Weekly Report

So far this is just a quick pullback to support, we would like to see a little more downside over this week.  Buy stuff as it comes to you.  As long as 360 holds on a closing basis, GLD can rally from here.

Upside here for XTN adn $TRAN would be a strong indication of a better 2026 than we have been thinking, as well as confirmation of a strong end to 2025.  There are two groups of commodities that start seasonally favorable moves in the November timeframe. These are the Agricultural commodities, and the Petroleum Complex.  Now that the Argentina election is over, the same fund manager suggests Argentina is buyable again fundamentally. Our technical work confirms this view.

It seems that the market is expecting a rate cut – the surprise will be if there is NO rate cut.

Stocks made new highs Friday and a look at the internal indicators suggests the yearend rally we have been looking for has started.  Gold is in a precarious position, mostly because of the weaker stocks, but last week’s analysis holds – it should make a higher high after the next buy signal.

Our “Divergence High” indicator triggered a signal suggesting that GLD will make a higher high before this market peaks.  Key numbers for GLD are 381 and 385.  The message here is that we would buy a dip in GLD but not SLV.

Short-term breadth indicators have favorable formations, but the intermediate indicators are still a bit overbought.  Key numbers to watch are from 88 to 85 on TLT, if these levels break, a significant decline has probably started.  A break of 376 on GLD would be an indication of at least a short-term peak.

Stochastics are coming down with the daily SPY in the low 30’s and QQQ in the same configuration.  Traders should be buying as things get into their preferred price targets and buy a daily stochastics recycle that seems close by here.  As long as IJR can hold the 111 area and XTN can hold 80 or so, this is another indication of a short-term bottom in equities.

The market finally came down on Friday, moving slightly below the SPY 656 we mentioned in the Midweek.  Realize SPY could break 650, as this would be typical expiration behavior.

Support areas on SPY are around 667 to 664, then 656.  % Bears Chart has just moved below 20%. Look at July of 2023, or even July 2020. These illustrate what happens when the chart just moves below 20%.

We continue to look for a decent advance into the end of the year.  The two main equal weight ETFs have staged an upside breakout.  It looks like the dollar has moved into a consolidation. This could last for another year or so but should resolve in some upside.

While we do not see another crash coming, recent articles on valuations being "permanently higher" is one factor suggesting 2026 might be a bit more difficult than 2025 has been. If XLF can break 50 it could test 46 or so.

The last few trading days of the month are generally positive, so we could see some rally this week.  The industrial metals is a complex picture, so if we were invested in CPER, we would keep it, but we would put new money in DBB.

We continue to see signs of a tired market.  While we would not chase oil, we expect higher prices in the very short-term.

Breadth on the NYSE was negative last week, not by much, but it still is a sign of a tired market.  Transports have been one of the best indicators of economic strength and they have been diverging, suggesting economic weakness.  So far, our forecast on TLT has been reasonably accurate. We have rallied to the 90-area and started to roll over. Now we will see if the rest of our forecast works, and rates rise into October.

We continue to think that there should have a short-term pullback in stocks and bonds on FED news, but that if this occurs it should be a buying opportunity. We remain bullish through the end of the year.

These indexes look ripe for a short-term pullback. QQQ is overbought but does not have the same sort of topping signs.  We think Japan is a new secular bull market that can advance for years.

Stocks are trading a little better than we expected but we still expect some pullback into October followed by a sharp advance into yearend. We have mentioned that TLT was hitting the point of maximum danger when the weekly stochastic became overbought and sell recycled. With this rally, it is very close.

We are bullish for yearend but think a nice dip could occur which would set up a better entry on the long side than you could get on the short side.  We should mention that we are now in what could be the riskiest part of the year for Treasury Bonds. Watch our interest rate indexes carefully.  The McClellan Oscillator suggests that in spite of some good days last week, momentum is slowing.

Stocks rally into Labor Day weekend most of the time. So, we are not surprised to see some upside here.

In spite of last Friday’s action, we have no major change in our outlook, which is to be cautious on the equity markets into late September/early October.  We acknowledge Powell’s speech but note that longer-term bonds advanced very little – in other words our concern about a rise in long-term rates remains.