The Fred Report - Weekly May 24, 2010While we remain cautious a few moths out, we can still see a positive end to 2010. We continue to look for new highs in Gold through summer and again in the winter. Overall, we expect speculative money to move into small and mid cap US stocks, and away from international markets for a while.The Fred Report - Mid Week Update May 19, 2010The momentum on the downside coming into May was stronger to the downside than expected. We see weakness in Financials, Healthcare, as well as Utilities. For traders, should close below SPX 1110 we would cover trading shorts.The Fred Report - Weekly May 17, 2010This week is options expiration, and is the first one in a while where there has been a surge in put buying in the equity indexes. Often this leads to very volatile trading. We note that Friday’s rally on the TLT filled a gap, and if this market turns down this may signal a move back down to the bottom end of the trading range. Indicators on oil are suggesting at best a weak rally, and likely no rally at all.The Fred Report - Mid Week Update May 12, 2010Small and mid cap indexes area still showing leadership. We note that commodities still look like leadership.The Fred Report - Weekly May 10, 2010This is the first correction where the SPY has outperformed the Russell and smaller cap indexes. TLT should start to come down from this level. Accumulation models look strong, the commodity is now oversold, and we are right within the seasonal window we have been looking at for a rally to begin.The Fred Report - Mid Week Update May 05, 2010We are in the areas both in time and price where it makes sense for a rally to start. We continue to feel that this summer rally (should it in fact occur) will be led more by commodities, consumer discretionary type stocks, and industrials and less by financials and healthcare.The Fred Report - Weekly May 03, 2010The stock market is now in the window of the time period we have been looking for to make the low that would begin a summer rally led by commodities and commodity related stocks. Now is probably the time to add some hedges (fixed income), while realizing that the rate rise we have mentioned this year could occur this fall, and not now. We note that the Euro may have recently staged a false breakdown.The Fred Report - Mid Week Update April 28, 2010The stock market has started to correct, which is what we have been hoping for over the last week or two, and we continue to look for a summer rally led by commodity names. We continue to look for choppy action into early May. The FXE has hit new lows. This represents the dollar’s best chance to rally and test the 86 area.The Fred Report - Weekly April 26, 2010The summer rally may have started earlier than expected. Overall, this market is acting like the 1975 to 1980 period – and this same sort of bullish sentiment was a feature of that time as well. The late 1970’s also showed strong out-performance by small and mid cap stocks, just as we are seeing now. The smaller cap ETF’s (HAO and JOF respectively) continue to outperform and we consider this an indication that the world economy continues to improve.The Fred Report - Mid Week Update April 21, 2010The internals have been improving and our favorite sectors (Energy, Discretionary, Tech, and Industrials) are all acting better. Financials still look weak to us relative to the foregoing, as do Utilities. Oil stocks are rallying much more than oil itself.The Fred Report - Weekly April 19, 2010The weight of the technical evidence suggests that this is a reaction to an overbought condition within a continuing uptrend. We would position in Technology, Energy, Discretionary, and Industrial stocks and sectors over the next few weeks, in anticipation of this rally.The Fred Report - Mid Week Update April 14, 2010It is options expiration and usually the market has at least one down day during expiration week, even if there is a positive bias overall to the week. We are detecting a bit of relative weakness in financial stocks and note that there are layers of resistance between 16 and 18 on the XLF. The Fred Report - Weekly April 12, 2010A look at other key indexes shows that leadership remains in the small to midcap space, which is normal when emerging from a recession. Our longer – term view remains that rates are going up, and that appropriate strategies will mitigate this risk. We believe that a summer rally in commodities will lift energy markets.The Fred Report - Mid Week Update April 07, 2010The IWM had the first close above 70 today. While not everything acted great, this is still significant and suggests the chance of a pullback is becoming less likely. As mentioned, we believe a dominant feature of this summer’s market action will be a rally in the commodity complex, in particular, oil. We continue to feel that the big rise in rates is going to occur in the fall and not now.The Fred Report - Weekly April 05, 2010Our benchmark for the market is two closes above 70 on the IWM, and should that occur, we will become more bullish short–term. We continue to feel that rates are going up longer-term, and that eventually hedging strategies will be needed for clients that are heavily invested in bonds. Should the USO close above 42 we would expect a move to 48 or possibly more by the end of summer.
The Fred Report - Mid Week Update March 31, 2010We continue to look for the market to stage a small drop here before a summer rally that puts the indexes, including the SPX, at new recovery highs. It looks as if more dollar rally is imminent, and should be underway by this Thursday at the latest.The Fred Report - Weekly March 29, 2010We are looking for a correction of no more than 5 – 6% in the SPX, and then a move through the 1200 area resistance. Bonds had a bad week last week and the TLT and BWX especially look weak. We are looking for one more decline in the Petroleum complex into an area that will set up a summer rally in oil and commodity stocks. We note that China is looking attractive and should be bought in here. The EWZ (Brazil) has also tested support and we would try to add positions here.The Fred Report - Mid Week Update March 24, 2010
Our first observation is that should the lows of this week be exceeded, we could expect a correction in the market. Our second observation is that the SPX is getting very close to the 1200 area we have been discussing as resistance for some time and given the short-term overbought condition we are a bit cautious. We have removed MU at our sell price of 10.45, our short-term target.
The Fred Report - Weekly March 22, 2010The stock market closed out the week on a short-term sell signal which carries over into this week. We are now on short-term sell signals in the Oil Market. We still have targets in the 82 – 86 area for the Dollar Index, and should it do this it should put Gold and Oil down in the buy areas.The Fred Report - Mid Week Update March 17, 2010The last two milestones that for me to absolutely eliminate any sort of retest scenario are the SPX going through 1200 and the Dow Transports through 4600. We expect a test to the upside of SPX 1200 in the near future, possibly by the end of the week.
