The Fred Report - Weekly February 27, 2012
We are seeing more signs that the market is getting tired. We think this is going to be a good year for stock prices, and would look to position in strong groups and sectors, particularly in the small cap sectors, starting now, and adding on any sort of pullback. We remain overweight XLE and energy in general in our sector work, and the next few weeks should show whether this is a good idea or not.
The Fred Report - Mid Week Update February 23, 2012
TLT has tried to break down below 116 and has not managed the two successive closes below 116 we expect to see before this market finally breaks. The Yen (FXY) is rapidly approaching 120 and a break of that area suggests a test of 115 or lower. We also point out that DBO has broken above 30-area resistance and a Friday close above this number would complete a head and shoulders bottom on oil.
The Fred Report - Weekly February 21, 2012
This week should be positive, although we are starting to see some signs the rally has gotten long in the tooth. Oil looks like it is ready to start an advance, and the big oil stocks still look better than the service names. Japan has signaled a desire to intervene and bring down the value of the Yen, but is unlikely to do so as long as the Eurozone is unstable.
The Fred Report - Mid Week Update February 15, 2012
Sideways consolidation is another way to correct overbought indicators, and this could happen again – just as we saw back in late January – the brief consolidation that started January 25th. We continue to look for stronger US mid and small-cap performance rather than Emerging Markets, but there could be a trade to the upside in the BRICS for the next month or so, as European issues fade.
The Fred Report - Weekly February 13, 2012
We still anticipate higher highs either immediately or after a very quick, sharp pullback. We remain bullish on commodities and would use weakness to add to positions slowly, for a summer rally. TLT should underperform and we would use strength to raise some cash and put it into other income areas. There is some technical evidence that sentiment is moving away from safety plus income, to income with some possibilities for growth.
The Fred Report - Mid Week Update February 8, 2012
The stock market continues to advance towards the 137 area on SPY, the next resistance. The broader indexes such as NYA, IWM are lagging a bit, and so are the Transports – a concern.
The Fred Report - Weekly February 6, 2012
The IJR has closed at an all-time high. This is significant because it continues the uptrend that has been in effect since the March 2009 lows. We expect SPY to challenge, and likely exceed, the 137 high made in 2011. Keep a wary eye on Europe, and note that we will move away from a bullish stance on the European ETFs should EWI move below 10.80.
The Fred Report - Mid Week Update February 1, 2012
The McClellan Oscillator has moved from +140 to +65, without significant deterioration. This is often a positive sign for the markets, and if we do not start to see deterioration soon, our anticipated correction may not occur. We would like to see two consecutive closes above 7900 on NYA (NYSE Composite Index).
The Fred Report - Weekly January 30, 2012
The US stock market appears to be more vulnerable to a short-term correction than at any time since Thanksgiving 2011, so traders should be cautious here. This is likely an appropriate time to add international bonds to portfolios that are willing to speculate a little in exchange for higher yields. Should GLD (SPDR Gold Trust) close above 160 on January 31st, our objective of 210 remains intact.
The Fred Report - Mid Week Update January 25, 2012
While trading patterns remain favorable, we did mention that for those who want to be a little defensive – now is be the time. A sharp drop would likely be a buying opportunity. Bonds are weakening, and the TLT is flirting with the key 116 area.
The Fred Report - Weekly January 23, 2012
We expect that 7900 on $NYA will be fully tested, and ultimately exceeded, but note that this would be a logical place for a pullback to begin. U.S. treasuries continue to look overextended to us. What is interesting here is that accumulation models on both USO, UHN, XLE, and OIH all look much better than the price charts of these ETFs, and for this reason we have elected to remain overweight oil and oil stocks for the time being.
The Fred Report - Mid Week Update January 19, 2012
We continue to like the market, but there are obviously problems. We also note that GLD is having positive indications with positive daily moving averages and the weekly stochastic has turned up. We think the market may be moving away from “safety and income” to “growth plus income”.
The Fred Report - Weekly January 17, 2012
While indicators suggest some more correction/sideways action is possible, we are surprised by the resiliency overall. Agricultural commodities will be entering a period of favorable seasonality over the next couple of weeks.
The Fred Report - Mid Week Update January 12, 2012
We remain bullish but acknowledge that there is an increasing chance that a correction off this rise could start late in the week or next week. We would like to see a bit more strength in the broad based NYA and IWM. The DIA has broken out, but this may be a classic case of the “Generals” leading the charge, an unstable situation for now, but one that can certainly be corrected. We have concern that the McClellan Oscillator is at +170 and we have not broken through most of the resistance.
The Fred Report - Weekly January 9, 2012
The positives we see are: (a) favorable short-term chart pattern, albeit one that is fully testing resistance, (b) sentiment is quite negative (a contrarian positive), and (c) the action in the US dollar is positive. Bonds look to perform less well in 2012 than they did in 2011. Overall, Asia remains an “avoid” for us. We would be sure to have at least some gold (whether stocks, or the metal itself) in portfolios at this time.
The Fred Report - Mid Week Update January 5, 2012
The markets have started the year off with a “bang”. Tuesday’s gap up is a start at breaking us out of the inverse Head and Shoulders. We would tend to be just a tad cautious until intermediate resistance on the broader indexes. Those numbers are 7900 on NYA and 76 on IWM.
The Fred Report - Weekly January 3, 2012
The Stock indexes have formed Head and Shoulders bottoms – all we need is more strength, at least in the case of the Dow and Dow Transports, to resolve these to the upside. Bonds are overbought and accumulation models are deteriorating – we remain cautious here especially in the case of US treasuries. USO (United States Oil Fund) is right up to resistance, but continues with favorable patterns, especially on a move above 40.50.
The Fred Report - Mid Week Update December 29, 2011
It is looking more like our scenario of a down week followed by a positive January could work out. Small and mid-cap indexes both made all-time highs in 2011, as did the Russell 2000, which is a bullish indication longer-term.
The Fred Report - Weekly December 27, 2011
This holiday week has got favorable seasonality for stocks – but traders should be cautious as it looks like it could be a down week. For the first time in a year, our TLT accumulation model is beginning to look vulnerable, suggesting bonds in general may be at a turning point in 2012. We have a short-term, but aggressive, buy signal on UNG (US Natural Gas ETF) here that has developed over the last few weeks.
The Fred Report - Mid Week Update December 21, 2011
A Head and Shoulders within a Head and Shoulders has occurred before, and has bullish implications. The neckline on both patterns is the same – 127.50 to 130 on SPY, 7900 roughly on NYA, 75 to 77.50 on IWM, and 165 to 168 on the MDY. Should these areas be exceeded the reward could be 12% or more. Should the areas of resistence be exceeded (NYA 7700 – 8000, IWM 77 – 78, MDY 168 or so) it would be another strong indication that the market is going to have a strong first half of 2012.
