Weekly Report

We still look for a rally into the end of January after a choppy week. TLT is starting to perk up as well, as long as it can stay above 87.50.

We note that RSP and Small Cap ETFs continue to look stronger than IYW (Technology), which we view as a plus suggesting leadership change.  We still maintain our forecast for an intermediate peak near the end of January with a solid tradable low in May.

We have moved above 692 today, faster than we thought! Ideally, we will close above 692 in the next few days/week to absolutely confirm our view.  We have been asked what bond ETF to buy for a trade into the summer. Our favorite here is MUB.  QTUM is breaking out of a consolidation and as long as it holds 107 it is strong enough to buy.

Short-term breadth indicators reinforce this: the next few weeks look favorable for gains, likely strongest in the indexes and sectors that have lagged thus far.  Indicators suggest that tech may perform less well than other sectors in the first part of the year, but if they get a significant enough pullback, they should show strength in the second part of 2026.  For now, we look for slightly lower rates in 2026.

Our outlook for the end of 2025 remains unchanged: we expect the market to finish higher, albeit with thin trading volume and limited participation.

From our end here, it looks as if the numbers for Christmas may come in a bit better than expected.  We will still sell the remaining half of our SILJ (Pure Funds Junior Silver Miners ETF) trading position by the end of December.

SPY moved down to test the 676-area support and has held it.  An SPY close below Tuesday’s low would call our forecast for an advance into New Year’s into question and we would start to sell some trading positions.

So far, all indexes are holding support areas so we are not concerned with the trading, although sentiment is a bit too bullish.  XLI has started a breakout and has real potential into 2026.

We are waiting for the FED news like everyone else.  If there is a sharp drop on the FED news, we would buy it.  We note that SLV outperforming GLD is often part of a topping process. Be careful with the metals here.

The way this rally is occurring is a bit of a surprise, as the market is broadening out with improvement in small and mid cap stocks.  We are close to a new Dow Theory buy signal (we need to exceed the December high).

The breadth over the last couple of days probably puts to rest the chance of a Zweig Breadth Thrust, but regardless of whether or not we get that signal, there has been substantial improvement in breadth – a bullish development.

Breadth has improved dramatically.  We will use pullbacks in stocks to add them if they get to our prices.

We still believe a rally into the end of the year is likely, as the current oversold readings support a seasonal advance.  There are some real signs of rotation in the market but nothing that prevents our yearend rally scenario.

The McClellan Oscillator, one of my favorite short-term indicators has turned up from a low level.  Daily stochastics on SPY and QQQ are now oversold and in position to turn up in buy recycles.

SPY should hold 660 to 650 if we are going to be right about our rally scenario.  Watch Value stocks as they should start to show even more relative strength.  Our contention is that the Dollar is a bullish pattern, and that a move back above 100 could be the signal for the start of a new rally.

We don’t have any changes to our equity market outlook, so I we can have a little bit of fun in this piece.

New Highs/New Lows showed negative new lows – i.e. more new lows than new highs. My good friend Walter Murphy mentioned that this was the first time this has occurred since April, and that this breaks a string of 27 weeks with more highs than lows – the longest such run since 2020/2021 when markets were coming off the Covid low.

So far this is just a quick pullback to support, we would like to see a little more downside over this week.  Buy stuff as it comes to you.  As long as 360 holds on a closing basis, GLD can rally from here.

Upside here for XTN adn $TRAN would be a strong indication of a better 2026 than we have been thinking, as well as confirmation of a strong end to 2025.  There are two groups of commodities that start seasonally favorable moves in the November timeframe. These are the Agricultural commodities, and the Petroleum Complex.  Now that the Argentina election is over, the same fund manager suggests Argentina is buyable again fundamentally. Our technical work confirms this view.