The FRED Report

Financial Research, Education & Data

The FRED Report is not authorized, endorsed or affiliated with the Federal Reserve of St Louis and its FRED Economic Data

The Fred Report - Mid Week Update June 8, 2011

 | 
author/source: Fred Meissner, CMT


Previous    Next


The FRED Report – Financial Research, Education & Data

Mid Week Update

 

Volume 3, Issue 46

June 8, 2011

 

Download PDF Version here


Update of Market View

Tuesday’s market was better than it appeared to be, at least on first glance, and this means that the week has a better tone to it than most market observers are suggesting. We discuss positives and negatives below.
First, Tuesday’s breadth was positive while prices closed negative. This is often the precursor to a sharp rally. Second, Tuesday’s market exceeded Monday’s low at the end of the day – and since most markets that open up after a big down day do this either right away, or in the next few days – the action at the end of the day eliminated some “reserve” selling pressure. While there are some negatives (and we will discuss these in the following paragraph), we still see the possibility for an up week – our thought is a down open tomorrow, followed by rally into Friday. Expiration week could then see more correction.
In terms of negatives, the main things we see are more for the end of June, after an intervening rally. The first concern is that weekly stochastics have started down, making new lows vs. the bottom in March due to the quake. This could imply that stochastics move all the way down to the 20 area on the weekly.  Should this happen, the market could easily challenge the 125 – 122 area. The Monthly indicators imply a drop into the end of June as well. Daily indicators, while oversold, do not have buying patterns on them, suggesting resolution of the daily oversold followed by more decline is certainly possible. All of this points to a low at the end of June/early July unless the tone of the market improves quickly. 
We show two weekly charts, below: the SPY (SPDR S&P 500 Trust) and IYT (iShares Dow Jones Transportation Index). Note how the stochastic on IYT is stronger as it is above the March low. This is a plus, as it suggests the economy is a bit stronger than the consensus – but it is likely not strong enough to suggest this is the end of the correction.

 

Other Points of Interest

We show the chart of the McClellan Oscillator. Note the McClellan has come down to support and is turning up – suggesting a short-term rally is possible. Our concern remains, after indicators such as this become neutral to overbought, that another leg down could ensue. 



 




DISCLAIMER: 
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 2010-2019 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. 

 

 

 

Who is Fred Meissner, CMT?
Listen here: