We remain defensive, and most subscribers were not bothered too much by last week as we have suggested implementing defensive maneuvers over the last month or so. A move below Friday’s lows would be a strong indication that a 9 – 12% correction from 160 is underway. The dollar may be set to do relatively well should bonds and stocks continue to fall together.
If this market moves below 160 on SPY, closing basis, we would become even more cautious. Aggressive advisors should add to PCY and PGX. Conditions appear right for a rally in Japanese equities at this time.
The Fred Report - Mid Week Update June 12, 2013Traders should be adding stocks, not because the market looks great, but because the risk is well defined (as we said, closes below 160 would be our benchmark). We remain long-term bond bears and would use a rally here to eliminate bond positions. Commodities continue to look like they are trading in a base, and we are seeing rally indications in Agriculture and Oil.The Fred Report - Weekly June 10, 2013This Weekly Report could be titled “The Benchmark Issue”. As long as SPY remains above 160 the market can continue to advance. Below 160 could be a problem. Bonds and TLT tried, and failed to rally above 117, and as long as it remains below that TLT is vulnerable. GLD also tested a key level (137) and failed to break through, so more downside is possible here.The Fred Report - Mid Week Update June 5, 2013Daily stochastics are coming down into the buying area on SPY. TLT needs to see more strength to get the daily stochastic up enough to be a confident buy signal.The Fred Report - Weekly June 3, 2013US stocks are at a critical juncture as several indicators are extremely oversold. Bonds had the drop forecasted last week, and look set up to rally back a bit. We continue to observe that economic data from around the world continue to show signs of slowing.The Fred Report - Mid Week Update May 30, 2013
A close below 36 for XLU would suggest additional weakness. Bonds look to have had the sharp shot to the downside, and could rebound here – although some choppiness over the next few days is to be expected.
The Fred Report - Weekly May 28, 2013The bottom line for this post holiday week is that we expect rally in US stocks into the end of the week, but would use this to complete defensive maneuvers. Bonds are set up to rally, but this is becoming acknowledged enough that we would like to see one more shot to the downside to actually set up the trade.The Fred Report - Mid Week Update May 22, 2013It looks to us like the down move in GLD is over, or very nearly so. FXY continues to look like a bottoming pattern.The Fred Report - Weekly May 20, 2013We do not see any reason to change our forecast that equities will do less well in the second half of 2013. Bonds are showing some bottoming signs, but they may not be ready to rally just yet – it could be a week or so away. Accumulation models on DBC continue to look attractive, and we would use near term weakness to add to or start a position in DBC.The Fred Report - Mid Week Update May 15, 2013We advocate taking some defensive measures in advance of a quicker than normal decline. We continue to expect that gold will retest the old lows before a significant rally. We continue to expect a strong summer in Agriculture.The Fred Report - Weekly May 13, 2013Stocks have continued their rally, but sentiment indicators continue to weaken and the market is overbought. The seasonal time for a rally in agricultural area is approaching.The Fred Report - Mid Week Update May 8, 2013We advocate moving into a more defensive position on this run higher. A move on SPY below 157 would be a concern and sign this rally is running into trouble.The Fred Report - Weekly May 6, 2013
The message from the equity markets right now is that a caution flag is out. Our forecast has been for a stronger second half in bonds and we still agree with this.
The Fred Report - Mid Week Update May 1, 2013Our sentiment model went negative as of today's % Bears reading, making our first sell signal since April 15, 2011. Oil has started to pull back a bit right here, and this could continue into May, but ultimately we still expect a rally from mid to late May until August.The Fred Report - Weekly April 29, 2013We would use strength over the next few days to add to covered call positions, and take other defensive measures. For the first time since the Japanese Yen hit 105, there are bottoming signs on FXY, and it could rally to the 103 – 105 area.The Fred Report - Mid Week Update April 24, 2013EEM has started to rally as well, and is below the 44.50 resistance we mentioned, suggesting some higher prices over the next few days. TLT staged a reversal and we would watch the downside targets for all the bonds we gave in the weekly review – they could be hit, and we would want to add to these for traders. GLD’s daily stochastic has just moved above 20, suggesting more rally is likely, but the next set of readings above 80 should lead to a retest of the recent low, that should be successful and bought.The Fred Report - Weekly April 22, 2013This is a particularly difficult place in the stock market – certainly more upside could occur, but the risk of decline over the next few weeks is quite high. We continue to believe that bonds will be a better hedge against a stock market decline than commodities, because of our concern that any market decline will be caused by a slowing economy and the perception that a recession is near.The Fred Report - Mid Week Update April 17, 2013Sentiment indicators and this upsurge in volatility combined with weakness in small and mid cap stocks and the transportations, suggest a more cautious stance. A move below 152 on SPY would be cause for concern. Indicators for Gold are oversold enough so that we should now rally, but again as mentioned we expect a double and not a “V” bottom.
