We remind all to watch the trading in TLT, below 137 would lead to a sharp decline, and this looks to occur soon. IBB is now at resistance and it is possible that the trading indication is largely over. Our target was around 300 and this is being tested.
Those that can use soft commodities should consider them rather than oil, for commodity exposure and diversification away from the metals, which remain our favorite area. BAC is trading right around resistance in the 15-area. The technical indicators are still positive overall, but the daily stochastic is overbought and in position to recycle, but in a solid short-term uptrend.
TLT continues to hold up but the weekly stochastic is now in sell mode and we should see more downside here. DBC has made what looks like a bottom in this area, but unless it can move above 15 there is a possibility that this will simply be a base.
TLT held support on a closing basis, while trading just a bit below it intraday. The support number is 137.50 and some closes below this will be a sign of concern. With long-term trend systems positive on gold we want to have a position.
The Fred Report - Mid Week Update August 3, 2016We have been expecting some market pullback as indicators are overbought. It is not bad, and should be contained by the 210 – 212 area on SPY. TLT had a better day than we expected in some respects, but the pattern is still precarious. Gold continues to look attractive and is challenging the 130-area. We think it will move above 131 or so on this advance.The Fred Report - Weekly August 1, 2016Three things we will be looking for will be out performance of IWM vs. IJR, continued improvement of NYA vs. SPX, and of course improvement of the NASDAQ composite relative to the NASDAQ 100. We continue to look at our longer-term FPO’s on the bonds. These have a set up for a sharp rise in rates in the near future. Oil still looks like a trading range to us, but after the August contract goes off the board there is downward seasonal pressure until November.The Fred Report - Mid Week Update July 27, 2016
Stocks are consolidating recent gains and working off the overbought condition, and we have no change to our comments. Some traders have indicated buying EEM, which is not our favorite. We prefer PIE, as it should do much better if this market makes a big move.
The Fred Report - Weekly July 25, 2016We noted on last Thursday’s conference call that if IJR can close the month above 120 the long-term trend system will go positive on small caps. This week we have a set up for a rise in rates that could be one of the sharpest of 2016 – and timing-wise it should occur in the next couple of weeks. Our work suggests the FXY will consolidate with the 89 – 90 area as support and 98 – 100 as resistance. Above 100 on FXY targets 115.The Fred Report - Mid Week Update July 20, 2016Stocks look to be consolidating an overbought condition on the daily and weekly stochastics, but the pattern remains positive, and we would use declines toward 212 on SPY to add to positions. When combined with other indicators on bonds, we caution advisors that this market is vulnerable. We show the chart below, and again indicate that there is more risk here than the market believes currently.The Fred Report - Weekly July 18, 2016
We have seen another sharp advance in bullish sentiment, this time from 41 to 50% bulls in just over 2 weeks. This is similar to the advance we saw before Brexit, and if there is a market surprise the result could now be the same – a violent, sharp drop. Both the DXY and UUP have built what look like bull flag formations on daily charts. We remind all readers that our forecast has been for a stronger dollar in the second half of the year, and a move above 25.07, targets 25.50 and likely higher.
More important to us is that the market is broadening out – IYT beat SPY again today and some of the smaller indexes are showing improvement. While one day is not overly significant, there have been sporadic signs since February of improvement. TLT had the biggest drop we have seen in ages today. We have been concerned that the last part of the advance in this ETF has been fluff and speculative buying, not solid investment.
The Fred Report - Weekly July 11, 2016We have some concerns that such a movement could occur because, once again, we have seen a big swing in bullish sentiment on Investor’s Intelligence – back to 48% bulls from 41%, in one week. This means that any sort of surprise could be hit with strong selling, not unlike the Brexit surprise.The Fred Report - Weekly July 5, 2016Our forecast has been, and remains, that equities would have a stronger second half than first half and this still looks to be the case, although strength may continue to be concentrated in the large cap names.The Fred Report - Mid Week Update June 29, 2016
Given the indicators we are not expecting a V bottom here. Gold is overbought and we would try to add to positions at 124.50. Bonds could retrace much, if not all, of this recent rise. We would continue to add dividend-paying stocks like SPHD and sell bonds.
The market is mixed in this area, and in some respects things are better than they seem. We would watch the 202-area benchmark, and continue to add dividend money and also low volatility. GLD through 130 targets the 150-area, and this remains possible and expected, although some short-term consolidation would not surprise us. Oil looks to be attempting to make a short and possibly intermediate-term top in this area.
SPY has not generated many questions, and essentially we have no change of opinion. Stops should be at breakeven (we are using 205) for aggressive investors, and 202 for those willing to give it more time to work. TLT has started to fall off and if it can break below 130 a test of 125 is likely. We would put orders in to add to GLD at 119.60.
The Fred Report - Weekly June 20, 2016This whole rally formation is the best chance to move toward our target of SPY 223, as we have mentioned, before the fourth quarter. We believe that the initial market reaction to the vote will be a market advance, and so XLF and specifically stocks like WFC, BAC, and JPM should all rally under this scenario.The Fred Report - Mid Week Update June 15, 2016
Based on sentiment risk we would use a touched stop at 205 intraday to get rid of trading positions, i.e. what were added at 205. Investment positions, as always, use a close below 202 to get more defensive. This may very well be moot – yesterday’s low is quite possibly the low of this correction, as the stochastic is almost oversold on a short-term basis. One of the things that could surprise and hurt the markets is a strong rally in the dollar. UUP has a double bottom, with a higher second bottom, an extremely favorable formation.
The Fred Report - Weekly June 13, 2016We still feel that the set-up is for higher highs after the indicators correct a bit, but we are mindful of negative possibilities. One of the concerns we have for the second part of the year is a rising dollar, and indeed the chart pattern on DXY suggests a double bottom may be in. If this is the case, then there are a few international bond ETFs that could have difficulty.The Fred Report - Mid Week Update June 8, 2016Stocks have continued a slow rally and have closed above 211 on SPY twice. This is positive. Careful if SPY moves below 205. The daily stochastic on GLD has gone positive and gold had a large advance on this latest buy signal, and it looks like the weekly has moved down to the 30’s and has not started to turn up. When this turns up another strong buy signal will be confirmed.
