Weekly Report

Bonds have hit the 95-area resistance on TLT and should pause in here.

We have discussed our belief that the equity markets would start to broaden out, moving away from the emphasis on Tech, broadening into other sectors and areas of the market.  IJR is an intermediate-term base with 90-area support and 100-area resistance, which is why we are using 100 as the neckline of the Head and Shoulders pattern.  As long as GLD can hold 185 on a pullback the short-term trend remains up.

Stocks are correcting sideways, which also can resolve the overbought condition on some of the indicators.  One of our more controversial ideas for a trade into yearend, is to buy banks – regional banks in particular.

Stocks are short-term overbought as we come into this week, but intermediate indicators still suggest upside, especially after a short-term correction.  One of our concerns is the condition of the Transportation indexes.

Stocks are overbought, so we could see some pullback next week – but otherwise we still think prices should be at least slightly higher from here at yearend.  TLT should consolidate in this area, but below 88.50 would be a concern.

Our internal indicators have improved last week, but not as much as we would have thought it should.  We have talked about the need for the market to broaden out, and one of the areas where we need to see improved performance is small cap.  MSCI Turkey Index Fund (TUR) This could see some window dressing into the end of the year, and a move above 40 would be gravy.

Stocks have continued their rally this week, and we have hit our trading target of 450 on SPY a bit early. 

We ran our indicators this weekend, and frankly, the results are somewhat disconcerting.  We will hold long positions but be a little tighter on risk management than we have indicated.

Stocks are a bit stronger than expected, and still have not made an effort to fill the two big gaps at 430 and 425 on SPY.  We would love to see TLT test 86 before challenging 90.

Accumulation models recovered somewhat but have not erased the technical damage done in October. Breadth and price oscillators have improved but some are still in a negative configuration.  One of the problems with last week’s trading was that several gaps occurred, and this week should see some pullback to fill these.  Since there is some possibility of Japanese government intervention to support the Yen, we will recommend EWJ for a trade into yearend.

The 423-area on SPY, and the 357-area on QQQ are the next resistance.  Keep watching the interest rate indexes.  It looks more and more like the Japanese Government has embarked on a policy to reduce the value of the Yen.

Indicators are oversold enough that we should still rally, but a yearend advance may very well be weaker than we have expected.  There has been a hit to our strong accumulation models, but it is not too severe, and the market is actually generating some buy patterns on the FPO’s, and my breadth oscillators as well.

We have been looking for a yearend rally from a double bottom in the 420-area and we believe that has started and should last through the end of 2023.  If we are correct on bonds, then PCEF should enjoy a rally into yearend.

It is noteworthy that the original decline, as well as this retest, is happening on very negative sentiment. I want to break 420 and move back above it. We would be buying high relative strength names in your models, both stocks and ETFs.

We liked the Tuesday action, with a down open and a higher close after trading in a range throughout the day.  Bonds also traded well, filling a small gap, and closing well after a down open.  Insurance has been under the radar and is picking up more notice.

We see no reason to change our outlook that the market is bottoming in this area and the timeframe we expected.  We looked at most of our breadth tools and these also have bottoming signs.  GLD is now a hold.

SPY has hit first resistance and could be choppy for the rest of the week, may move into a retest later this week or next.  We would deploy some money on a pullback to the 429-area on SPY.

SPY fully testing the 420-area, that we have been forecasting has been hit.  Clients should be adding aggressively here, especially if we can see some more declines based on the Israel situation.  We would also add on a move back above 90 on TLT, which we expect, but maybe not until early November.

We still think that 420 might be tested, but this is our minimum expectation and again suggest advisors look at models – some stuff may have already bottomed.  We would add some XLF and KRE in this area.  TLT has finally gone below the 89 to 90 area and we would look to add more duration on a move back above 90.

There are some indications for a short-term bounce but we continue to see a move down to the 425 – 420 area by early October as being possible.  Since everybody is interested in semiconductor stocks, they might go just a bit lower than people think.  XLG is coming down and this should be a decent play into the end of this year.