The Fred Report - Sector Review November 2015Last month we made some changes to sector weightings and this month we leave them alone. This makes sense as we believe the market should be narrow into yearend. Those FA’s seeking high performance (with accompanied higher risk!) should choose stocks within 10% of their highs in all sectors. We would not do this ordinarily. This does not sound like investing, and is designed to take advantage of “performance chasing” on the part of big funds into yearend.The Fred Report - Sector Review October 2015Last month we decided not to change allocations abruptly for trading purposes and left them as they were. This made sense as we can see some changes in leadership as the market has recovered. The Fred Report - Sector Review September 2015Stocks are now reflecting the weakness we have seen in the technical indicators. Should market action continue to unfold as we are expecting, a retest of the low could take place in early to mid October. This creates an interesting question regarding this report – should we change allocations abruptly for trading purposes or leave them as they are?The Fred Report - Sector Review August 2015The Dow Industrials had two down quarters (without getting horribly oversold!), and our forecast remains for a rally in the second part of 2015. A breadth surge should confirm this is underway. We continue to look for the McClellan Oscillator to move above or below 200 to signal a surge in either direction.The Fred Report - Sector Review July 2015XLY is showing strong improvement, and benefits from low oil prices. Bonds may stabilize for a bit at this support, but then rates should slowly rise. XLE has started to break down, suggesting the technical rally we played earlier in the year did not foreshadow improving fundamentals.The Fred Report - Sector Review June 2015Our underweight XLB improved as the oil market has rallied, and oil could rally into June/July. Oil fulfilled our objectives for how a bottom should be made in January. Traders could again overweight XLE on a tactical basis through the end of July. XLP has weakened and we now have concerns. This is a possible underweight if it does not improve.The Fred Report - Sector Review May 2015SPY is up about 2 points since the last Sector Review. We are sorry stocks are so dull, but cannot control this outcome. Smaller stocks continue to improve a bit on a relative basis. To put this into perspective, the average range on SPY is around 2 points – so we have had one day’s trading range as the gain for the month.The Fred Report - Sector Review April 2015We remain with XLF and XLV as over weights. XLF stands to benefit from rising rates but looks to be a second half story. XLV has continued to trade well in a choppy market so we stay with this for now – we keep thinking we should downgrade this but cannot find an adequate technical reason to do so. We remain under weight XLB and XLU, but are watching XLU carefully as it is a great bond substitute on a multi-year basis. The Fred Report - Sector Review March 2015XLU was one of the top two sectors in 2014, and IYZ was one of the two worst, beaten only by XLE. The charts suggest it may be time for mean reversion. While utilities outperform bonds on a long-term, multi-year basis in a rising rate environment, there can be short-term problems during periods of sharply rising rates. The Fred Report - Sector Review February 2015SPY has been up about 10 points since the last Sector Review. This is because the last few days have been strong. Smaller stocks continue to improve a bit on a relative basis. We remain with XLF and XLV as over weights. XLF stands to benefit from rising rates. Our new under weight XLB has improved as the oil market has rallied, but should weaken again as oil retests.The Fred Report - Sector Review January 2015We remain with XLF and XLV as over weights. XLF stands to benefit from rising rates. Our new under weight XLB has weakened as the international economy weakens. IYZ is flat to weak and did not perform defensively in the recent market turmoil.The Fred Report - Sector Review December 2014SPY has been down a bit (roughly 3 points) since the last Sector Review. This has been a volatile period. Smaller stocks continue to lag; the broad-based index, NYA, is still underperforming, and bearish sentiment is still low, a concern. SPY is basically unchanged since September.The Fred Report - Sector Review November 2014We remain with XLF and XLV as over weights. XLF stands to benefit from rising rates, and bonds may have a reversal pattern suggesting higher rates and lower prices are on the horizon. XLV showed big improvement in the accumulation models. While XLP and XLU are currently outperforming this should fade if the market enjoys a yearend rally – and some of the narrowing we have seen in the market should also fade if a rally occurs.The Fred Report - Sector Review October 2014This has been a volatile period. Risk on SPY is continued decline to the February low and we note that XLE and IYZ have penetrated their February lows already, while XLI, XLB, and XLY have come perilously close. Of the best performing sectors relative to the February low (XLF, XLV, IYW, XLU, and XLP) the last two are defensive and IYW may be over hyped.The Fred Report - Sector Review September 2014We remain overweight XLI and XLB for now, while acknowledging that these are conservative choices. Aggressive traders may want to overweight IYW and XLV through the end of 2014 (as we have in our small cap sectors), and then switch back to XLI and XLB.The Fred Report - Sector Review August 2014Overall, very little is happening with the stock market this summer, although we have hit the minimum expectation for a summer rally when May closes up, as it did. SPY moved down to test support and has rebounded slightly. We remain overweight XLI and XLB for now, while acknowledging that these are conservative choices.The Fred Report - Sector Review July 2014SPY has advanced slightly (less than 2.00) since the last Sector Review. Other indexes have also rallied, but it still looks as if our forecast rotation into large cap names could continue over the next several months. Tech often performs well in the fourth quarter but for now remains a strong equal weight; we might upgrade this in the fall.The Fred Report - Sector Review June 2014SPY has advanced slightly since the last Sector Review. Other indexes have also rallied, but it still looks as if our forecast rotation into large cap names could continue over the next several months. Below 189 on SPY could trigger a bit more corrective behavior in large cap and would be a buying opportunity in our view.The Fred Report - Sector Review May 2014SPY has been volatile, but ultimately flat, since the last Sector Review. Other indexes have been weak, and it looks as if our forecast rotation into large cap names could continue over the next several months. Below 184 on SPY could trigger a bit more corrective behavior in large cap and would be a buying opportunity in our view.The Fred Report - Sector Review April 2014SPY has been volatile, but ultimately flat, since the last Sector Review. The market has been above and below the 185 area on SPY several times, and below 184 could trigger a bit more corrective behavior. There has been significant corrective behavior in the NASDAQ and some of the “high flyers” in Tech and Biotech.
