Stocks are acting about as expected this week, choppy and up and down. Bonds are acting as expected for sure – TYX is rallying as is TNX. While we are not averse to putting some money to work we would be careful about buying in a big way this week.
The bottom line is that the internals have not improved enough to flash an all clear and cautious market participants should still add money to preferred issues and sectors slowly, if at all. What I, (and FRED report clients) care much more about is how the bond market is going to react after the FED meeting.
Weekly momentum indicators are oversold enough to have an up week although the patterns on these indicators aren’t great. Oil and the oil stocks should bounce around a bit – up and down like the market but this is an attractive-looking trading opportunity.
There are more sell signals than buy indications, normal but a concern suggesting this market could be choppy to down for longer than many believe. Starting down towards 182 now would suggest that the first low of this move has NOT been made.
There is enough evidence suggesting another move down that cautious advisors should be selective in here and make sure to leave some money out for a retest. A pullback in Oil that reloads the daily stochastic, without making new lows, would be a welcome here. We feel that Europe has two things going for it at this juncture: it is safer and there may be more upside potential.
The Fred Report - Mid Week Update August 26, 2015Unlike the corrections we saw in 1998 and 2011 we have seen pronounced technical weakness months before the correction started. Realize we may have hit a trading phase where the market opens up and trades down, then opens down and trades up. I call this the “Wubba-Wubba” pattern - lots of volatility but no real net change close to close.The Fred Report - Weekly August 24, 2015
Indicators suggest things can get worse unless this 198 level holds on a closing basis, today. Muni Bond ETFs are trading well and might be a good hedge in this environment. We want to end up with PGJ at the end of this Chinese turmoil as that is the most attractive technical pattern of these units.
Stocks are little changed from last week, as are our views, but there has been some improvement beneath the surface. Bonds look poised to resume their decline in price (and corresponding rise in rates).
We remain with a buy signal and stops below last week’s lows on the indexes. DBC started the week with a bang but has fallen off in sympathy with the drop in oil. It is still holding and unless the low of last week breaks we should see some upside.
The Fred Report - Weekly August 10, 2015We have arrived at a key point on some of the indicators suggesting a rally should begin this week – if not we would become a bit more defensive. We would expect TNX and TYX to be choppy for a week or so, and then rates should start to rise again. Perhaps the most interesting commodity development last week is a short-term trading buy on DBC and for those who have wanted to add this into portfolios and are aggressive this is now finally buyable.The Fred Report - Mid Week Update August 5, 2015We have no changes in our stock commentary, price is holding but internals remain weak, and a break of 204 on SPY would lead to 198.The Fred Report - Weekly August 03, 2015
The market is close to “put up or shut up time”. Commodities in general remain oversold and not reacting well to this condition – a rally could occur at any time but likely some more work in this area is needed.
The Fred Report - Mid Week Update July 29 2015We actually think that the bottom on oil still will be in the vicinity of the March low but that we could bounce around in this area for a while longer.The Fred Report - Weekly July 27, 2015Internals continue to deteriorate, and with the daily stochastic negative as well a test of the recent low at 204 on SPY is likely. Gold has been interesting over the last few weeks, with many down days, and then finally an outside positive reversal day on Friday. Such a day is normally a sign of demand coming into the market and overcoming supply, and exhaustion of selling pressure.The Fred Report - Mid Week Update July 22 2015We have no changes in our stock market outlook – need a breadth surge to get excited.The Fred Report - Weekly July 20, 2015
As far as the general market is concerned – we continue to note signs of narrowing and await a breadth surge. Should XLF break out of this resistance a move to 32 is possible. Within Financials, we continue to feel that big banks have the potential to make a big move in the second half. GLD could fully test 100, and we will treat that as a buying opportunity. The dollar has moved up a bit, and DXY could challenge the resistance at 100 again over the next week.
The McClellan Oscillator has improved and is at +146 roughly. We are still watching this to see how it does closer to the +200 level. If China ETFs “follows the script” they will retest the lows, and then make new closing lows, in five to ten weeks, and that could then be a more significant bottom.
In the absence of news, we have a very slight short-term buy signal at support so we would expect the market to try for the upside early in the week. It is, however, hard to make an aggressive weekly forecast given the Greek situation. The short-term rally in bonds we have been looking for may very well have ended.
