We remain with a buy signal and stops below last week’s lows on the indexes. DBC started the week with a bang but has fallen off in sympathy with the drop in oil. It is still holding and unless the low of last week breaks we should see some upside.
The Fred Report - Weekly August 10, 2015We have arrived at a key point on some of the indicators suggesting a rally should begin this week – if not we would become a bit more defensive. We would expect TNX and TYX to be choppy for a week or so, and then rates should start to rise again. Perhaps the most interesting commodity development last week is a short-term trading buy on DBC and for those who have wanted to add this into portfolios and are aggressive this is now finally buyable.The Fred Report - Mid Week Update August 5, 2015We have no changes in our stock commentary, price is holding but internals remain weak, and a break of 204 on SPY would lead to 198.The Fred Report - Weekly August 03, 2015
The market is close to “put up or shut up time”. Commodities in general remain oversold and not reacting well to this condition – a rally could occur at any time but likely some more work in this area is needed.
The Fred Report - Mid Week Update July 29 2015We actually think that the bottom on oil still will be in the vicinity of the March low but that we could bounce around in this area for a while longer.The Fred Report - Weekly July 27, 2015Internals continue to deteriorate, and with the daily stochastic negative as well a test of the recent low at 204 on SPY is likely. Gold has been interesting over the last few weeks, with many down days, and then finally an outside positive reversal day on Friday. Such a day is normally a sign of demand coming into the market and overcoming supply, and exhaustion of selling pressure.The Fred Report - Mid Week Update July 22 2015We have no changes in our stock market outlook – need a breadth surge to get excited.The Fred Report - Weekly July 20, 2015
As far as the general market is concerned – we continue to note signs of narrowing and await a breadth surge. Should XLF break out of this resistance a move to 32 is possible. Within Financials, we continue to feel that big banks have the potential to make a big move in the second half. GLD could fully test 100, and we will treat that as a buying opportunity. The dollar has moved up a bit, and DXY could challenge the resistance at 100 again over the next week.
The McClellan Oscillator has improved and is at +146 roughly. We are still watching this to see how it does closer to the +200 level. If China ETFs “follows the script” they will retest the lows, and then make new closing lows, in five to ten weeks, and that could then be a more significant bottom.
In the absence of news, we have a very slight short-term buy signal at support so we would expect the market to try for the upside early in the week. It is, however, hard to make an aggressive weekly forecast given the Greek situation. The short-term rally in bonds we have been looking for may very well have ended.
U.S. stocks have, at least so far, rallied off of support in the 204 – 205 area on SPY. They did this with an outside day to the upside, which is often but not always a positive pattern. We remain with targets in the 223 area on SPY. While we have been looking at the possibility of a rally in TLT toward 122 – 124 this may not be possible now, and traders should start to sell bond positions taken at 116 or so.
The Greek news appears to be front and center, as the no vote, plus the size of the vote, has created consternation as measured by a down U.S. stock market overnight. So far, at least, this represents an opportunity for us. A check of the indicators on oil suggest that prices should hold in this general area – i.e. no more than 1.50 down on the current contract or around 52/bbl, or 56/bbl on the perpetual contract I use, or around the 17.91 to 17.40 area on USO.
The Fred Report - Mid Week Update July 1 2015This has been a whacky end to the quarter, but the upshot is that the major stock indexes, with the exception of the NASDAQ had a down quarter, fulfilling our forecast of a down quarter but not giving us the kind of oversold readings we would have liked to see.The Fred Report - Weekly June 29, 2015Be prepared to use risk management, and be selective. We would use a drop to add to big banks, especially if they are hit by the Greek crisis. TNX closed at its highest level since late September/Early October 2014. We believe this move could be the “real thing” – we could easily see rates back where they were before QE began, and quicker than most expect.The Fred Report - Mid Week Update June 24 2015
We continue to look for 214 – 215 on SPY. Next bonds may have failed again, and more decline could expected on a break of 115 on TLT.
On a purely technical level, we continue to see some leadership out of smaller stock indexes, which is bullish and suggests that the economy continues to improve. The lack of momentum as the Russell 2000 and S&P Mid-Cap Index (S&P 400) in making new highs is surprising. Oil has gotten overbought but remains in a positive configuration. While there might be some sideways trading as the weekly chart consolidates we continue to look for 67 on the nearby contract for oil.
We continue to look at the possibility of 214 – 215 on SPY, and then a pullback. Financials continue to improve and two ETFs pertaining to banks have broken out. Bonds should therefore be expected to attempt a rally, and rates decline, over the next few weeks.
It would not surprise us to see some more choppy and negative behavior in June that could lead to a buy point in July. Over the last few weeks, we have commented on the seasonal tendency in oil to bottom in the last week of May/first week of June, and then stage a summer rally.
