The Fred Report - Sector Review March 2012
Since the last sector review, the markets have arrived at the low end of our target range of 140 – 143 on SPY. Anecdotal sentiment is quite bullish, but the actual numbers remain favorable - our Investor’s Intelligence %Bears model remains elevated. US Small Cap stocks have made all time highs. European concerns have receded, and our expectation that these will be resolved favorably is becoming consensus view. Indicators on European stock indexes and currencies have favorable patterns, but US markets continue to look more attractive from a technical point of view. Still, this is a good point to tighten up stops, sell underperforming holdings and review positions.
The Fred Report - Sector Review February 2012
Since the last sector review, the markets have traded through important resistance. Our Investor’s Intelligence %Bears model remains elevated, but put/call ratios have come down, at least on up days. The Inverse Head and Shoulders patterns we alluded to in the last Sector Review have resolved in upside behavior, and US Small Cap stocks have made all time highs. European concerns continue to roil the markets, but our expectation is these will be resolved favorably – Indicators on European stock indexes and currencies have favorable patterns.
The Fred Report - Sector Review January 2012
Sector Weight Notes: We lower Technology (IYW) to an equal weight. We raise Financials (XLF) to an equal weight. Health Care (XLV) moves to an overweight and Consumer Discretionary (XLY) lowered to an underweight.
The Fred Report - Sector Review December 2011
Since the last sector review, the markets have traded sideways. Sentiment indicators remain elevated, but individual readings have started to come down. We acknowledge headwinds: (1) we see NO further U.S. government stimulus until after the 2012 elections, (2) Eurozone problems, and (3) Debt issues in the US. However, the markets may have discounted these issues, which are widely acknowledged, and European fears have kept sentiment negative, a plus.
The Fred Report - Sector Review November 2011
Since the last sector review, the markets have rallied sharply. Sentiment indicators remain elevated, and we believe a strong yearend rally is underway. We acknowledge headwinds: (1) we see NO further government stimulus until after the 2012 elections, (2) Eurozone problems, and (3) Debt issues in the US. However, the correction we have seen seems to have discounted these issues, which are widely acknowledged, and European fears have kept sentiment negative, a plus.
The Fred Report - Sector Review October 2011
Since the last sector review, the markets have been down. Sentiment indicators have improved, and we believe a strong yearend rally has started. We acknowledge headwinds: (1) we see NO further government stimulus until after the 2012 elections, (2) Eurozone problems, and (3) Debt issues in the US. However, the correction we have seen seems to have discounted these issues, which are widely acknowledged.
The Fred Report - Sector Review September 2011
Intermediate-term, stocks are holding. There are many attractive intermediate charts in this report. Many market participants seem to be overlooking this potential strength.
The Fred Report - Sector Review August 2011
Sector Weight Notes: We RAISE IYW to an OVERWEIGHT. We LOWER XLF to an UNDERWEIGHT. We acknowledge risk in a new overweight at this juncture, but Tech earnings have come in, the stocks look good, and we are looking six months out.
The Fred Report - Sector Review July 2011
Sector Weight Notes: We RAISE XLI to an Equal Weight. We LOWER XLP to an Equal Weight. We have had a defensive allocation for much of 2011, and our current allocation tilts to neutral. This leaves us is position to make changes should our forecast of a strong second half of 2011 materialize.
The Fred Report - Sector Review June 2011
The markets have continued to correct. We made some significant changes in this report to reflect the fact that accumulation models in three economically sensitive sectors have gotten much worse, suggesting that the economy could slow more than the consensus expects this summer.
The Fred Report - Sector Review May 2011
Since the last sector review, the markets have been sideways to up. Our overweight sectors, especially XLP, have been market leaders. We will watch carefully if the market has the expected decline into a May/June low and possibly make some changes at that time.
The Fred Report - Sector Review April 2011
Since the last sector review, the markets have been sideways and so have most sectors. We lower XLB, to an equal weight, as our accumulation model has been a bit weaker than expected. IYW has also started to show weakness on a relative basis. We remain equal weight Tech for now, but this has been expected.
The Fred Report - Sector Review March 2011
In stocks, we have made several replacements, both to take profits and eliminate bad stocks. These changes can be seen on page 2.
Since the last sector review, the markets have been sideways and so have most sectors. We note that XLB, one of our overweights, has been a bit weaker than expected, and that IYW has also started to show weakness on a relative basis. We remain equal weight Tech for now.
Sector Weight Notes: We move to an OVERWEIGHT on XLY (Discretionary), and an UNDERWEIGHT on XLV (Healthcare).
In stocks, we replace KO with CL, as KO is dollar sensitive and we expect a dollar rally. We replace MS with AXP as well. See the individual charts for more.
Sector Weight Notes: We RAISE Staples to an OVERWEIGHT, and LOWER Technology to an UNDERWEIGHT. We know this is a big change. We underweight Technology as accumulation models have weakened and Tech has become the “darling” of Wall Street – 8 out of 10 strategists in the Barron’s survey count tech as a favorite sector. We have been overweight Tech since 2009, and want to take some money off the table.
Sector Weight Notes: We RAISE Materials to an OVERWEIGHT, and LOWER Utilities to an UNDERWEIGHT. We believe there will be greater improvement in the economy and this is reflected in the charts – XLB has broken through intermediate-term resistance. At the same time, defensive sectors such as Utilities may see outflows, and the XLU chart is weakening.
We RAISE Healthcare to an EQUAL weight, and LOWER Discretionary to an EQUAL Weight
The reason for the above minor changes is we believe the short-term improvement in Healthcare will continue after the election, with gridlock on the horizon. We are assuming that Republicans win a majority in the House of Representatives.
The Fred Report - Sector Review September 2010This report contains more stock changes than most reports, as we are moving into the end of the year. Because of 2010’s volatility, tax selling is more of a concern than usual and we have been defensive in our picks. Changes have not been concentrated in one or two sectors, but have been fairly broad based.The Fred Report - Sector Review August 2010Our OVERWEIGHTS remain XLY, IYW. Consumer Discretionary has been strong since the bear market low in 2009. Our UNDERWEIGHTS are XLF and XLV. The Financial stocks have petered out, recent earnings have disappointed, and the XLF looks to be in a trading range. In our EQUAL WEIGHTS, watch the XLE carefully. Right now these stocks are reacting to news much more than technical factors and there might be some changes as seasonal strength ends.
