Stocks have pulled back and may have set up a Santa Clause rally due to last week’s negative close. We think emerging markets are going to do better in 2014, but until the 45-area resistance for EEM is decisively penetrated on the upside would not take big positions.
We continue to see signs of an emerging growth over value trend. Gold continues to show bottoming signs. The oil and gas winter trade is progressing.
The Fred Report - Weekly December 9, 2013We continue to be overweight and interested in XLI (Industrials) as opposed to the consumer sector ETFs (XLY and XLP). A smaller correction should happen sooner rather than later – and should the market defer this smaller correction it is setting up for larger risk in 2014. India and China continue to improve, suggesting EEM will ultimately resolve this consolidation in upside behavior.The Fred Report - Mid Week Update December 4, 2013Markets are acting about as this week was forecast. UNG seasonal trade is to hold until January 31, and we will leave in our Bucket List for now – but this has hit our target of 19.45 and traders can take gains. USO looks as if the seasonal trade is starting to work and if above 36 our end of January target of 38 is within reach.The Fred Report - Weekly December 2, 2013
The bottom line is sentiment is worse than it was in 1999 and 2007, but this is a caution flag, and not a sell signal. There is strong support for bonds in this area but if it breaks bonds may only be half way through their correction. We would use weakness in Japanese equities to add to positions.
The Fred Report - Mid Week Update November 27, 2013We continue to like the Tech sector into the end of the fourth quarter (and we remain overweight this), and by definition this means QQQ and the NASDAQ can do well, but overall we think large cap will do better in 2014, and large cap growth performs the best. We reiterate that gold looks like a bottoming formation as long as the summer lows basically hold. DBC remains our favorite commodity ETF as well.The Fred Report - Weekly November 25, 2013Stocks are normally up Thanksgiving week. USO has got support from 32 to 34 and has been building a base. We have discussed taking a position but really adding to this on a move on the weekly stochastic moving above 20. The Fred Report - Mid Week Update November 20, 2013
There are layers of resistance for XLF between 21 and 24 that are being challenged at this time. Much through 22 – 24 would be very bullish. USO is making all sorts of bottoming signs and in area and at a time when bottoms should occur. It is not completely confirmed until the weekly stochastic turns up.
We would be concerned on a drop below SPY 172.50. At the same time, we believe this is a Secular Bull Market, and has been since 1974. The TNX is in an interesting position at this juncture, as it is challenging resistance at 27.60 and the daily stochastic is in a slight sell mode. This means there is at least a chance that rates will start to decline again, and continue the downtrend, making new lows and challenging our objective of 24.
The Fred Report - Mid Week Update November 13, 2013we would use this weakness in GLD to add some positions. We have had a price target of 34 on USO for some time, and would take a preliminary position now, with more to follow on some strength.The Fred Report - Weekly November 11, 2013For advisors holding an excess of cash (we have been advocating 20%), or getting in new accounts, we would add money to large cap growth rather than value, and in Industrials and that sort of stock rather than consumer names. The insipid nature of the bond rally in October suggests that there may signify the beginning of a real bond bear that carries longer than people expect.The Fred Report - Mid Week Update November 6, 2013
We are suggesting adding money to large cap, while moving away from aggressive over weights in small cap. If rates move up more than anticipated, bond ETFs will be difficult to make money in, but several that might work well in 2014 are: CWB, BKLN, DSUM, and BWX.
Several advisors have asked if this is the most overbought market we have seen – it is not. Closing the month here, and then an up or mostly flat November, would be needed to put price oscillators where they were in 2007, 1997 – 1998 and other super overbought periods. Our buy signal ends in October, and unless TLT can make it above 110 by Thursday’s close the odds of a bear market in bonds go up, and traders should either close out positions or substantially tighten stops.
Our forecast has been for this week to be down and we still think this can occur. TLT has done reasonably well this month but should do better still and we can see a test of the 110 area as being possible by the end of the week.
TLT closed above the key 107.50 area and 109 then 113 remain possible before this move ends. While stocks are acting better than we have expected, drifting down this week would set up more corrective behavior next week.
The Fred Report - Weekly October 21, 2013Short-term indicators are overbought, and condition indicators suggest a neutral to defensive position is warranted. TLT still has targets in the 110 – 114 area assuming 107.50 is penetrated to the upside.The Fred Report - Mid Week Update October 16, 2013Bearish sentiment is low in the 20% Bears range, rather than in the 27% range. This is a negative. Our forecast remains that the market should dip in October before some rally at year end.The Fred Report - Weekly October 14, 2013Since last week's rebound has resolved the short-term oversold condition, we continue to see a real possibility of exceeding the recent low before the month is out. While we continue to believe there can be some bond rally this month and next, in reality the anemic trading suggests that the 30-year bear in bonds that we fear has started.The Fred Report - Mid Week Update October 9, 2013Stocks have continued to pull back and closed below the key 166 area on Tuesday. This opens the door to lower prices and a test of the 162 – 160 area looks likely. TNX still has some room and could still test the 23 area but this is happening slower than we would like to see, and there is a lot of support at the 26 – 25.50 area, below. Coal is actually weaker than oil and the chart is avoid for now.
