So far, it looks as if our forecast/plan of an intermediate bottom in March is happening. Sentiment is improving, with several firms cutting upside targets, talk of recession, and a big MarketWatch headline suggesting there is more downside and not to buy anything.
Now it looks like the equity markets should rally tomorrow and then bounce around a bit before starting an advance, hopefully creating a bit more fear and consternation.
Stocks continued their decline last week and we have more bottoming signs in our indicators. We think the first-tier growth names will do well in a rally from this area, but that second tier growth names may not do as well.
We have been adding money slowly, and would continue to add money. GLD is above the 267 to 268 area where we suggested traders sell this. Investors, be on guard – this month could be the end of the advance in gold.
If the scenario we have been looking for works out, then this rally should be the strongest of 2025 and last through the summer. GLD is making a significant top in here, and defensive action should be taken. Short-term indicators suggest some rally is possible this week and traders should sell that rally, ideally around 267.
We would be adding money in here, looking to add more on confirmation of a low. The main thing for PLTR is that back above 90 closing basis would be a buy point.
We have been looking for a low in price by the mid-March. The market has spent most of February going sideways to slightly down, and now is falling off, within the window we have been looking for a low based on our indicator analysis. Our forecast for rates has been a decline into mid-2025, and then the risk of a rally into the end of the year.
XLF should perform well in our projected rally, but the trade has become crowded and we will reevaluate this in the summer, with a view towards moderating our strong recommendation.
We are in the window of the timeframe where we have been looking for a solid intermediate low. Bonds are trading about as expected, with a short-term peak at 90 on TLT and a daily sell recycle.
This is kind of the “Tariff Letter” due to fundamental changes over the weekend. We saw some reaction in Friday’s markets. Daily and weekly stochastics are now in sell mode on SPY and QQQ. This would support our view that a recycle of the daily and weekly is coming, and this should lead to our best buying opportunity so far in 2025.
The first thing to mention is that we believe this decline is not yet over. We have been expecting, and continue to expect, a sideways to down market into February/March. We would consider continuing to diversify away from Tech.
The Tech Sell off due to new competitor DeepSeek will be reviewed on Wednesday after the dust settles. While we still think The US can outperform Europe this year, the improvement in EWG suggests Europe may have a slightly better year.
We have finally seen a rally attempt, but much later than we expected, a sign of weakness. We would continue to use NLR for exposure here, but if support starts to break, we would be cautious. China is our favorite international speculation, while Japan is one of our favorite international investments.
We continue to look for sideways to down behavior, with a potential rally to relieve the oversold condition that should start soon, but fizzle. It seems clear that 85 is a key area on TLT that is holding so far.
We do not think this will be a bear market year (as mentioned in our Monthly Review), but we do think the market can be down to sideways into February/March as the weekly and maybe even the monthly stochastics recycle. Potential downside areas are: SPY 568, below that could target as low as 525 intraday; QQQ 460 could be hit; IJR 108, then 101. If TYX closes above 51.70, rates are on the way up in the first half. If that occurs, watch this as TYX has got resistance from 60 to 62.
Stocks are acting worse than expected so far, but in reality, we are back where we were at the end of December. So, today and Friday will be important for the market, and a close above 596 on SPY by Friday would continue to keep rally possibilities alive. One of the big concerns here is that TLT is much weaker than expected.
Right now, stocks are on a short-term buy signal, and we expect this week to see some upside, at least into Wednesday. However, breadth indicators are suggesting technical problems ahead, at least for now. So, in terms of this being “the year of the REIT”, what is the technical verdict? These three ETFs, plus some of the others we look at, are oversold enough to work, and they are in buy mode short-term, along with TLT and other bond ETFs as we have discussed over the last few weeks.
Stocks closed on a short-term buy signal, suggesting the first week of January should be up – this might create some bullishness that would lead to problems on the next daily sell signal. TLT has closed with a small daily buy signal via the chart pattern, as has LQD, but perhaps more important is that MUB has closed with a daily stochastic recycle. One could make the case that DBC is a giant Head and Shoulders Bottom and is almost certainly the basis for managers such as Stanley Druckenmiller and Paul Tudor Jones’ forecasts of a coming bull market in commodities.
