Indicators suggest that this rally could pause short-term, but if there is consolidation and the 190-area holds we could see continued advance to the 203-area objective we have had since December 2013. The bond market should hold this support and consolidate or rally into at least the end of June, but it depends a bit on short-term strength.
On a technical basis, INDY and SCIF are overextended – not to say they cannot continue, but they are overextended. The main reasons we like EEM are that China is improving and so is Latin America.
If the pattern we are looking for holds, stocks should now consolidate recent gains, or even pull back. While the chance of a large summer driving rally in oil is probably lower than average, there are a number of fundamentals in favor of oil – principally the increase in U.S. oil production.
The Fred Report - Mid Week Update June 4, 2014It would be a concern if SPY moves below 189 short-term and 184 intermediate-term. We would be concerned if TLT moves below 111 for more than a few days. We continue to believe that gold is in a bottoming formation as long as GLD remains above the 114 – 113 area.The Fred Report - Weekly June 2, 2014The equity market continues to narrow as it advances. While we continue to believe SPY can trade at 203 this year, it may not do so over the summer. We would watch carefully if TLT starts trading below 111, as this could lead to a rise in Treasury rates that would ultimately affect all bonds.The Fred Report - Mid Week Update May 28, 2014Be patient here and let GLD come to you, and add on this dip or get a position if you do not have gold. Investors should continue to add money. Things do look a bit better, and we would focus on XLI and XLB names.The Fred Report - Weekly May 27, 2014One of the problems we have had with the NASDAQ is that breadth has been negative as measured by some of our breadth indicators since March. Preferred Stock ETFs have lagged TLT for a while and we would give a lot more consideration to selling these if TLT starts closing below 111.The Fred Report - Mid Week Update May 21, 2014While Russia should trend higher there may be some consolidation at that point. For investors, it looks like the low is in on these markets – and buying on a pullback looks okay.The Fred Report - Weekly May 19, 2014Our benchmarks of NYA 11,000 on the upside, and below SPY 184 on the downside seem valid and we would wait to make a big trading commitment until we see one or the other confirm. We continue to see more strength in Industrials and Materials than Consumer names.The Fred Report - Mid Week Update May 14, 2014We remain with low volatility and defensive positions. Bonds have been choppy but have held 110 as measured by TLT and as long as this holds bonds can advance to 115.The Fred Report - Weekly May 12, 2014We have a set up for a trading rally, especially in Tech and Biotech. Real estate ETFs of all kinds look to be a solid income vehicle, with improving charts that have a way to go before hitting resistance.The Fred Report - Mid Week Update May 7, 2014
On stocks, a move above NYA 11,000 lessens the risk of a correction, and a move below 184 on SPY suggests a correction is underway. We believe positive fundamentals in financials have been widely discounted, such that this resistance may hold XLF for a long time.
Value stocks are improving relative to smaller cap growth names, which supports our view that it is likely that industrials and materials should continue to perform better than the former high flyers. We continue to suggest dollar cost averaging at a reduced rate, with the idea of accelerating this on a decline over the next month if the market starts to correct.
The Fred Report - Mid Week Update April 30, 2014There are no changes to our basic market opinions, except to observe that TLT has tested the 110 support area and held. Stocks have rallied into the end of April and this reflects favorable seasonality, but we may very well see some weakness in May per our forecast.The Fred Report - Weekly April 28, 2014
We continue to expect a correction in the SPY similar to the one already experienced by the QQQ, into the middle to end of May. TLT has rallied close to our target price range, BUT still may have a month to go in the time cycle. We continue to believe the gold market has had a 50% retracement and is in the first stages of starting a new bull phase.
Our theme of a tired consumer as measured by the charts of XY and XLI remains intact. GLD continues choppy as forecast, and the daily stochastic is down almost into buy territory.
Stocks rebounded last week as expected, but accumulation models and momentum suggest more corrective behavior is in store. The trading action looks like a correction in a bull market because some sectors have done so much better than others – and bear markets usually have strong commonality. For folks looking for a tactical opportunity, agricultural commodities may be the most interesting one at the present time.
NASDAQ is oversold enough to stage a short-term rally, while blue chips look like more decline is possible. We would use projected strength over the next week or so to diversify away from over weights in the “flyer” stocks and into positions in Industrials, Materials, and possibly even Income stocks to take advantage of this leadership change.
The Fred Report - Mid Week Update April 9, 2014U.S. stocks have tested, and so far held, support at the 184 area on SPY. While we think this can, and will, ultimately break, some volatility in here is expected into the Easter weekend. We would add stocks in Materials and Industrials, and would add sector ETFs in those areas also.
