The accumulation model on GLD is still negative, but it has flattened out, suggesting that selling is drying up. IIPR is our favorite way to invest in Marijuana.
We could see down days on Wednesday and Thursday, and if we do, you want to add money. TLT has started to rally and should continue through the week. GLD may have peaked near 170.
A review of the technical indicators suggests this advance has more to go. Intermediate breadth momentum has picked up, but is not yet overbought, although some of the short-term breadth tools are – suggesting this might be another consolidation week, albeit with the possibility of an upside surprise. We discuss TLT and LQD, as we have a trading buy signal on them that could be strong over the next couple of weeks.
Stocks should be choppy, but look to be setting up for a rally into the end of 2021. TLT also looks to be making a bottom. It should hold the $140 area without too much difficulty.
We think the market can put in a tradable bottom sometime between now and the end of October. TLT is now oversold enough to start a rally toward the end of the week.
We are seeing, and should continue to see, up and down days with large swings. We call this “going aggressively nowhere”. We still have targets of 26 to 27 on UUP, but it is overbought and could consolidate here first.
We want to be buyers on down days, to set up for a yearend rally. We are at an interesting juncture in rates, as accumulation models suggest that rates should remain in a range and not shoot up to 2.25% or so on the 10-year, as we originally thought they would at the last buy signal on TLT.
The accumulation models suggests that some of the fits and starts in leadership changes we have seen in 2021 will resolve in favor of new sectors, long-term bullish for the market and in line with what we have suggested.
Stocks fell a bit more than we expected on Monday, but the pattern we have been looking for is continuing. We still expect some lower prices – but realize that in a correction of this type, not all stocks decline or bottom at the same time.
IYT and the Dow transports are holding the double bottom made over the last week, and that is an area we will be watching this week, as Transportation indexes remain one of our favorite economic indicators.
The situation here remains fluid and we are coming into options expiration this week, but we still believe this is an excellent chance for a drop that will lead to a fall buying opportunity. SPY is at a key area as well – 445 is some support as well as a strike price. That is one reason why we think a bounce is likely, but this could break this by Friday. A move below 438 would project further downside.
Stocks closed out August quietly. Monthly and Quarterly indicators (our longest-term indicators) are all suggesting the risk of a pullback in September/October.
Breadth indicators are close to overbought again, and we still see the possibility of a fall correction in this timeframe. Biotech has built a base, and on an intermediate basis it has also built a high-level consolidation. Realize this could be a strong sector this fall even if the market corrects.
