The Fred Report - Sector Review March 2015XLU was one of the top two sectors in 2014, and IYZ was one of the two worst, beaten only by XLE. The charts suggest it may be time for mean reversion. While utilities outperform bonds on a long-term, multi-year basis in a rising rate environment, there can be short-term problems during periods of sharply rising rates. The Fred Report - Sector Review February 2015SPY has been up about 10 points since the last Sector Review. This is because the last few days have been strong. Smaller stocks continue to improve a bit on a relative basis. We remain with XLF and XLV as over weights. XLF stands to benefit from rising rates. Our new under weight XLB has improved as the oil market has rallied, but should weaken again as oil retests.The Fred Report - Sector Review January 2015We remain with XLF and XLV as over weights. XLF stands to benefit from rising rates. Our new under weight XLB has weakened as the international economy weakens. IYZ is flat to weak and did not perform defensively in the recent market turmoil.The Fred Report - Sector Review December 2014SPY has been down a bit (roughly 3 points) since the last Sector Review. This has been a volatile period. Smaller stocks continue to lag; the broad-based index, NYA, is still underperforming, and bearish sentiment is still low, a concern. SPY is basically unchanged since September.The Fred Report - Sector Review November 2014We remain with XLF and XLV as over weights. XLF stands to benefit from rising rates, and bonds may have a reversal pattern suggesting higher rates and lower prices are on the horizon. XLV showed big improvement in the accumulation models. While XLP and XLU are currently outperforming this should fade if the market enjoys a yearend rally – and some of the narrowing we have seen in the market should also fade if a rally occurs.The Fred Report - Sector Review October 2014This has been a volatile period. Risk on SPY is continued decline to the February low and we note that XLE and IYZ have penetrated their February lows already, while XLI, XLB, and XLY have come perilously close. Of the best performing sectors relative to the February low (XLF, XLV, IYW, XLU, and XLP) the last two are defensive and IYW may be over hyped.The Fred Report - Sector Review September 2014We remain overweight XLI and XLB for now, while acknowledging that these are conservative choices. Aggressive traders may want to overweight IYW and XLV through the end of 2014 (as we have in our small cap sectors), and then switch back to XLI and XLB.The Fred Report - Sector Review August 2014Overall, very little is happening with the stock market this summer, although we have hit the minimum expectation for a summer rally when May closes up, as it did. SPY moved down to test support and has rebounded slightly. We remain overweight XLI and XLB for now, while acknowledging that these are conservative choices.The Fred Report - Sector Review July 2014SPY has advanced slightly (less than 2.00) since the last Sector Review. Other indexes have also rallied, but it still looks as if our forecast rotation into large cap names could continue over the next several months. Tech often performs well in the fourth quarter but for now remains a strong equal weight; we might upgrade this in the fall.The Fred Report - Sector Review June 2014SPY has advanced slightly since the last Sector Review. Other indexes have also rallied, but it still looks as if our forecast rotation into large cap names could continue over the next several months. Below 189 on SPY could trigger a bit more corrective behavior in large cap and would be a buying opportunity in our view.The Fred Report - Sector Review May 2014SPY has been volatile, but ultimately flat, since the last Sector Review. Other indexes have been weak, and it looks as if our forecast rotation into large cap names could continue over the next several months. Below 184 on SPY could trigger a bit more corrective behavior in large cap and would be a buying opportunity in our view.The Fred Report - Sector Review April 2014SPY has been volatile, but ultimately flat, since the last Sector Review. The market has been above and below the 185 area on SPY several times, and below 184 could trigger a bit more corrective behavior. There has been significant corrective behavior in the NASDAQ and some of the “high flyers” in Tech and Biotech. The Fred Report - Sector Review March 2014SPY has been volatile, but ultimately flat, since the last Sector Review. The market has been above and below the 185 area on the SPY several times, and below 184 could trigger a bit more corrective behavior. Indicators suggest a decline from roughly the end of March to the end of May is possible. We have suggested moderating the pace of dollar cost averaging into the end of March – but to still add money for new accounts, as a correction now would be positive long-term, and may not actually occur.The Fred Report - Sector Review February 2014SPY has been volatile, but ultimately flat, since the last report. We had a sharp pullback and upgraded our market view to neutral from neutral/defensive in our U.S. stock portfolios as the market fell. Once again, the market fell just over half of our projected decline before stabilizing, and this has relieved the pressure on long term momentum indicators but has not helped sentiment much. Advisors also should have added some cash – but we still have some “firepower” to add on the next drop.The Fred Report - Sector Review January 2014SPY had a “Santa Claus” rally but has been flat since then. Sentiment indicators continue to be weak. Our current market recommendation is still Neutral/Defensive and we advise having some cash and also a sell list.The Fred Report - Sector Review December 2013We remain happy with our favorite overweight, XLI. Accumulation models on this and to a lesser extent IYW (Technology) are much better than the consumer sectors. This suggests that we could see a “tired consumer” spending less, with increased business spending, in the first part of 2014. Our under weights are a mixed bag. XLY (discretionary) remains a solid up chart, but with signs of internal weakness, while IYZ has weak accumulation models and a faltering chart.The Fred Report - Sector Review November 2013Since the last sector review, SPY has advanced. Sentiment indicators continue weak. We were looking for a market correction in October, and moved our timing models to neutral as at the recent low we had corrected around half of our expected 7 – 12% pullback. In last month’s Sector Review we noted markets looked better going into fall but the October rally was a surprise and has made long-term indicators look worse.The Fred Report - Sector Review October 2013Since the last sector review, SPY has continued to consolidate. At this writing, the SPY is less than two points from July’s close, which was less than a point from September’s close. Our belief that the first half of 2013 will be stronger than the second has been working so far. Things look a little better going into fall, but there are enough signs of weakness that we do not want to “throw caution to the winds”.The Fred Report - Sector Review September 2013Since the last sector review, the SPY has continued to consolidate. At this writing, the SPY is just two dollars higher than July’s close. We still believe the first half of 2013 will be stronger than the second, and economic numbers around the world are mixed. Last month we made some changes in the Sector Weightings designed to position these models for a yearend rally after an October/November correction.The Fred Report - Sector Review August 2013Since the last sector review, the SPY has continued to consolidate after exceeding our objective of 156 - 161 for the rally that we have held since fall 2012. We still believe the first half of 2013 will be stronger than the second, and economic numbers around the world are mixed. We have made some changes in the sector weightings, which may be a few weeks early.
