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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.
We would be watching IWM and IJR carefully here. The daily stochastics on small cap gave us the buy signal we had ahead of this run, even though the daily SPY did not recycle. When these give a sell recycle below 80 this rally should end.
We want to look at QQQ and ONEQ charts because we have some internal indicators on the NASDAQ that are flashing caution signs.
On an investment basis, we would rank SLX (Market Vectors Steel ETF) a buy. Our reasons are the double bottom at 34 or so, and a monthly stochastic that has just gone positive.
We have two targets on stocks for this year – 294 to 302 (last year’s targets, again), and 220 to 200 on the downside, which now seems to be over exuberant on the downside.
GLD has filled a gap and is oversold on the daily stochastic. Although the weekly stochastic is not yet oversold GLD should rebound a bit – not sure if 126 will be retested but GLD should at least bounce. EWS (Singapore) would be an interesting, if not unusual, addition to international portfolios.
It is interesting that this market is starting to have some similarities with 2015, the year before the last Presidential Election.
Once again, we are in a situation where the daily stochastics on SPY are coming down but not oversold, while IJR, IWM, and IYT are oversold.
We see no reason to abandon a cautious stance here. SPY should hold the area of the last low at 272, and if this fails a test of 265 or so is possible. We would watch this carefully on the next pullback – If it makes another higher low, IEO would be a strong addition to the oil component of portfolios.
We cover small cap India.
The patterns on some of the longer-term breadth indicators a]lso suggest caution is indicated here and now, but that the market should be higher in the second half of 2019.
TLT is holding on and has basically supported at 118.50. As long as this area holds the trend is still sideways to up, and it could challenge 125. We still think Britain will be better off out of the EU.
U.S. stocks are testing some short-term support areas that could hold, and advisors with “too much” cash should add some here. A break of 272.40 on SPY, followed by a break of 271 would indicate further correction.
Other than small cap there is just not that much to talk about here. EWS is interesting, has a strong yield, and may be a good way to trade an advance in China.
SPY has slowed in the area around 280 and we have seen some new low expansion, one of the factors we are looking for to suggest this rally is ending. We are seeing some signs that interest rates should rally over the next few months, and bond prices decline.
We are comfortable being overweight XLV in our Large Cap Sector portfolio.
Stocks closed the week reasonably well, and there was no new low expansion, which is our “canary in the coal mine."
Stocks were up for options expiration last week, and new lows did not expand, suggesting this rally may have a bit more to run although indicators are overbought. PSCE may be a cutout low, and for speculators this is a good opportunity.
We note that the weekly stochastic is now overbought, above 80 and if it turns down, we will have both daily and weekly stochastics negative. Should this occur we would consider starting to move back into low volatility from our equally weighted RSP position. We will be watching the new lows numbers – if they start to expand, we would have concerns.
Transportation charts support the possibility of pullback and retest over the next few months. When we look at these European ETFs, they suggest that we should have European concerns. The real question is whether European growth and financial concerns will cause a drop in the Euro and a spike in the dollar.
The next daily stochastic signal, which will occur on a rollover and move below 80, should lead to a buy recycle, and we would wait to deploy significant new capital until that occurs.
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