We continue to look for a recycle in the daily stochastic on SPY, and to monitor other indexes to see if that signal occurs elsewhere. Traders can add a bit vs. a stop of 284 on SPY as if that breaks a test of 269 to 270 is possible.
SEA may have made a cutout, or false breakdown, low in December. This shipping index is a good measure of worldwide economic strength, and it has been down since 2015. Now there are some bottoming signs, and the monthly stochastic is in buy mode for the first time since 2017.
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.
On an investment basis, we would rank SLX (Market Vectors Steel ETF) a buy. Our reasons are the double bottom at 34 or so, and a monthly stochastic that has just gone positive.
We have two targets on stocks for this year – 294 to 302 (last year’s targets, again), and 220 to 200 on the downside, which now seems to be over exuberant on the downside.
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.
The patterns on some of the longer-term breadth indicators a]lso suggest caution is indicated here and now, but that the market should be higher in the second half of 2019.
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.
Other than small cap there is just not that much to talk about here. EWS is interesting, has a strong yield, and may be a good way to trade an advance in China.
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.
