author/source: Fred Meissner, CMT
Volume 3, Issue 3
August 11, 2011
We have had a number of questions we will answer in this alert.
We are not giving up on a market rally from here to 1200 to 1235. Wednesday was an inside day (a higher low and lower high than the previous day), and this is often a sign of a trend change. What is interesting from an academic perspective is that it MIGHT be a double inside day if night trading from two days ago is included – which was a question – but generally we do not include the night session in our work. In any event, we had an inside day today, so we have at least one.
What this means is that if the high of August 10 is exceeded the next target is the high of August 9, then 1200 to 1234. Should the 1090 area be exceeded on the downside, there would be risk of this move continuing down to the 1000 area on the SPX. Obviously this is a difficult market, and one that has fallen more quickly than we expected – but this area represents the best place to mount a rally we have seen since the decline began. Note this should start immediately, with the set-up we have, should this rally not start by next Monday, the chances of taking out the lows increase.
We want to comment on TLT as we did not do so in the midweek. We wanted to see one more trading day. So far, we have been wrong on TLT. It is right at 110 – area resistance, and substantially above our 100 sell point. Accumulation models do not support these price levels on TLT but do support the levels on LQD. We would use LQD for bond investments, and realize that if TLT starts to fall here a test of the 100 area or lower is possible, and more quick than most think is likely. We are concerned that a very sharp drop could be in the cards.
Gold and GLD. Our new 12 month target is a bit closer than the last one: 1892/oz on the nearby Comex contract, or 189 on GLD. We note that margin requirements on gold have been raised, and that once these start being raised a sharp down-move is coming. On the plus side, gold is outperforming silver, suggesting the long-term uptrend is intact. We have gone to an underweight on metals, suggesting recycling money in PSAU or gold stocks.
Sentiment. Put/call numbers are looking better but, surprisingly Investors Intelligence % bears has dropped rather than risen. This is a strong negative and suggests lower prices in store, but I believe after a rally.
Fred Meissner is primarily responsible for the research in this report and certifies that: (1) all of the views expressed in this research accurately reflect his personal views about any and all of the subject securities or issuers; and (2) no part of his compensation was, is, or will be directly or indirectly related to the specific recommendations or view expressed him in this research.
This report is for your information only and is not an offer to sell, or a solicitation of an offer to buy, the securities or instruments named or described in this report. Interested parties are advised to contact the entity with which they deal, or the entity that provided this report to them, if they desire further information. The information in this report has been obtained or derived from sources believed by Fredco Holdings, Inc. to be reliable, but Fredco Holdings, Inc. does not represent that this information is accurate or complete. Any opinions or estimates contained in this report represent the judgment of Fredco Holdings, Inc. at this time and are subject to change without notice. Fredco Holdings, Inc. or its employees, officers, directors, principals, agents, affiliates or adviser may from time to time provide advice with respect to, acquire, short sell, hold or sell a position in, the securities or instruments named or described in this report.
Fredco Holdings, Inc. does not have investment banking relationships with any of the companies mentioned in this report and does not conduct investment banking business, in general. Fredco Holdings, Inc. and its employees do not receive compensation of any kind from any of the companies in this report. Fredco Holdings, Inc. , its directors, officers, principals, agents, advisers, affiliates and employees may maintain a financial position in the securities mentioned in this report, provided however that no buying or selling activity will be taken with respect to a security referenced in a report by such parties within three days of such report’s publication.
The information contained herein was prepared by Fredco Holdings, Inc., which is solely responsible for the contents of this report.
Copyright 2010-2023 Fredco Holdings, Inc.. All rights reserved. This report is a publication of Fredco Holdings, Inc. located at 4514 Chamblee-Dunwoody Rd, Suite 112, Dunwoody, GA 30338.