We still believe our 500 to 480-support area on SPY should hold, especially on a closing basis. The Put/Call number improved to 1.23, getting close to what we want to see, and suggesting some panic. A move below 274 on GLD would confirm a trend change.
The numbers for the downside that we published in our alert (500 to 485) are still operative. We also believe a V bottom is unlikely here – with the kind of momentum we’ve seen a divergence bottom/basing period makes more sense. Bonds could be volatile as equities sort themselves out. For those that are holding, we would sell both TLT and LQD if TLT can trade at 95 early Monday morning.
We have been expecting equities to rally after the tariffs are imposed and still expect this. TLT is rallying as well – it is a bit weaker than expected but still should hit at least 93 and likely 95, by May/June. Lower volatility and high dividend ETFs are trading near all-time highs in spite of the market decline. Watch gold here as some strange stuff could happen this month with regard to the physical commodity.
Put/Call hit its highest level on individual data points since March 13th, and before that January 10th, 2025. While we would like to see bigger numbers, this is a move in the right direction. We think equities are still in a bottoming process.
We have no changes to our forecast for a rally into the June timeframe. TLT is basically still holding the 90-area as the daily stochastic moves closer to oversold and a recycle.
We have no changes to our belief that the market is set up to rally into the summer months. Because of the increased spending from Germany, that Europe could be entering a new long-term bull market.
SPY is still stronger, per our Accumulation Models, suggesting the market should move away from secondary Tech. If readings on %Bears continue this way another week should give us close to 30 on this indicator – contrarian bullish, which is another support to our outlook.
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.
