a little caution is in order.  I think it is too early for a retest of the recent highs and would expect a retest of the 200 day moving average at least one more time.  I think we are probably range bound until the elections are over in November.  If the elections (not to mention the European Debt Crisis) are resolved in a more market friendly direction, then a rally to new highs at 1450 or above on the S&P 500 could be considered.  Until then, the market will probably remain choppy with above average daily volatility. 

Disclaimer:
This information is neither an offer to sell nor a solicitation to buy securities. Forecasts, estimates and opinions stated are my own and the data presented is for educational purposes
only.  Investments involve risk unless otherwise stated. Past performance is not a guarantee of future results. Be sure to first consult with a qualified tax and/or financial adviser before implementing any strategy discussed.

Kevin Spires, CFA, FRM

(Disclosure:  Bellaire Capital Managment is long SPY on behalf of its clients)

With the Chinese lowering key rates by .25%, the SPY (S&P 500 Index ETF) is up almost 1% this morning.  The world's Central Banks are pulling out the stops to try and stop the bleeding taking place in Europe and stop it from spreading to the rest of the world.

With a clear bounce off of the 200 day moving average, the SPY looks ready to target the 134.30 level that it failed to exceed early last week.  The 2011 highs at 135/136 would be next.  To break back into the uptrend from last October would take the market back up towards 139.  The stochastic oscillator has only risen towards the middle of its range, so there is certainly some room to run higher, but I wouldn't want to be getting long at these levels.

Personally, I think it is too early for the market to rally towards the highs of the year.  The Greek elections are less than two weeks away.  There is going to be a long, slow build up towards our own Presidential Election in the U.S.  I think we are still range bound until our own election is settled and the Europeans resolve some of their issues.

Disclaimer:
This information is neither an offer to sell nor a solicitation to buy securities. Forecasts, estimates and opinions stated are my own and the data presented is for educational purposes
only.  Investments involve risk unless otherwise stated. Past performance is not a guarantee of future results. Be sure to first consult with a qualified tax and/or financial adviser before implementing any strategy discussed.

The SPY (S&P 500 Index ETF) Closed below its 200 day moving average on Friday.  Today is a crucial day for the for the Equity Markets.  If the SPY closes below the 200 day moving average again, it could herald a prolonged summer slump. 

If the SPY can decisively close above the 200 day moving average, I think the Equity Markets will have a short term relief rally into the 1340/1350 range on the S&P 500.


There have been many false "breaks" of the 200 day moving average.  Last fall and winter, SPY closed above its 200 day moving average several times only to fall back a day or two later.  Often, it takes several days above/below the moving average to confirm a break.  Additionally, a decisive break of more than .5% is usually enough to confirm the breakout.

Disclaimer:
This information is neither an offer to sell nor a solicitation to buy securities. Forecasts, estimates and opinions stated are my own and the data presented is for educational purposes only.  Investments involve risk unless otherwise stated. Past performance is not a guarantee of future results. Be sure to first consult with a qualified tax and/or financial adviser before implementing any strategy discussed.

Kevin Spires, CFA, FRM
Disclosure:  As of 5/30/2012, Bellaire Capital Management did not hold any position in SJT.

The San Juan Basin Royalty Trust (SJT) is a Royalty Trust that has a 75% net interest in Natural Gas and Oil Producing Properties in the San Juan Basin of NW New Mexico.  Almost all of the revenues of the trust are from 1,000+ producing Natural Gas wells.  Unfortunately, once you subtract operating expenses, the Trust has trouble producing Net Cash flow with Natural Gas prices below $3.50 MCF. 

Back in 2009 when the Average annual price for Natural Gas was $3.48/MCF the Trust was able to distribute less than $.65 for the year - and the Trust traded at a low price of barely $12.50/share.  Down over 10% at times today to trade below $15 for the first time since 2009, SJT looks likely to attack the $12.50/share price at some point this year.  Natural Gas prices are barely at $2.40 for the nearby months and have traded below $2.00 in March/April - prices that will determine distributions for June/July.  Expect monthly distributions to average < .$.05 for the next few months under current prices.  Even though SJT is deeply oversold based on a 20 day Stochastic Oscillator, the $12.50/share is beckoning.

Disclaimer:
This information is neither an offer to sell nor a solicitation to buy securities. Forecasts, estimates and opinions stated are my own and the data presented is for educational purposes only.  Investments involve risk unless otherwise stated. Past performance is not a guarantee of future results. Be sure to first consult with a qualified tax and/or financial adviser before implementing any strategy discussed.

Kevin Spires, CFA, FRM
Disclosure:  Bellaire Capital Management is long SPY on behalf of its clients

The SPY (S&P 500 Index SPDR ETF) has bounced a bit from very oversold levels and is now a bit above its 200 day moving average.

A Stochastic Oscillator suggests the bounce has a bit to run, with the 20 day EMA barely off the bottom.

Going forward, it appears the market could run back up to the broken trend line in the 1350 range.  From there, I expect to see failure to break back into the old uptrend and a retest of lower levels with a more serious attempt to break the 200 day moving average on the table.

Disclaimer:
This information is neither an offer to sell nor a solicitation to buy securities. Forecasts, estimates and opinions stated are my own and the data presented is for educational purposes only.  Investments involve risk unless otherwise stated. Past performance is not a guarantee of future results. Be sure to first consult with a qualified tax and/or financial adviser before implementing any strategy discussed.