TLT is holding on and has basically supported at 118.50. As long as this area holds the trend is still sideways to up, and it could challenge 125. We still think Britain will be better off out of the EU.
U.S. stocks are testing some short-term support areas that could hold, and advisors with “too much” cash should add some here. A break of 272.40 on SPY, followed by a break of 271 would indicate further correction.
SPY has slowed in the area around 280 and we have seen some new low expansion, one of the factors we are looking for to suggest this rally is ending. We are seeing some signs that interest rates should rally over the next few months, and bond prices decline.
Stocks were up for options expiration last week, and new lows did not expand, suggesting this rally may have a bit more to run although indicators are overbought. PSCE may be a cutout low, and for speculators this is a good opportunity.
We note that the weekly stochastic is now overbought, above 80 and if it turns down, we will have both daily and weekly stochastics negative. Should this occur we would consider starting to move back into low volatility from our equally weighted RSP position. We will be watching the new lows numbers – if they start to expand, we would have concerns.
Transportation charts support the possibility of pullback and retest over the next few months. When we look at these European ETFs, they suggest that we should have European concerns. The real question is whether European growth and financial concerns will cause a drop in the Euro and a spike in the dollar.
The daily stochastic on SPY and QQQ have both gone into sell mode, suggesting momentum weakness Our tax loss list has been completed. Five stocks hit their trading targets, one Century Link (CTL) was stopped at breakeven.
We still believe the odds are we will have a retest but it may come later in the year, after more short-term topping action. While this area for REITs still is in a trading range, there are some signs in my accumulation models that suggest this year they could break out of this range and stage an advance.
Several indicators are now suggesting the market should pull back into the middle of next week, or possibly longer. The daily stochastic for GLD has gone negative, and the weekly is overbought and starting to turn down. GLD hit the resistance at 122 and gapped down from that area Friday.
On the upside, targets on SPY are 260, then 267 to sell, and on the downside, exceeding last week’s low would do it for me – and that number will go up over the next few weeks. From the standpoint of risk management this is a good situation and we would buy MLPs at this time.
The market should have more upside here, but cautious advisors should realize that a good pullback is likely after this rally runs its course. This move should take a few months to materialize, but ultimately, we should see UUP at 24.50 to 24.30.
We would still wait for a daily stochastic buy signal to commit big money to an advance. The concern with GLD is that our accumulation model has started to diverge such that we would take profits on the next weekly sell indication, and would take partial profits at the end of 2018, especially if 120 is exceeded.