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.
The Fred Report - Mid Week Update July 7, 2011
We still think a sharp test down is in the cards, which may not last very long, and recent action, particularly in IYT, would tend to confirm this. It looks like 126 is the maximum downside for the SPY until we get a new selling indication, and in fact the downside may only be 130.
The Fred Report - Weekly July 5, 2011
We sense some skepticism with regard to the recent strength, and we think the market can exceed the old 137 area high and test 142, 143 by the end of summer. While bonds could certainly bounce this week, the big potential for more upside in this market has likely exhausted itself. Agricultural commodities have a tendency to rally in the summer.
The Fred Report - Mid Week Update June 29, 2011
While the price action is good, accumulation models are less so, and some backing and filling, or an outright decline, is still possible and would not be a surprise. The TLT has closed below 95 and unless we move back above there soon, the up-move in TLT (and bonds) is likely over and it should move back to 88 or lower.
The Fred Report - Weekly June 27, 201
The IWM and IYT are trading stronger than the SPY, and accumulation models on all stock indexes have improved markedly last week. We would be VERY careful in this environment as bonds could start to do very badly. We are running out of time to test the 100 area on TLT before the next decline starts. Aggressive advisors looking to add a bit more money this week should carefully consider oil stocks, or the XLE and/or OIH. The UUP remains our favorite speculation, and we reiterate that should FXE decline through 140 the dollar should get a nice pop.
The Fred Report - Mid Week Update June 22, 2011
What would be ideal would be some further rally/consolidation to keep the SPY up in this area (we do not think it can go higher than132 – 133), then a sell-off into the end of the month of June. HYG especially looks interesting and traders can start to accumulate as this will likely trade in line with stocks.
The Fred Report - Weekly June 20, 201
We would like to see a slight up week, followed by a drop into the end of the month to reset our monthly indicators. Bonds could stat another up-leg here, and the TLT could challenge the 100 area. The metals look more attractive than oil at this point in time – gold in particular, but silver could rally as well. Should FXE move down through the 140 area that should be enough to move the dollar above 77 which would be a significant breakout.
The Fred Report - Mid Week Update June 15, 2011
The short-term oversold condition was somewhat ameliorated by Tuesday’s action but there is room for more upside before the short-term moves to neutral. This may be more a correction in time rather than price – i.e. the market may not go much lower here, but rather consolidate, with several false starts to wear us out before the next up leg starts. Much lower than 95 on the TLT would be yet another sign that this move is ending and rates are going higher. Should the UUP move above 21.45 this move would look stronger and this is what we expect.
Tuesday’s breadth was positive while prices closed negative. This is often the precursor to a sharp rally. Note the McClellan has come down to support and is turning up – suggesting a short-term rally is possible.
The Fred Report - Weekly June 6, 2011
The stock market may end June weaker than where we are now, but the prospects of an intervening rally look pretty good. We caution advisors that interest rate markets are showing signs of fatigue and bonds area close to our targets. We suggest adding some of the agricultural ETFs. They are seasonal, as well as technical reasons for these to do well.
The Fred Report - Mid Week Update June 2, 2011
We note that the IWM and MDY both look stronger than the SPY, and this is a positive. We still feel that a rally in June is likely, but the risk of a peak in June has increased as well (after a rally). We continue to have concerns about the Euro and the weaker countries in Europe. We still expect a rally in the dollar.
The Fred Report - Weekly May 31, 2011
The stock market has declined for four weeks in a row, a situation that almost always produces rallies in bull markets. We expect a rally this week as well. Bonds look to have a bit more to go on the upside, but we would safeguard profits as we expect a decline in prices in the second half of the year. We expect GLD and DBC rallies to continue, whether or not the dollar rallies.
The Fred Report - Mid Week Update May 25, 2011
Should we decline from here, and accelerate into next week, we are setting up an ideal, tradable low. Ideal would be a close between 1290 and 1280 on SPX next Tuesday – this would be a perfect set-up on my monthly. We show IWM and SPY below, noting the broad market is weaker, suggesting that more of a decline could in fact occur.
The Fred Report - Weekly May 23, 2011
We would use weakness to slowly accumulate stocks in strong sectors. Overall, we expect higher rates, and lower prices into the end of the year. Commodities should continue a rebound rally, but this should give way into lower closing lows sometime in the next few months.
The Fred Report - Mid Week Update May 18, 2011
Given that it is expiration week – the market should attempt a rally for one to two days, which, if we are correct, should ultimately fail and move us into position for a decent buy point in May/June. Metals should also attempt to rally. We are an equal weight on GLD, and would avoid SLV.
The Fred Report - Weekly May 16, 2011
We continue to expect a correction in May. The bond rally continued last week and we continue to believe this market can advance into June before running into trouble. Oil, in particular, generally bottoms at the end of May/early June in most years – and then we have our “summer driving rally”.
The Fred Report - Mid Week Update May 11, 2011
The sell formation we have will be eliminated by a close above the recent highs at 137.18 Strongest sectors remain Staples and Discretionary for now.
