The technical condition of the markets is such that unless equities “change character” and rally strongly on improved breadth and volume, the chances of a correction are way up from here into the end of the year. Gold and Silver rallied sharply at the end of August, and we continue to think they will outperform in a stock market correction.
We remain concerned should SPY penetrate the 137 area on the downside. Europe as a whole might be vulnerable this fall, and in any case if we are speculating on the long side we would especially want to hold US markets as they are better technically.
The Fred Report - Weekly August 27, 2012
Stocks pulled back as expected last week, and this should set up a strong close to August. Gold looks as if it has started the rally we have been expecting, and we maintain our six month184 target on GLD for now. BRIC countries, as well as other Emerging Markets, continue weak patterns – they remain an avoid for us.
The Fred Report - Mid Week Update August 22, 2012
The SPY has traded fully into our projected area of 140 – 143 with today’s trading action, and has staged an outside day with a negative reversal. While it certainly could be “the top” for now we maintain our strategy and view that August 31st will be the high close of the summer rally.
The Fred Report - Weekly August 20, 2012
The summer rally in US stocks continues, and we advocate sticking with strong stocks and sectors while examining portfolios carefully. Right now it looks as if TLT rallies this week, then falls off once again into the end of August, and then may mount another rally attempt.
The Fred Report - Mid Week Update August 15, 2012
We would use the last bit of this rally in August to become a touch more defensive – sell underperforming holdings, and move that money into something like SPLV or at least stronger sectors. We were expecting bonds to probe the upside and then fall below the support at 124.
The Fred Report - Weekly August 13, 2012
Overall, there is no change to our views – there is more upside in stocks and commodities into the end of August, and we will stay with these positions into the end of the month. Bonds are at a key juncture and this week could see some changes.
Stocks have continued their rally so far this week, and our forecast is for the market to be strong into the end of August. We do not believe QE3 will happen until after the election. The market is narrowing in favor of large cap stocks, which is traditionally been the precursor to a decline of magnitude.
The Fred Report - Weekly August 6, 2012Stocks had a good week last week, and we expect this “summer rally” to continue through August. GLD looks ready to test and exceed the 160 area.The Fred Report - Mid Week Update August 1, 2012We would like to see a bit more downside into the end of the week. It still looks like a strong close to August is in the cards. While both GOOG and AAPL are improving, there is some risk in both of these names and we would be a bit more cautious on tech.The Fred Report - Weekly July 30, 2012While from a theoretical standpoint it is possible that the July close will be the high close for this summer rally, sentiment and other indicators suggest continued rally into August. We think that Europe should rally into the end of August, and might be a good speculative trade here. XLE seems ready to challenge our initial objective of 72 and could then test 75.The Fred Report - Mid Week Update July 25, 2012We note our forecast has been for stocks to be down the first part of this week, and up for the second, followed by a strong August, assuming of course that this week closes stronger than where we are now. This has been a weaker than average summer rally thus far – and often this means the resulting decline can be more forceful than usual.The Fred Report - Weekly July 23, 2012Overall, we see more upside is at least possible over the next few weeks, but continue to see some warning signs. We could be facing a fall correction – and one that could last into next year. One of the problems we remain concerned about in the next year is an overbought condition in bonds that results in rising rates.The Fred Report - Mid Week Update July 18, 2012
We expect the rest of this week to be choppy but ultimately close up nicely. We are starting to see more warning signs that the stock market is weakening internally, such that we would be selling slowly into strength over the next few weeks as we see it occur.
The Fred Report - Weekly July 16, 2012This week is options expiration and as such could be a bit more volatile than usual. Stocks look poised to (finally) move to the upside. The accumulation models on bonds remain more attractive than stocks, which likely points to a “day of reckoning” later in the year.The Fred Report - Mid Week Update July 11, 2012We continue to suggest selling underperforming stocks, and otherwise getting portfolios in shape for a decline. Should the dollar move much through 84 for the DXY, it would tend to confirm a new up-leg for the buck and this could hurt both stocks and commodities.The Fred Report - Weekly July 9, 2012We expect 143 on SPY this summer but this is not that far away. Our interpretation of what the market is saying now is that, while momentum indicators remain bullish, as does seasonality, economic indicators area weakening enough to worry market participants, and they are taking steps to prepare for a decline. We continue to recommend Preferreds and Corporate bonds in the US market, rather than treasuries.The Fred Report - Mid Week Update July 5, 2012Stocks have finally broken out above the 136 area on SPY, and perhaps more important to our summer rally scenario is that the IWM, IJR, and MDY are participating in the rally as well. The case can certainly be made that small-caps are still outperforming large although that out performance has narrowed in recent weeks, and should the economy slow in the second half of the year the small caps may weaken.The Fred Report - Weekly July 2, 2012We should see the market up an additional 5% or so in two months. We still recommend using this strength to sell underperforming stocks, write calls, and otherwise be defensive, as the market may react badly to the next short-term overbought condition.
