Weekly Report

So far, we are basically right on market direction – down but stronger than anticipated. If TLT holds 88 it is still short-term up, and above 90 would be strong. A close below 462 would imply more downside for GLD, which we expect by the end of March.

Below 600 on QQQ and 675 on SPY (SPDR® S&P 500 Trust), closing basis, which would suggest the correction is starting. TLT closed above 90, so our next target of 92 looks possible. It could happen in the next few days, if investors look for a safe haven.

Corrective behavior is likely to start in earnest when QQQ starts trading and closing below 600, and so far, we have held that area. We continue to foresee more problems into the April to May period but will monitor the indicators to see how this is working out. TLT continues to test the 90-area, and ultimately should go through and test 92 or so, by summer.

While we think that tech is due for a bounce, we are not at all sure this sector will have any sort of outperformance over the next few months. The oil market is in an interesting position, as favorable seasonality has ended, but stocks and oil remain relatively strong due to world events.

If this decline materializes according to our forecast, it should be choppy and difficult to trade, but end up lower in mid to late spring. Our conclusion here is that the five- and ten-year rates have more pressure to decline, based on the charts. However, even the thirty-year rates look lower chart wise. If INDA can move above 55 it could test 60 or even higher. Follow the indicators and use risk management, but if the Nikkei is where the US market was in 1984, there is a lot more upside.

In our view, these are snap back rallies in stocks like PLTR and should end this week, then resume some downtrends next week. TLT has started to rally. We continue to look for some more upside, say to 90, where we would reevaluate this unit. GLD and SLV were up Monday but down Tuesday. There should be more upside here, but if these continue to pull back this week, there could be downside without an intervening rally.

Weekly Advance/Decline numbers on the New York were positive, while the NASDAQ saw negative breadth. The rotation is real.

New lows for GLD below 427 would suggest continuation of the decline. We are expecting more bounce/basing in the metals but remain negative, especially on SLV.

Right now, we are going with two assumptions: (1) that we are going to be right about a pullback into the April to June time frame, and (2) that Transports and Small Cap will outperform on a decline. We all know Tech is the largest sector in the S&P 500, and it is over owned by retail investors. This could make it more vulnerable.

We have advocated selling off some unwanted positions and taking some profits, preparing for an expected pullback into the April through June timeframe. We figured metals could advance into the end of the month and expect GLD and SLV to have a difficult time in February.