Monthly Report

The market pulled back to 380, in line with our forecast, and then rallied back to resistance. It is set to pull back once again. Small Cap is weaker than expected. Transports remain a concern.

The Put/Call indicator spiked at the end of December 2022, giving panicky readings. This was weaker than it should have been throughout 2022. However, it was flat during the banking crisis, suggesting complacency is coming back.

TLT has tested the low end of the 110 to 97 range. Accumulation models remain strong. MUB, LQD, and HYG have potential bottoming formations.

Support at 380 to 360 on SPY continues to hold – buying at 380 has not been a bad idea. We expected a rally toward 430 to 440 on SPY. This has slowed at 420 and should pause here.

Some of our proprietary breadth indicators are giving bear market readings in spite of a tough 2022. When we have seen this, it can lead to problems later on, after a short-term bounce. We remain cautious moving into 2023. Use some risk management.

The weekly stochastic on the Dollar is oversold, suggesting this decline is close to ending. This has layers of support from 105 to 100. We will buy the next daily stochastic recycle.

We would continue to dollar cost average, as recommended.

There still is no spike in the Put/Call as we saw in 2018 and 2020. This indicator suggests more work is needed before a real bottom.

Accumulation models on SPY have improved and there are some intermediate term bottoming signs. We continue to look for a low in this general area and timeframe, even if there is not much of an advance until yearend.

The market was set up for a July rally, and this occurred. Now, some consolidation is likely. Support at 380 on SPY continues to hold – buying there has not been a bad idea. We would continue to dollar cost average, as recommended.

The second quarter has been difficult, per our forecast. The market low we have been looking for in this June/July timeframe may have occurred. A rally here may give way to another decline to a final low, but there could be a nice advance from this area.

Small Cap is holding on better than expected. Transports remain a concern, saying the economy could weaken further.

The Put/Call ratio has finally started to spike, indicating at least some panic.

The market was set up for a decline, and so far, we have seen this earlier than expected. We are seeing continuation of the decline, and this could continue.

Markets remain volatile, but are now in position to attempt a rally as you can see from the proprietary charts on breadth and sentiment. For clients we would still put money in models, but slowly, realizing this correction probably has more to run.

The market is set up for a decline, and so far, we have seen this earlier than expected.

We thought we should have a yearend rally led by Small and Mid-Cap stocks, but it was led instead by large cap – this is setting up for problems over the next few months.

SPY has pulled back to support in the 450-area and held so far: Accumulation models on SPY have started to weaken, but not enough to derail a yearend rally. The Monthly and Quarterly indicators are overbought, but this is a problem for next year.

The market was set up for a fall decline, and this happened. Now, it looks as if the yearend rally has started. Small Cap traded better on the pullback, which we expected. Transports remain a concern, saying the economy could weaken. At this writing, it looks like we should have a yearend rally led by Small and Mid Cap stocks. RSP should also outperform. This rally has started.

We are expecting a setup for a yearend rally from this correction, but that is not here yet. Give this corrective behavior a bit more time. The weekly stochastic could recycle. We will look for a buy signal around October expiration – the market could be choppy until then.