The Fred Report - Monthly July 2012Stocks corrected to our forecast area of 132 and resolved the overbought condition on most indicators. What should have been a strong buy pattern failed at 136, our first stopping point. This is a concern. The expected summer rally could end in the most significant decline of 2012, Unless the intermediate technicals are repaired soon. Sentiment indicators are starting to deteriorate and put/call indicators are showing some complacency – how the market reacts to the next intermediate overbought condition is important.The Fred Report - Monthly June 2012Stocks corrected to our forecast area of 132 and resolved the overbought condition on most indicators. What should have been a strong buy pattern has, however, failed. This is a concern. We expected a summer rally which could end in the most significant decline of 2012.Unless this is repaired soon, we may simply decline. Sentiment indicators are starting to deteriorate and put/call indicators are showing some complacency in our view.The Fred Report - Monthly May 2012
Stocks have consolidated/corrected a bit and resolved the overbought condition on most indicators. We now expect a summer rally to occur on increased bullishness. This should start this month and could test the 148 area on the SPY, leading to the most significant decline of 2012. Sentiment indicators are starting to deteriorate and a summer rally would create enough complacency to cause a correction, in our view.
The Fred Report - Monthly April 2012Stocks have rallied strongly and exceeded the 2011 high on SPY, moving to the 140 – 143 area as forecast in November 2011. It is not surprising to see overbought readings on some indicators as this occurs. Short-term corrective behavior is likely, but sentiment remains elevated enough that corrections should be short lived. We need more price action to arrive at a new upside target, however. The Fred Report - Monthly March 2012
Stocks have rallied strongly and exceeded the 2011 high on SPY as forecast. It is not surprising to see overbought readings on some indicators as this occurs. Last November, we forecast a test of 1400 – 1430 on SPX, and stocks are close enough to this area that a correction could occur at any time, but we still expect to see a test of the low 1400’s.
The Fred Report - Monthly February 2012
Stocks have rallied out of the Inverse Head and Shoulders mentioned in last month’s report. It is not surprising to see overbought readings on some indicators as this occurs. Sentiment suggests a rally could carry further than people expect – a test of the 137 area highs on SPY is not out of the question, whether before or after a sharp short-term correction remains the question?
The Fred Report - Monthly January 2012
Stocks have appeared to have etched out an Inverse Head and Shoulders – a positive short-term price pattern. For this to be valid, stocks should start to rally in the first couple of weeks of 2012, which we expect. Should breadth remain weak (on an intermediate basis) as this rally occurs, we would have concerns. Sentiment suggests a rally could carry further than people expect – a test of the 137 area highs on SPY is not out of the question.
The Fred Report - Monthly December 2011
Last month, we noted that indicators suggested a bottom was forming, and this seems to have occurred. The November pullback has weakened our yearend rally forecast but not completely eliminated it, as the market has made higher lows. We suggest a bit more caution in here, especially if a short-term rally develops that challenges, but not exceeds, recent resistance.
The Fred Report - Monthly November 2011
Last month, we noted that indicators suggested a bottom was forming, and this seems to have occurred. This has led to a strong rally that should carry into the end of 2011, and possibly longer.
The Fred Report - Monthly October 2011
Last month, we noted that indicators suggested a retest was probable, and that new closing lows were likely. This has basically occurred, but not all indexes have made these lows. SPY certainly could (and should) make a new closing low to complete the pattern but this is not necessary, and should the market start a rally this month it should be very strong.
The Fred Report - Monthly September 2011
Last month, we noted that indicators suggested a decline was probably. We have felt that the biggest opportunity of 2011 would be a buy signal after a spring correction. While an intermediate buy could still occur, it will likely not occur until the end of the year. Caution flags remain out. How the market treats the next oversold readings is key to the rest of 2011. We believe there is a strong possibility for a retest of the August lows – and it is too early to say whether it will be successful or not.
The Fred Report - Monthly August 2011
Last month, we noted that indicators may not have set up a strong summer rally. While this is a surprise, this seems to be occurring. We have felt that the biggest opportunity of 2011 would be a buy signal after a spring correction. While an intermediate buy could still occur, intermediate indicators are weakening and price action is as well. This suggests a summer rally is less likely – and in fact a significant decline may start. Caution flags are out. How the market treats these oversold readings is key to the rest of 2011.
The Fred Report - Monthly July 2011
The SPY declined, but not enough to give us the set up we wanted to insure a strong summer. Breadth indicators have improved, and sentiment indicators have improved as well. We have felt that the biggest opportunity of 2011 would be a buy signal after a spring correction. While an intermediate buy could still occur, intermediate indicators are not as clear as we hoped to see at the end of June. This suggests a summer rally is likely – and we will evaluate the move as short-term indicators become overbought.
The Fred Report - Monthly June 2011
The SPY has declined, but not enough to give us the set up we wanted to insure a strong summer. Breadth indicators have improved, and sentiment indicators have remained negative. We have felt that the biggest opportunity of 2011 would be a buy signal after a May correction. While this could still occur, intermediate indicators are not as clear as we hoped to see at the end of May.
The Fred Report - Monthly May 2011
The SPY has rallied through our short-term objective of 135 on the SPY, but not by much. Breadth indicators have improved, but sentiment indicators have worsened markedly – including some prominent bears moving to the bullish camp. We have felt that the biggest opportunity of 2011 would be a buy signal after an upcoming correction. If this scenario is going to work, the market should be correcting by mid-May.
The Fred Report - Monthly April 2011
The SPY has rallied through the forecasted 130 area on the SPY, and come back down to test it. While this is favorable price action, we do not see corresponding strength in breadth indicators, and sentiment indicators and headline risk keep us cautious. We have felt that the biggest opportunity of 2011 would be a buy signal after a correction, and it is possible that the correction has started. If so, indicators, especially intermediate ones will become oversold, and this means a further correction in prices.
The Fred Report - Monthly March 2011
The SPY has rallied through the forecasted 130 area on the SPY, and come back down to test it. While this is favorable price action, we do not see corresponding strength in breadth indicators, and sentiment indicators and headline risk keep us cautious. We have felt that the biggest opportunity of 2011 would be a buy signal after a correction, and it is possible that the correction has started now. If so, indicators will become more oversold than they have so far.
The Fred Report - Monthly February 2011
The forecast test of 130 on the SPY has occurred, and we have fallen sharply from that area, on news of possible regime changes in the Middle East. Such a surprise, when the indicators suggest the market is vulnerable, often leads to a sharper correction than would otherwise occur. We have felt that the biggest opportunity of 2011 would be a buy signal after a correction, and it is possible that the correction has started now. If so, indicators will become more oversold than they have so far.
The Fred Report - Monthly January 2011
The forecast yearend rally has occurred. Indicator patterns suggest either (A) a short-term peak is at hand, or (B) the market will change character via a significant breadth and volume surge, which would fix the negative indicator picture. We continue to have SPY 130 as a target – perhaps this area will be tested before a short-term correction begins.
The Fred Report - Monthly December 2010The SPY has broken above the 114 resistance noted in the last report and is consolidating. The consensus opinion is that “gridlock is good” for the markets. We believe it is, but think the market has discounted this to some extent. So far our scenario of a sharp drop after the midterm elections has played out; now we look for a yearend rally which may lead to an intermediate top.
