Monthly Report

Investor’s Intelligence %Bears is wow above 30 is a plus, as the indicator is where it was during the depths of the Pandemic in 2020. Overall, this suggests the sentiment backdrop is positive intermediate term.

So far, it looks as if our 480 to 485 area will hold this decline, but we could see some fairly violent moves up and down before price stabilizes. 

Oil and Gasoline are close to entering negative seasonality. Watch oil via USO, UGA and DBC carefully. The oil stocks have ignored seasonality because of improved earnings – and oil has positive seasonality through March but not much longer.

Now we are looking for a pullback into February/March. This should set up a strong rally. We will deploy all cash on a weekly buy signal

The equity markets have improved, but the New Highs / New Lows Indicator is lagging, suggesting selling is going on that is not reflected in the Cap Weighted averages.

Equities experienced a strong rally after the election. Watch our breadth indicators as they are weaker than we would like to see on a kickoff rally.

Prices were sideways to down before the election, and are rallying after, in line with our forecast, but are stronger than we expected.

Please find the link for the latest The FRED Monthly Review below. The Monthly Review is essentially a chart book of various asset classes and a comprehensive view of the U.S. equity market.

Equities experienced a very sharp drop in early August and rebounded but this does not really change our forecast of a choppy corrective market into late September/early October, followed by an advance before the election.

Equities have experienced a very sharp drop and are rebounding but this does not really change our forecast of a choppy corrective market into late August/early September, followed by an advance before the election.

Put/Call has moved down to the low end of the range. This indicator is rated negative as it has dropped back down this month, as the market rallied. It is showing a bit more complacency.

The dollar tested the 106-area and failed so far, but the intermediate picture is still strong. Look at a long-term chart of the dollar. The dollar is a multiyear uptrend (since 2008) and this could be resuming.

TLT is trying to make a short-term bottom: TLT failed at resistance around the 100-area and now has a pattern of lower highs and lows. The daily stochastic is overbought, and the weekly is a new buy recycle. The recent short-term rally tested 90 but failed to move above it. Another advance to 100 would improve this chart.

Put/Call Ratio is moving up, a bullish surprise. We have seen a couple of spikes in the last year that are positive, and this is positive when it should be dropping. These swings in sentiment are a positive for the market – consensus can lead to problems and a one-sided market.

The market via SPY has rallied but other indexes are lagging. This is a set up for a pullback unless IJR and MDY pick up soon. MDY is improving and hit new 52-week highs.

TLT is rallying, but the trend remains down. Accumulation models have weakened. MUB, LQD, and HYG have bottoming formations, and are stronger than TLT.

The market via SPY rallied to resistance. It rallied into yearend as forecast, and now should have a minor correction. Small Cap is improving, as is Mid Cap. Transports remain a concern. As long as SPY remains above 450 the picture is short-term positive.

USO is at the bottom of a range as positive seasonality continues: The weekly stochastic is oversold, and the daily is almost oversold. UGA is a base: The daily stochastic is coming down, and the weekly is oversold and ready to turn up.

We expect a rally into Thanksgiving, and maybe into the end of 2023. Many internal indicators continue to suggest intermediate weakness.

If we are right, then the majority of stocks have made lows here and even if there is a retest the strong names may not come down again, so we would be adding to models here.