We have hit the bottom end of our upside target range for SPY for 2019. We are Over Weight XLF and this has rallied to the lower end of 28 to 29 resistance. Short-term support is now 27 and as long as this holds, we could see this break above 29 by the end of May.
We would be watching IWM and IJR carefully here. The daily stochastics on small cap gave us the buy signal we had ahead of this run, even though the daily SPY did not recycle. When these give a sell recycle below 80 this rally should end.
GLD has filled a gap and is oversold on the daily stochastic. Although the weekly stochastic is not yet oversold GLD should rebound a bit – not sure if 126 will be retested but GLD should at least bounce. EWS (Singapore) would be an interesting, if not unusual, addition to international portfolios.
We see no reason to abandon a cautious stance here. SPY should hold the area of the last low at 272, and if this fails a test of 265 or so is possible. We would watch this carefully on the next pullback – If it makes another higher low, IEO would be a strong addition to the oil component of portfolios.
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.