Weekly Report

Our Accumulation Models continue to suggest a rally into the July time period.  Readers will recall that we have been concerned about higher rates for the last six months or so – but that our forecast has been for this risk to show up later in 2025.

We still expect higher prices into July/August.  GLD has rallied back above 302 but really needs a weekly close to maintain the uptrend.

While indicators are overbought short-term, sentiment indicators suggest further upside.

SPY 560 might very well hold this. Advisors that want to add money should consider adding some cash if that area hits.  Watch GLD here. It is holding secondary support at 299.

We have mentioned that if we are going to see a pullback/retest it should start this coming week. If this occurs (and this looks more doubtful) we are looking for a test of the 500-area on SPY.  Our big concern is rates, and we note that TLT is not showing much upside, a concern that we will keep observing.

If this works as we expect, the markets will come down on heavy bearishness, but with better breadth.  TLT is trading well, holding short-term support with an outside day up on Tuesday.  One thing to watch in the news on gold is to see if the exchange changes margin requirements.

The question on everybody’s mind is whether we will have a retest. We are overbought enough to have a pullback starting this week.  Our forecast has been for an especially strong summer rally this year and we are sticking with that, after a dip at least over the next two weeks.  We still think Small Cap is a speculative buy.

We still think a retest is likely but note this almost always within four to six weeks after the first low.  A successful retest means strong stocks won’t go down so we should be buying for models now, not waiting.  TLT continues to rally off the bottom in the 85-area and is now testing some resistance in the 90-area. We continue to look for 92, and then 95.

There were some technical features of the advance that confirm our original view that a retest is likely.  we should use declines to add to models.  There is substantial risk of an advance, not a decline, in rates.

One question is whether Monday was the retest we are looking for, and to the best of our belief the answer is no.  Realize that on a retest fewer stocks in your models should decline – buy the strongest ones, and don’t worry too much about the retest. We anticipate this process should take another few weeks.

The indicators still suggest this is a bottoming pattern and that a retest of the closing low on SPY is possible.  We would like to see a down open on Monday, maybe another small down day, and then the rest of the week should be up.

Some sideways trading would be positive here, and within that context we could see a test of the 510-area on SPY.  A slight down close on the week would set up a strong up week next week.

The situation is such that some more bouncing around is likely, and eventually a new CLOSING low. The word “Closing” is important, because the closing low is SPY 496.48 and not down in the low 480’s.  A strong advance in rates is one of our biggest concerns.  We would like to see USO trade above 70 to suggest a move to the 80’s is in the cards.

We still believe our 500 to 480-support area on SPY should hold, especially on a closing basis.  The Put/Call number improved to 1.23, getting close to what we want to see, and suggesting some panic.  A move below 274 on GLD would confirm a trend change.

The numbers for the downside that we published in our alert (500 to 485) are still operative.  We also believe a V bottom is unlikely here – with the kind of momentum we’ve seen a divergence bottom/basing period makes more sense.  Bonds could be volatile as equities sort themselves out. For those that are holding, we would sell both TLT and LQD if TLT can trade at 95 early Monday morning.

We have been expecting equities to rally after the tariffs are imposed and still expect this.  TLT is rallying as well – it is a bit weaker than expected but still should hit at least 93 and likely 95, by May/June.  Lower volatility and high dividend ETFs are trading near all-time highs in spite of the market decline.  Watch gold here as some strange stuff could happen this month with regard to the physical commodity.

Put/Call hit its highest level on individual data points since March 13th, and before that January 10th, 2025. While we would like to see bigger numbers, this is a move in the right direction.  We think equities are still in a bottoming process.

We have no changes to our forecast for a rally into the June timeframe.  TLT is basically still holding the 90-area as the daily stochastic moves closer to oversold and a recycle.

We have no changes to our belief that the market is set up to rally into the summer months.  Because of the increased spending from Germany, that Europe could be entering a new long-term bull market.

SPY is still stronger, per our Accumulation Models, suggesting the market should move away from secondary Tech.  If readings on %Bears continue this way another week should give us close to 30 on this indicator – contrarian bullish, which is another support to our outlook.