Weekly Report

September is often the worst month of the year, according to several seasonal studies, and the setup coming into the month is interesting from a technical perspective. Our view on Gold is that there should be some consolidation in either event, and right now our number to proclaim a new bull is a move above 440 on GLD.

Three growth and technology ETFs (IYW, QQQ, SPHB) have started to underperform SPY, suggesting the move toward value names is picking up some steam. We have been treating the TYX as a false breakout above 53 or so, and we are back below that area. The basic Chinese economy is stronger than the tech sector (different from the US), and that we should be seeing signs of Chinese economic improvement and strength over the next few months.

We would like to see a down open that tests these areas, followed by a rally into Friday. TLT and SPTL both closed positive after down opens, and if we are correct, we are going to rally for the remainder of the week.

Our forecast has been for a strong finish to August, and this week is expiration – we could see some fireworks! We have an interesting set of signals on bonds such rates should fall from now into the end of August, and possibly into the end of the year.

Stocks are continuing the consolidation in a “High, Tight, Flag”. Gold still should trade 412 to 420 on GLD.

SPY and IJR broke out last week, maintained the breakout and are trading well. So far, the basic structure of equities is conforming to the outlook expressed by our Accumulation Models: IJR and SPY are outperforming QQQ – as we have expected. GLD is now on track to test 412 to 420 and we would trade for those areas. We would expect more downside for oil over the next few weeks.

SPY has closed comfortably above our breakout number of 752, and IJR has closed above 147. Our plan to buy SPY and IJR on a QQQ buy recycle was effective, so watch when QQQ stochastic becomes overbought. GLD needs to clear 388 to confirm a rally to the 412 to 420-area.

We believe a buying opportunity in bonds is close by. TYX is trying to break out of long term consolidation.

SPY and IJR continue to trade well and look like support should hold. On SMH, a 50% retracement would put the index at roughly 460. So, let’s look for support in that area. Best is around 490,

Our plan has been to wait for an oversold condition to occur in the weakest index (QQQ), and then buy SPY and IJR, or even stronger sectors than Tech.