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Below are Fred's Weekly Reports with a brief synopsis of each. To view the full report, click on the title.
The current market still looks like more rally is possible, although the chart pattern suggests the Friday gap will fill. While rates may not rise at the same rate as last week, they should continue to advance after some consolidation. We continue to have targets of 72 on WTI for this year.
SPY has held support and should rally back to the top end of the trading range, and possibly break out to new highs. TLT has rallied up to the top end of the range we have looked for and should start to pull back this week.
The economic news on Tuesday was a weaker ISM Manufacturing number and this hit small cap and the Transports harder than SPY.
We continue to see consolidation that is bringing a buy recycle in the daily stochastics. DBA is moving down into the timeframe we are looking for as a price low, so for traders we should start to look for intermediate buy indications.
Bonds had a daily buy recycle and are up, while SPY had a daily sell recycle and is down. A higher low on a buy recycle in SPY could set up new highs for that index.
We are watching the trading in IJR this week, which could break above 82 this week. If that happens the market could do well in September and October, rather than the other way around, as most people think.
Stocks continue to act well, and it is worth noting that even 5 years ago having a 10% rally in oil would have hurt stocks a lot more than just 1%.
There are a couple of zones of support on SPY for traders here, 288.50, and 285, where you can try and buy the market.
IWM is a buy recycle on the weekly, and IJR is stronger showing relative strength. These markets are suggesting that there is no likelihood of recession.
We saw some key reversals on GLD (SPDR Gold Trust) and SLV (iShares® Silver Trust) - in particular SLV - last week. We have had, and continue to have, concerns that our accumulation models have suggested a sharp drop in the metals, and that prices were not sustainable in the 140 area.
We would still add to positions in the 285 area, as we have indicated, but look for a stronger September.
A tradable bottom is close at hand. We would hold DBC for now. It looks like some rally should occur. While Oil has negative seasonality at this time, the indicators have already come down, indicating some rally is possible from here, even if there is further decline later in the year.
This movement has served to continue to drop the weekly indicators into buy territory and is line with our view that more work is needed in this bottoming pattern.
Note that daily stochastics are positive on SPY but may have to go through a complete cycle above 80 again, then down before the market rallies.
One of our favorite short-term breadth indicators is the McClellan Oscillator. It has built a bottom as well, but may need a bit more work, along with other indicators.
This “aggressively going nowhere” behavior is essentially causing the weekly indicators to come down and the market may be on “hold” until the overbought condition is further resolved on the weekly.
Last week’s corrective behavior brought daily indicators down into buy territory, but some weekly indicators may need a bit more time to set up an intermediate buy configuration.
Advisors have added some money per our instructions, and the question is obviously if this is the ultimate low of this correction? It certainly could be but the most important thing to us is that the risk now looks to be no more than 276 to 277.
It is probably a bit too early to suggest we are out of the woods, but at the same time advisors with new money or new clients can start to put people into their models. TLT has performed better than we thought it would on this move, but now it is in a position where the accumulation model does not support prices, and it is overbought.
A test of 285 to 270 is possible from here. That would be buyable as the long-term technical indicators continue to look positive.
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