We could still see some more rallying through the end of the week – although our minimum upside target of 118 for the week has been achieved. We note strength in the Transports so far this week and this is a cause for intermediate-term optimism. We realize our best buy point is likely closer to the end of September and hopefully around 109 – 108 on SPY.
The Fred Report - Weekly September 12, 2011
We note that the Transports continue to act worse than the broad market, another concern, and the accumulation models on both the IYT and the SPY have gotten worse. The dollar index has resistance in the 80, then 82, area and, given the position of the weekly stochastic, could test that area. A dollar move could cause all of the commodities to trade down a bit.
The Fred Report - Mid Week Update September 8, 2011
This rally has some of the earmarks of a short covering rally, and we believe that it will continue through at least Friday. We expect a test of the SPY 123 – 126 area by the end of the week. After this rally ends, we still feel that a retest of the August lows is likely.
The Fred Report - Weekly September 6, 2011
Should the market finish this week strongly up, and then start to sell off – we are vulnerable to a move to, or through, the August lows. The strength in corporate and municipal bonds implies that whatever else is wrong fundamentally, there is unlikely to be a severe credit crunch like the 2007 – 2009 bear markets. We note that our “tale of two Europe’s” theme is alive and well – with Germany and France performing better than Spain and Italy.
The Fred Report - Mid Week Update August 31, 2011
This does not change our forecast of a retest of the lows after a test of the 123 – 125 area on SPY. % bears has increased again, to 36% – improving our model, so the healing process continues. We realize that should stochastics roll over and the moving averages cross back negative – another very sharp down-leg should occur which will take us to new closing lows. The agricultural commodities have a seasonal tendency to rally into September.
The Fred Report - Weekly August 29, 2011
While there is surface improvement accumulation models and such have not improved, we continue to look for a retest. Daily Bond indicators are actually somewhat oversold, so it could be that the bond market situation resolves itself with a short-term rally, followed by a more severe correction. Indeed, the reason for the market’s retest might turn out to be dollar weakness.
The Fred Report - Mid Week Update August 24, 2011
These big “one day wonder” type of rallies are consistent with bear markets, and as such the action would tend to confirm that this rally is a selling opportunity, and our retest scenario is alive and well. When the economy starts to emerge from recession, or recession fears, Small Cap stocks often perform better. We could see GLD in the 170-area or so, and TLT back to 100, but will monitor these carefully as the week progresses.
The Fred Report - Weekly August 22, 2011
For Investors: deploy some cash into favorable sectors (Large Cap Energy still looks appealing), realizing that this is very likely not the final low in the market. Should stocks rally, Treasury Bonds should sell off – and sharply. We note that in spite of the recent market turmoil, commodities continue to outperform, and we expect this to continue into the end of the year.
The Fred Report - Mid Week Update August 17, 2011
We have a short-term buy signal that should be good enough to take us up through the 120 area to the 123 area we have suggested should occur. We have no changes in opinion on other markets – Bonds should be lower at the end of the week, gold higher – but risk of a sharp drop remains for both. The Accumulation Models on both XLI and XLB have improved from the horrid levels of two months ago – but still look dicey.
The Fred Report - Weekly August 15, 2011
Last week, our forecast became a rally towards the 1200 – 1235 area on the SPX, and we still see this as the likely outcome for this week. Thus far, bonds have outperformed my expectations but this may end abruptly as indicators do not support TLT at these levels. We have recommended investing in Singapore and Malaysia as these have been strong technical charts.
The Fred Report - Mid Week Update August 10, 2011
Obviously this has been a difficult market but it looks as if there is some light at the end of the tunnel. Our forecast for the next several days is a rally to the 1200 to 1235 area on SPX followed by some backing and filling, and then another move down within 5 -7 weeks to retest and slightly exceed the low we have made on a closing basis. Readers may want to take some of the GLD profits and put it into the PSAU – this mining and precious metals ETF is outperforming stocks so far, and should outperform into the end of the year.
The Fred Report - Weekly August 8, 2011
We would expect a rally after a down open on Monday. We think the SPY can test the 122 – 125 area or possibly higher over the next few days/week. We have lightened up in Gold and moved our opinion to an underweight despite it moving above $1700. We continue to like commodities and think they will outperform into the end of the year.
Tuesday’s action has broken major support on most indexes, and caused a good bit of consternation amongst our clients and in the technical community as a whole. We reiterate that gold and the commodities area is still our favorite investment overall. While TLT could move higher, we see risk of a sharp reversal. We would begin the process of lightening up, and raise stops on the rest of positions.
The Fred Report - Weekly August 1, 2011
We believe in the adage “be quick to turn bullish and slow to turn bearish”, and certainly we could see some real improvement here – but caution is indicated unless we move quickly above the 135 area on SPY. Unless we exceed recent highs on broader indexes such as the NYA (NYSE Composite), the possibility for further corrective action remains. Commodities remain our favorite asset class, and we note that gold has made all time highs. A move above the 77 area on DXY would break the trading range to the upside.
The Fred Report - Mid Week Update July 27, 2011
This weakness early in the week may turn out ok, as long as the market turns up and has a strong close to the week. We do not want to come across as unduly bearish, and this could simply be a “pause that refreshes.” The dollar still has a chance to advance, but needs to hold the 73.20 area.
The Fred Report - Weekly July 25, 2011
Exceeding the Cambridge Hook high of 137.18 should set the market up to attempt a move above the 140 - area resistance by the end of summer, in line with our forecast. While our forecast has been for a stronger 2nd half to 2011, we are beginning to see more signs that this may not be in the cards. We remain concerned that rates around the world could start to rise in the second half of 2011.
The Fred Report - Mid Week Update July 20, 2011
It looks to us as if this rally can take us to new rally highs on the SPX. We believe that the recent lows (OEF 58.05 and SPY 129.63) should be the summer lows – and these should not be retested before upside objectives are met.
The Fred Report - Weekly July 18, 2011
We believe that a rally into the end of August could be starting this week. Our upside objective for this summer rally continues to be the 140 area. The salient point to remember, though, is that bonds themselves, at least so far, do not seem to be concerned by the prospects of default on either a national or local level. The FXE is testing key support in the 139 – 140 area and we ultimately think it is going to break.
The Fred Report - Mid Week Update July 13, 2011
We would like to see another down move to test the 130.50 area intraday, but frankly we believe that may not occur and we could simply rally from this general area. Oddly enough, due to recent strength in the FXY, the dollar has been flat even as the FXE has come down.
The Fred Report - Weekly July 11, 2011
Indicators suggest a bit more retracement is possible, and some choppiness, as well – it is expiration this week. We would use declines to the 133 to 132 area to add to positions for a summer rally that should ultimately carry to the 140 – 144 area on SPY. LQD remains more attractive for bond investors on a technical basis.
