Our current reading of the sentiment indicators is NEGATIVE. %Bears moved into sell mode in February. The indicator has gotten slightly worse over the last month. The Put/Call indicator is neutral to slightly positive. Market Vane and Consensus, Inc. figures are showing more bulls – we do not provide but these are now weak and getting worse. We rate sentiment negative here because the intermediate sentiment indicator remains in sell mode, while Put/Call is in neutral territory, after giving a slight sell signal. Put/Call is about the same as the last few months’ reports.
TLT has rallied into our target area of 126 – 130, and failed. LQD looks better than TLT. It has already filled the November gap, and is also weakening. HYG and various junk bond ETFs have rallied and still look strong. TLT has a buy signal on the Monthly stochastic, but the trading action is a concern. This peak could be the last before another major correction that could carry TLT to 100.
We have moved through our “breakout point” suggesting the market can advance into yearend. Our benchmark for this is the 231-area on SPY, suggesting favorable risk/reward. See our January Yearly Forecast Research Piece for more details. We are positive on 2017 overall. Yes, the market needs to broaden out but just WHEN they should end is an open question.
Commodities have built a long-term base, and these could be strong in the second half of 2017. GLD has been weaker than expected, but the long-term trend systems are still barely positive. Industrial metals (DBB) have made a solid looking bottom. There has been favorable oil news, and oil seasonal weakness into May but this bottom may be upon us, and advisors should start to add these.
Technically, little has changed over the last month. Our concern is that the current condition on the indicators could lead to corrective behavior into the summer, or even by May. Fundamentally, we are seeing some “growing pains” on the part of a Trump Administration, and a solid oversold condition could lead to a strong rally into the end of 2017 and possibly beyond.
TLT has consolidated the weak November, and could rally into summer, but this would be a selling opportunity. LQD fell also, but looks better than TLT. Commodities have built a long-term base, and these could be strong in 2017.
Technically, there are more positives, and the market should rally into the end of January. Our concern is that the next overbought condition on the daily indicators could lead to corrective behavior into the summer. Fundamentally, the reason for this could end up being some “growing pains” on the part of a Trump Administration, and a solid oversold condition could lead to a strong rally into the end of 2017 and possibly beyond.
The Fred Report - Monthly December 2016We broke out of a consolidation, based (the election), few people were willing to commit money in advance of this event. Technically, there are more positives, and the market should rally into the end of December. The internals of the market have improved. There is an excellent chance of hitting targets in the 223-area on SPY. The Fred Report - Monthly November 2016We are in a consolidation, based on a news event (the election), and very few people are willing to commit money in advance of this event. Technically, there are more positives, and the market should rally into the end of November. The Fred Report - Monthly October 2016We have been in a short-term consolidation, and with more positives, our 223-area target on SPY is within reach. The general tone of the market has improved. Market internals continue to improve, and as mentioned, the index long-term trend systems have gone positive. There is an excellent chance of hitting targets in the 223-area. The Fred Report - Monthly September 2016There is an excellent chance of hitting targets in the 223-area. Our forecast has been a stronger market in the second half, and this is on track. Last month, we suggested It was time to be more aggressive, and this remains true.The Fred Report - Monthly August 2016We have been in short-term rally mode, and with more positives, our 223-area target on SPY is within reach. The general tone of the market has improved, but non-confirmations still exist. TLT broke out but on news and gaps, but is now weakening again.The Fred Report - Monthly July 2016Our forecast is a stronger market in the second half, but this may fail here and then rally in the fourth quarter. Still, it is time to be more aggressive in large caps. We have seen a rally in some commodities, and this is a bright spot in the current environment. GLD continues to rally, and the monthly moving averages have gone positive for the first time since 2013. The Fred Report - Monthly June 2016We are more vulnerable now than any time since the beginning of 2016, and we are still cautious. How June goes will give us an idea of how 2016 ends. Our forecast is a stronger market in the second half, but this may fail here and then rally in the fourth quarter.The Fred Report - Monthly May 2016We have been in short-term rally mode, but several objectives on the upside have been hit. How May goes will give us an idea of how 2016 ends. We have seen a rally in some commodities, and this is a bright spot in the current environment.The Fred Report - Monthly April 2016The general tone of the market has improved, but non-conformations still exist. Until the structure corrects the market is vulnerable, although some downside objectives have been met.The Fred Report - Monthly March 2016The bear market structure at the end of 2015 has improved but it has not been repaired. Now, we are in short-term rally mode, but several objectives on the upside have been hit. Failure to penetrate 200 on SPY from here would suggest more decline is possible and a test of the recent low is possible from this area. Until the structure corrects the market is vulnerable, although some downside objectives have been met.The Fred Report - Monthly February 2016The bear market structure at the end of 2015 has increased, rather than rallying in January as we thought it might. Now, we are in short-term rally mode, with several objectives on the upside. Failure to penetrate 200 on SPY from here would suggest more decline is possible and a test of the 175 area on SPY. Until the structure corrects the market is vulnerable, even if downside objectives are hit.The Fred Report - Monthly January 2016Our forecast that window dressing would dominate the last month of 2015, was correct, and traders who used our “10% solution” have sold these trading stocks, and should be looking to reposition into smaller names if a rally starts in January. This rally should cause SPY to close the month above 211. Please see our yearly forecast for yearend targets and more discussion. The Fred Report - Monthly December 2015Stocks rallied from the buy signal at roughly 190 on the stochastic, but now stochastics are overbought. SPY should hold 204 – 205 and certainly not move below 202 before yearend, and as long as this occurs our yearend target of 223 remains in play.
