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[OEXCHAOS]

THE RHODES REPORT
Telephone: 484-278-4073
Email: richard@rhodes-capital.com
Web Address: http://www.rhodes-capital.com

“FORECAST”
STOCKS: The European debt contagion remains front and center. Spain
and Italy bond yields remain high, but are off their worst levels after the
EU Summit produced a vague pan-European banking supervisor and other
ways to lower periperhal European bond yields. This is positive in the
short-term, but will only provide a respite to lower stock prices. Also,
China remains on a growth deceleration curve, with growing concerns of
a very hard landing — various estimates are centering in on the 7.0%
level and even lower.

STRATEGY: The S&P 500 remains above long-term support at the 160-
wma at 1203; which delineates bull/bear markets. However, the 200-dma
support zone at 1266-to-1278 remains the bulls “Maginot Line”, while
overhead resistance at 1340-to-1360 has also proven itself as resistance.
However, we expect this zone to be ultimately given in the days ahead,
with a short-term target of 1390.

CAPITAL MARKET COMMENTARY
! TRADING STRATEGY: Yesterday we added
several long positions in the Healthcare group,
which puts the portfolio 60% long at present, with
a beta of .86. And, we may look to add further to
the portfolio in well-defined risk-reward positions
once our new positions become insulated from
random noise…i.e. meaning we develop a cushion
on these trades.

Our S&P forecast is for the rally to continue
through month-end in the least with the S&P 500
reaching upwards to between 1390 to 1450 – with
the probability of the upper level being tested rather
good. This would put the S&P 500 20% above its
160-week moving average – a level that time and
time again in the past has served as major resistance.
Our downside point of “reversing” would be
a breakdown below the 1325 level.

More here:

http://www.rhodes-ca...newsletters.php