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The Fred Report - Mid Week Update October 5, 2011

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author/source: Fred Meissner, CMT


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The FRED Report – Financial Research, Education & Data

Mid Week Update

 

Volume 3, Issue 80

October 5, 2011

 

Download PDF Version here


Update of Market View

WE WILL BE TRAVELING IN TEXAS AND WILL ANSWER EMAIL AS I CAN
We would very much like to thank subscribers who emailed in regarding the correctness of the Monday Morning Alert. It is always gratifying when something works, but please remember this call when we make mistakes – but I know subscribers want me to stick the ole neck out. I will always remember a broker at my first job that excitedly told me, “I’m going to buy options! This market could go up or down a little bit – substantially!” with a straight face (are you listening, Michelle?).
So far, the situation reminds me of the World Chess Championship in 1978, Game 28, won by Korchnoi, when the score was Karpov 5, Korchnoi 2. Karpov needed only one more win to end the match. When asked if his victory signified a reversal of fortunes, Korchnoi’s reply was – “I have won one game in a row”….
In other words, trading continues to go along in a way that suggests the divergence bottom scenario is working, but the market remains precariously placed. We have a couple of observations based on client concerns. Most important: We now have a good benchmark, or stop. If we are going to be right and the lows of Tuesday are indeed significant and possibly the lows for this correction, they should not be exceeded. In other words – risk management strategies should kick in if the SPY moves much below Tuesday’s lows.
We would like to see a bit of choppy up and down action over the next few days, again NOT a huge runaway market, where moving average systems begin to go positive, breadth continues to improve, etc. Ideally we will keep a high level of fear in the marketplace. Most people were skeptical of the rally today – a good sign. Another day like yesterday, with a down open and choppy trading that closes up would be just fine.
We show weekly charts of IWM and DIA going back to the 2010 lows. Note that stochastics are down in the basement, and should they move up above 20 that would be a big plus.

 

Other Points of Interest

We show the BRIC countries weekly charts below. Note how much weaker these are than US indexes. As of now, we remain concerned about relative performance (see them vs. the 2010 lows. We would lean more towards using US small and mid-cap stocks for speculative money rather than trying to pick these up cheaply.

 
 

 




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. 

 

 

 

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