Last week’s rally did not look great on accumulation models, and while we think the market can move higher here, over the very short-term especially, it is quite likely prices fall just a bit to close in the 121 to 122 area on SPY for the year, in line with our forecast. Bonds continue to trade opposite stocks, and from the standpoint of their accumulation models look surprisingly better than equities. Seasonally oil, and then the metals, tends to work the best into the winter months.
The Fred Report - Mid Week Update November 30, 2011
Monday’s challenge of the 121 area has filled an upside and we still look for the market to test 122 – 123, where we will then see if the market has what it takes to rally into the end of the year. Right now, our preferred scenario is a rally up to the main resistance (8000 on NYA), followed by a slow pullback for a close to the year around 1220 on SPX.
The Fred Report - Weekly November 28, 2011
Short-term indicators support a pretty decent rally here. Indeed, a test of the 122 – 123 area seems likely. Bonds are forecasting a “surprise” fundamental event that trumps the technical condition of the stock market. There is a seasonal tendency for agricultural commodities to drop at this time. Big Energy will outperform the market into the end of the year.
The Fred Report - Mid Week Update November 22, 2011
Stocks have failed at these levels and have done worse than expected – penetrating the 120 area on SPY. Prices have moved down to oversold on daily indicators, but have just started to turn down on weekly indicators. Our most likely scenario is the following, the market drops a bit more this week but basically goes dead and then we mount a rally attempt over the next couple of weeks into mid-December.
We still think that there is a good chance that the market will have a good up close this week. TLT continues to hold on in here and we hope that it starts to fall off later in the week. US domestic banks are better off than people think, and that as European fears subside there could be a rally in all banks.
We expect an up week this week, but since it is options expiration it could be choppy and hard to forecast. This week seems pivotal for TLT – right now our best guess is that we embark on a sharp decline that lasts through the week and retests the 112 – 110 area – a gap and also support. It looks as if the seasonal rally in the energy complex has started.
The Fred Report - Mid Week Update November 9, 2011
We note relatively favorable short-term patterns on the major indexes. Our real concern would be a quick shift in sentiment to the bullish side. The weekly SLV chat has broken the intermediate uptrend, but the stochastic has gone below, and then above 20, a “classic” buy signal.
The Fred Report - Weekly November 7, 2011
We still expect a challenge of the 2011 highs by yearend. Tech and Energy remain favorite sectors. Our forecast for this week is for the rally to resume, and we expect to see more upside over the next couple of weeks.
The Fred Report - Mid Week Update November 2, 2011
While we are surprised by the speed of this decline it is not altogether unexpected, and it is resolving overbought conditions on some of the indicators. We can see prices going a little lower, and they could possibly test 118.40 intraday, but our work right now suggests the 120 area should hold. Gold looks to have made a short-term low after testing support on GLD.
The Fred Report - Weekly October 31, 2011
We do not have any indicators suggesting an intermediate top of significance, so still believe pullbacks should be sharp and limited. If the market runs away from institutions, they have little time to recover before yearend statements hit client mailboxes. This could cause “performance chasing”. As long as GLD is above 165 this move could have legs. We continue to expect a strong move up in commodities into yearend.
The Fred Report - Mid Week Update October 26, 2011
We think the market is stronger than that and may only test the 121 area. We note that GLD has broken out of a small base. TLT is rallying as expected and an up week here would correct the oversold condition on the weekly FPO, and then set up further decline.
The Fred Report - Weekly October 24, 2011
The stock market continues to act well, but we have started to hit some overbought readings, and it is possible that we experience the first real correction of the current uptrend this week. In spite of the technical breakdown, bonds could bounce for a week here, and we would use that bounce to further lighten positions. We remain with a 10-month price target of 210 on GLD, or 2100/Oz for the nearby COMEX gold future, whichever occurs first.
The Fred Report - Mid Week Update October 19, 2011
Tuesday’s rally was an outside day to the upside, which is normally positive, and may be the precursor of a breakout of the trading range. We will not be concerned about the nascent up-move unless SPY penetrates 117 on the downside – and we continue to expect ultimate upside resolution.
The Fred Report - Weekly October 17, 2011
While overbought short-term, indicators suggest the rally could continue. TLT has broken down through 114 and should new lows for this down-move occur, the treasury market could drop sharply. It may be time to start some baseline positions in stock ETFs relating to agriculture.
The Fred Report - Mid Week Update October 12, 2011
Our accumulation model on the SPY is looking very positive here as well, suggesting that pullbacks, if they occur, are likely to be short, sharp, and quickly retraced. Our thought here is that if we are correct in assuming that the equity markets have hit their lows for the year, corrections will hold in the 113 – 114 area, and this area may not be tested. TLT is a bit oversold short-term and could bounce.
The Fred Report - Weekly October 10, 2011
While we remain optimistic about a rally into the end of the year, some of the market internals deteriorated a bit more than I would like to have seen. Our forecast is now that the market should rally through the end of the year WITHOUT violating the 1070 area on the SPX, or the 107 area on SPY. The commodities markets appear to be stabilizing and getting ready for their seasonal advance into the winter.
The Fred Report - Mid Week Update October 5, 2011
Trading continues to go along in a way that suggests the divergence bottom scenario is working, but the market remains precariously placed. If we are going to be right and the lows of Tuesday are indeed significant and possibly the lows for this correction, they should not be exceeded.
The Fred Report - Weekly October 3, 2011
While this may be one of those times when Fundamentals (which look ghastly and perilous) trump Technicals (which have improved markedly and now look quite attractive), the technicals suggest a tradable low is at hand. We have, so far, been wrong about extent of the bond move, but once again are seeing chinks in the façade of the bonds. We still maintain an objective of the 23.50 area on UUP, and 81 – 83 on the DXY.
The Fred Report - Mid Week Update September 28, 2011
On a technical basis we have most of the divergences we need for a bottom. We think this is the best chance of a bottom since August. We would move back to at least an equal weight for investors in the metals. We remain concerned that a test of 100 – 105 is possible.
