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.
U.S. stocks have, at least so far, rallied off of support in the 204 – 205 area on SPY. They did this with an outside day to the upside, which is often but not always a positive pattern. We remain with targets in the 223 area on SPY. While we have been looking at the possibility of a rally in TLT toward 122 – 124 this may not be possible now, and traders should start to sell bond positions taken at 116 or so.
The Greek news appears to be front and center, as the no vote, plus the size of the vote, has created consternation as measured by a down U.S. stock market overnight. So far, at least, this represents an opportunity for us. A check of the indicators on oil suggest that prices should hold in this general area – i.e. no more than 1.50 down on the current contract or around 52/bbl, or 56/bbl on the perpetual contract I use, or around the 17.91 to 17.40 area on USO.
The Fred Report - Mid Week Update July 1 2015This has been a whacky end to the quarter, but the upshot is that the major stock indexes, with the exception of the NASDAQ had a down quarter, fulfilling our forecast of a down quarter but not giving us the kind of oversold readings we would have liked to see.The Fred Report - Weekly June 29, 2015Be prepared to use risk management, and be selective. We would use a drop to add to big banks, especially if they are hit by the Greek crisis. TNX closed at its highest level since late September/Early October 2014. We believe this move could be the “real thing” – we could easily see rates back where they were before QE began, and quicker than most expect.The Fred Report - Mid Week Update June 24 2015
We continue to look for 214 – 215 on SPY. Next bonds may have failed again, and more decline could expected on a break of 115 on TLT.
On a purely technical level, we continue to see some leadership out of smaller stock indexes, which is bullish and suggests that the economy continues to improve. The lack of momentum as the Russell 2000 and S&P Mid-Cap Index (S&P 400) in making new highs is surprising. Oil has gotten overbought but remains in a positive configuration. While there might be some sideways trading as the weekly chart consolidates we continue to look for 67 on the nearby contract for oil.
We continue to look at the possibility of 214 – 215 on SPY, and then a pullback. Financials continue to improve and two ETFs pertaining to banks have broken out. Bonds should therefore be expected to attempt a rally, and rates decline, over the next few weeks.
It would not surprise us to see some more choppy and negative behavior in June that could lead to a buy point in July. Over the last few weeks, we have commented on the seasonal tendency in oil to bottom in the last week of May/first week of June, and then stage a summer rally.
The Fred Report - Mid Week Update June 3 2015The trend on bonds is now down and objectives are 105, then 90 on TLT. Be careful here.The Fred Report - Weekly June 1, 2015Small cap stocks have not registered new highs since April. These indexes often lead the markets so this performance is a concern.The Fred Report - Weekly May 26, 2015First, we have recommended holding a cash position to deploy should the market correct. Second, we have advocated investing new money in models – but more slowly than usual as there could be a good opportunity to accelerate that investing over the next several months. We are seeing signs that the seasonal bottom in agriculture is not going to hold this year.The Fred Report - Mid Week Update May 20, 2015XLF had a good day and we expect more upside. This is still a second half story for us but we like the looks of this setup.The Fred Report - Weekly May 18, 2015
If the market pushes to 214 – 215 on SPY without strong improvement in breadth we would have real concerns – to the point of advocating short sales on a decline back below 210. We would have a position in GLD, not a big one – but we would be hanging around and ready to buy more.
Technical indicators support some sort of bounce here for TLT, and 124 – 127 are possible. Stocks still look they can correct into June/July, and indicators continue to weaken.
This market is a prime example of what we call going aggressively nowhere, and while we still expect 214 – 215 to be challenged before a pullback and advocate putting money into models, we would slow our rate of investing a tad to see if we can add money on a decline. Financial stocks generally outperform in periods of rising rates, and when we look at XLF and a couple of key stocks in particular we can see evidence of this.
