Oil has consolidated and seasonal weakness has ended. Watch oil via USO, UGA and DBC carefully. The oil stocks have ignored seasonality because of improved earnings. The latest OPEC+ cut news is bullish for oil and suggests a summer driving rally.
Do note that Put/Call barely budged as banks failed, enough of a negative to turn our opinion on this negative. It has fallen on Debt Ceiling concerns as well. This indicator suggests a return to complacency. We grade this negative for that reason.
The market pulled back to 380, in line with our forecast, and then rallied back to resistance. It is set to pull back once again. Small Cap is weaker than expected. Transports remain a concern.
The Put/Call indicator spiked at the end of December 2022, giving panicky readings. This was weaker than it should have been throughout 2022. However, it was flat during the banking crisis, suggesting complacency is coming back.
Support at 380 to 360 on SPY continues to hold – buying at 380 has not been a bad idea. We expected a rally toward 430 to 440 on SPY. This has slowed at 420 and should pause here.
Some of our proprietary breadth indicators are giving bear market readings in spite of a tough 2022. When we have seen this, it can lead to problems later on, after a short-term bounce. We remain cautious moving into 2023. Use some risk management.
The weekly stochastic on the Dollar is oversold, suggesting this decline is close to ending. This has layers of support from 105 to 100. We will buy the next daily stochastic recycle.
Accumulation models on SPY have improved and there are some intermediate term bottoming signs. We continue to look for a low in this general area and timeframe, even if there is not much of an advance until yearend.
The market was set up for a July rally, and this occurred. Now, some consolidation is likely. Support at 380 on SPY continues to hold – buying there has not been a bad idea. We would continue to dollar cost average, as recommended.
The second quarter has been difficult, per our forecast. The market low we have been looking for in this June/July timeframe may have occurred. A rally here may give way to another decline to a final low, but there could be a nice advance from this area.
The market was set up for a decline, and so far, we have seen this earlier than expected. We are seeing continuation of the decline, and this could continue.
Markets remain volatile, but are now in position to attempt a rally as you can see from the proprietary charts on breadth and sentiment. For clients we would still put money in models, but slowly, realizing this correction probably has more to run.
We thought we should have a yearend rally led by Small and Mid-Cap stocks, but it was led instead by large cap – this is setting up for problems over the next few months.
SPY has pulled back to support in the 450-area and held so far: Accumulation models on SPY have started to weaken, but not enough to derail a yearend rally. The Monthly and Quarterly indicators are overbought, but this is a problem for next year.
