FREDAlert!
Volume 10, Issue 2
December 27, 2018
Given the sharp moves on Christmas Eve and 12/26/18 we’ve decided on a quick alert. First, both of these moves are interesting and have served to take the market below and then above our first downside target area of 240 on SPY. We have other downside targets: 220 and if things get REALLY difficult 200 is possible, but not likely. The attack on that area is why we suggested nibbling Wednesday. Obviously, this is a classic example of a bear market rally of a big up day during a decline, that then leads to lower lows – but the fact that Wednesday’s move happened from our target area suggests this may be part of a longer-term bottoming process. Also, there are some divergences in momentum suggesting bottoming action.
We do NOT have a daily stochastic buy signal yet but would continue to nibble. We believe, and indicators suggest, that there will be a pullback to this move where we would get a real, strong buy signal and conservative players should watch for this. The most aggressive advisors can add more aggressively here, but with a stop below 200 on SPY. Even if this rally fizzles the 220 to 200 area should hold another decline, as things stand now.
We will put a final tax bounce list out Monday, but four of the names will be F, CTL, CHK, NBR. There are another four names or so, and we will give more concrete parameters, but basically, we would use a 30% stop loss and a 30% target from your buy point, and the list will end on Friday February 1.
Have a safe, Happy New Year!