The improvement in Put/Call, if it continues, does suggest some continuation of this summer rally. TLT has completely filled the gap at 110.54, and even traded below it. Closing below this area could imply rising rates for the remainder of 2014 and possibly an end to the bond bull market.
The model on IYT is suggesting this index could pause or even weaken, especially relative to other indexes, in the second haft of 2014. The patterns on both DBA and JJA are negative enough to suggest sale of these units immediately, but certainly on moves below DBA 27.20, and JJA 49.60.
A bit of back-off and chop after hitting the 11,000 area on NYA is not a surprise. We could still have a fairly strong close to the quarter. TLT has held support and turns up but remains in no-man’s-land unless it can start to make new highs on this run.
The Fred Report - Weekly June 23, 2014We are now seeing a very welcome broadening out which is positive as long as it continues. Sector work suggests that large cap names should still lead, and leadership sectors remain XLI, XLB, and XLE. Gold may be the best INVESTMENT available at this time. The Fred Report - Mid Week Update June 18, 2014The trading action in small cap Japan has improved, and this is another reason we think it likely that the Yen will fall. For people looking to invest in Japan that currently have positions we would take a 75% weighting in large cap Japan, and add 25% in SCJ or JOF – with SCJ being a slightly better chart.The Fred Report - Weekly June 16, 2014
Indicators suggest that this rally could pause short-term, but if there is consolidation and the 190-area holds we could see continued advance to the 203-area objective we have had since December 2013. The bond market should hold this support and consolidate or rally into at least the end of June, but it depends a bit on short-term strength.
On a technical basis, INDY and SCIF are overextended – not to say they cannot continue, but they are overextended. The main reasons we like EEM are that China is improving and so is Latin America.
If the pattern we are looking for holds, stocks should now consolidate recent gains, or even pull back. While the chance of a large summer driving rally in oil is probably lower than average, there are a number of fundamentals in favor of oil – principally the increase in U.S. oil production.
The Fred Report - Mid Week Update June 4, 2014It would be a concern if SPY moves below 189 short-term and 184 intermediate-term. We would be concerned if TLT moves below 111 for more than a few days. We continue to believe that gold is in a bottoming formation as long as GLD remains above the 114 – 113 area.The Fred Report - Weekly June 2, 2014The equity market continues to narrow as it advances. While we continue to believe SPY can trade at 203 this year, it may not do so over the summer. We would watch carefully if TLT starts trading below 111, as this could lead to a rise in Treasury rates that would ultimately affect all bonds.The Fred Report - Mid Week Update May 28, 2014Be patient here and let GLD come to you, and add on this dip or get a position if you do not have gold. Investors should continue to add money. Things do look a bit better, and we would focus on XLI and XLB names.The Fred Report - Weekly May 27, 2014One of the problems we have had with the NASDAQ is that breadth has been negative as measured by some of our breadth indicators since March. Preferred Stock ETFs have lagged TLT for a while and we would give a lot more consideration to selling these if TLT starts closing below 111.The Fred Report - Mid Week Update May 21, 2014While Russia should trend higher there may be some consolidation at that point. For investors, it looks like the low is in on these markets – and buying on a pullback looks okay.The Fred Report - Weekly May 19, 2014Our benchmarks of NYA 11,000 on the upside, and below SPY 184 on the downside seem valid and we would wait to make a big trading commitment until we see one or the other confirm. We continue to see more strength in Industrials and Materials than Consumer names.The Fred Report - Mid Week Update May 14, 2014We remain with low volatility and defensive positions. Bonds have been choppy but have held 110 as measured by TLT and as long as this holds bonds can advance to 115.The Fred Report - Weekly May 12, 2014We have a set up for a trading rally, especially in Tech and Biotech. Real estate ETFs of all kinds look to be a solid income vehicle, with improving charts that have a way to go before hitting resistance.The Fred Report - Mid Week Update May 7, 2014
On stocks, a move above NYA 11,000 lessens the risk of a correction, and a move below 184 on SPY suggests a correction is underway. We believe positive fundamentals in financials have been widely discounted, such that this resistance may hold XLF for a long time.
Value stocks are improving relative to smaller cap growth names, which supports our view that it is likely that industrials and materials should continue to perform better than the former high flyers. We continue to suggest dollar cost averaging at a reduced rate, with the idea of accelerating this on a decline over the next month if the market starts to correct.
