The Fred Report - Weekly June 29, 2015Be prepared to use risk management, and be selective. We would use a drop to add to big banks, especially if they are hit by the Greek crisis. TNX closed at its highest level since late September/Early October 2014. We believe this move could be the “real thing” – we could easily see rates back where they were before QE began, and quicker than most expect.The Fred Report - Mid Week Update June 24 2015
We continue to look for 214 – 215 on SPY. Next bonds may have failed again, and more decline could expected on a break of 115 on TLT.
On a purely technical level, we continue to see some leadership out of smaller stock indexes, which is bullish and suggests that the economy continues to improve. The lack of momentum as the Russell 2000 and S&P Mid-Cap Index (S&P 400) in making new highs is surprising. Oil has gotten overbought but remains in a positive configuration. While there might be some sideways trading as the weekly chart consolidates we continue to look for 67 on the nearby contract for oil.
We continue to look at the possibility of 214 – 215 on SPY, and then a pullback. Financials continue to improve and two ETFs pertaining to banks have broken out. Bonds should therefore be expected to attempt a rally, and rates decline, over the next few weeks.
It would not surprise us to see some more choppy and negative behavior in June that could lead to a buy point in July. Over the last few weeks, we have commented on the seasonal tendency in oil to bottom in the last week of May/first week of June, and then stage a summer rally.
The Fred Report - Mid Week Update June 3 2015The trend on bonds is now down and objectives are 105, then 90 on TLT. Be careful here.The Fred Report - Weekly June 1, 2015Small cap stocks have not registered new highs since April. These indexes often lead the markets so this performance is a concern.The Fred Report - Weekly May 26, 2015First, we have recommended holding a cash position to deploy should the market correct. Second, we have advocated investing new money in models – but more slowly than usual as there could be a good opportunity to accelerate that investing over the next several months. We are seeing signs that the seasonal bottom in agriculture is not going to hold this year.The Fred Report - Mid Week Update May 20, 2015XLF had a good day and we expect more upside. This is still a second half story for us but we like the looks of this setup.The Fred Report - Weekly May 18, 2015
If the market pushes to 214 – 215 on SPY without strong improvement in breadth we would have real concerns – to the point of advocating short sales on a decline back below 210. We would have a position in GLD, not a big one – but we would be hanging around and ready to buy more.
Technical indicators support some sort of bounce here for TLT, and 124 – 127 are possible. Stocks still look they can correct into June/July, and indicators continue to weaken.
This market is a prime example of what we call going aggressively nowhere, and while we still expect 214 – 215 to be challenged before a pullback and advocate putting money into models, we would slow our rate of investing a tad to see if we can add money on a decline. Financial stocks generally outperform in periods of rising rates, and when we look at XLF and a couple of key stocks in particular we can see evidence of this.
Sentiment indicators and some of the momentum indicators we follow have continued to deteriorate. TLT had a bad week last week and it may be that the Treasury market is anticipating a rate rise in June. We would love to get additional GLD should this fall to 109, and then rebound back above 112.
Stocks are continuing to advance and we are moving closer to the 214 to 215 area on SPY that we thought might be tested before corrective behavior occurs. QQQ below 104 targets below 100 and would be a concern, and ONEQ below 189 – 187 would also be a concern and we show daily and weekly charts, below. We note Apple (AAPL) reports after the close and will impact trading in QQQ and ONEQ.
Stocks had a bad day Friday, failing at the 210 – 212 area on SPY and pulling back once again. This area is resistance and the daily stochastic is turning negative on this movement. We prefer to use our SPY support levels of 204, then 198 as areas of support. If these break, then a decline could be violent due to low bearish sentiment.
We do expect one more good shot up to new highs on the dollar, even if they are just intraday highs. Alcoa has satisfied the downside projections we made, and should rebound.
