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.The Fred Report - Weekly April 7, 2014Stocks are at an interesting juncture, and could start a correction into the end of May sometime over the next two weeks. We expect bonds to rally into the end of May, as measured by TLT, and believe TLT could hit the 112 area, perhaps a bit more on the upside. It looks like we have the start of a longer-term bottoming process in copper and other industrial metals.The Fred Report - Mid Week Update April 2, 2014SPY can trade up into the end of the week, but longer-term indicators suggest risk into April/May. Gold and bonds are acting as expected and should pick up strength at the end of the month if not a bit sooner.The Fred Report - Weekly March 31, 2014Stocks look to pull back and if this occurs it will be a great buying opportunity – maybe the best of 2014. For those advisors who have no exposure to gold, this area represents a good place to start to add either the stocks or the metal.The Fred Report - Mid Week Update March 26, 2014We would be slowly moving portfolios slowly towards SPX-type issues with an emphasis on Materials and Industrials, and away from Technology, with new money. China may have bottomed for at least a rally, and indicators support further advance in EWH as well.The Fred Report - Weekly March 24, 2014
We would use strength in stocks this week to prepare for a possible decline in April and/or May. Copper may have made a significant bottom on March 19th. The trading in the Chinese markets may very well mean that the fears are overblown, and that after the current hooraw is over the rebound could be tradable.
Stocks closed the week down, but still above the 184-area support we have been using to keep the short-term uptrend alive. The DXY may test 79, slowly and then rally.
U.S. stocks are having a consolidation week, but still remain up for the month, which sets up our scenario of a more difficult April and May. We remain bullish on GLD, but remain surprised that it is not testing some lower levels.
We still believe that the SPY can trade at 203 this year, and while we would prefer to see that number at the end of the year, after a correction, it is possible we see acceleration here in March. Should a bond rally occur, our forecast of higher rates in the second half may prove correct.
We would be concerned if SPY closes below 179 – otherwise we continue to look for a bit more rally then a decline into May. Bonds are in an interesting position, as we have a Monthly FPO buy signal that should support a sharp rally in the Treasury bond market.
We continue to advocate holding to firm weightings to small and mid cap, but would become progressively more cautious on mid and small cap should MDY move below 230, and should IJR move below 98, in a correction. Bonds have digested some of the short-term overbought readings, and while they should consolidate a bit, and TLT could test 104, this market seems poised to rally again in March if not before. Gold has broken out of the Head and Shoulders bottom on the daily charts, and this move has been confirmed by silver.
Stocks have rallied into the main resistance area of 182 – 184 on SPY, and could make a new high in February. We continue to recommend smaller allocations to small and mid-cap names.
We remain long-term bullish although we could see the much more volatility this year than last. We would continue to use this rally to sell all bonds and bond instruments advisors wish they had sold before the tapering announcements.
Advisors can add about a quarter of cash built up now that momentum indicators are less overextended. We have adjusted stock portfolios slightly to take advantage of a projected advance in February. TLT has closed over the key 108 area, and should continue this rally to the next critical area, which is 110.
