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David Dierking

Sector Buy/Sell Signals – Week of November 18th

Equities in the U.S. and around the world are flashing buy signals but fixed income and precious metals are looking very weak.

U.S. equities were largely flat for most of the week before "trade optimism" showed up again powering the S&P 500 to its sixth consecutive weekly gain. Perhaps it's not ironic given that's exactly the point in time when the Fed began buying billions in Treasuries again. Regardless of whether this is an economically-driven rally or a free money-fueled rally, the bulls remain in control on the equity side and will probably push the S&P 500 up towards the 3200 level by year-end.

Both corporate and government bonds had a solid week but the near-term trend remains solidly negative. I still believe that the 10-year yield will move back north of 2% before the end of the year putting long-term Treasuries on pace for about a 3-4% loss if that were to take place. Junk bonds have experienced some volatility lately but look better than their peers at the current moment.

Gold has been in a steady down channel since the beginning of September and it's looking like that trend could continue over the next few weeks. Price action suggests that it could slip from its current level down to around the $1400 range or even a bit below that depending on how a year-end equity rally pans out. My intermediate-term price target for gold is still above $1700 so any indications of selling pressure should be bought up.

Here is the full scorecard for the week ahead.

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