FREDAlert!
Volume 2, Issue 2
February 05, 2010
Downlaod PDF Version here
There have been numerous calls about the markets so we have some interim observations before the weekly piece goes out the door.
Stock Market: So far, the IWM has moved into the $58 area which is the bottom end of our projected range. Sentiment indicators remain somewhat negative. Investors Intelligence %bears fell last week from roughly 23 to 22, which suggested more decline was in store. While put/call numbers are improving sharply, this is not enough to adjust the negative sentiment upward. Please see the Monthly for more on this.
Because of poor sentiment we adjusted down our IWM range to 58 to 56. Currently, we are actively looking for stocks to add to our list, and will likely start to add next week. The end of the world is not at hand, but we do think that a divergence or cut-out low could occur, and, as mentioned the timeframe could extend into mid to late February. More choppiness ahead so take your time as a buyer. In weeks like this, Fridays usually are down days so there is no need to be a major buyer today. Ideally equities will be down today, open down on Monday. The chart below of the IWM shows a gap in November at $58.40, which can be filled. We feel equities are close to the low for this correction but not quite there. Overall, new highs/new lows numbers are such that nibbling at strong stocks will begin to make sense sooner than later.
Gold:
The GLD has broken down through the 105 support and continue to look for a buy signal here, but for now we will not add our 1/2 position back. We will cover the dollar next week more depth as its movements are correlated to gold which remains positive from a longer trend viewpoint.
