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The Right Way To Trade

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  • Stocks, Gold & Dollar Commentary July 16, 2018

    Stocks
    The algos controlled the market, limiting volatility to practically zero, while driving stocks up 2%, – through overhead resistance SPY 277.12 – to max Fib resistance 279.79 (actual high 279.93). But, in doing so, they couldn’t get many individual stocks to make new highs. Thus, while the market flirted with all-time highs, Market Breadth registered 14 week lows. The other important takeaways: Volume was at the lowest in at least a year (ex holiday weeks) and Market Range came in at a 7 month low producing a Bearish Weekly Squat. With all that said, our Upside/Downside Volume numbers remain bullish, and the New Economy sector was strong, so a decent amount of time of sideways trading is still needed before any kind of major sell-off (15 -25%) is in the cards. An important cycle high is due July 19. The initial correction should be in the range of 3 – 4%, (SPY 270.78 – 268.30 max) before another attempt at new highs.
    Gold
    Spot gold fell $13 (1241) but held above our max 1233 (low 1236.50). After leading bullion for nearly 6 months, the shares gave ground, falling 4.0%, and a 3 week low vs bullion. The metal is clearly in a bottoming area, but with the Dollar remaining strong and stocks in run-a-way mode, gold bulls will require patience. The key number for the XAU is a Weekly close over 86.38, for a sharp move to 105.49. To regain its bullish footing, GLD needs to close over 121.53 (spot 1280).
    Dollar
    The Dollar held firm closing in resistance (UUP 25.00). Fib resistance (25.05- 25.52 strong). Fib support 24.04 (strong).

  • Stocks, Gold & Dollar Commentary July 9, 2018

    Stocks
    In the slowest trading in 7 months, with practically zero volatility, the algos took over – refuting Trumps trade war – and rallied stocks from SPY 270 support (actual low 269.24) penetrating our overhead SPY target 275.34 (actual high 275.84) finally rising 1.5% on the week, with most gains on Friday. Clearly volume has not kept pace with price, and with a 12 week low in Market Breadth, and immediate Fib resistance dead-ahead (SPY 277.12), a pull-back is likely before a thrust to an important high around mid July. The problem with calling for a final top, is that there has not been sufficient Downside Volume on down-days. Downside Fib targets remain 268.07 – 265.11.
    Gold
    On persistent cartel paper selling, spot gold printed 1237.50, a scant 4.50 from our projected max downside target 1233 (GLD 116.75), but came off the bottom to finish the holiday-shortened week at 1253.80, a slight up-tick from the prior week. Meanwhile the gold shares (XAU index) continue to out-pace bullion, gaining 2.6%. With the index having spent the past 16 months primarily between 77 and 92, and with our ADX basis Weekly, with a 7 handle, a major up-move (105.49) is pending on a Weekly close over 86.48 (Weekly 89 line). As the shares continue to lead, they support the bullish case with a series of bullish Weekly Upside/Downside volume numbers, a 19 week high in bullish Daily momentum and a 6 month high when compared to the metal.
    Dollar
    Fib resistance proved insurmountable (25.05 – 25.52 strong) as the Dollar (UUP) fell steadily closing at a 4 week closing low (24.83). Fib support 24.04 (strong).

  • Stocks, Gold & Dollar Commentary July 2, 2018

    Stocks
    Stocks gapped lower to start the week, penetrating our SPY downside target 270.00, spending the rest of the week trying to fill the gap Рin extremely choppy trading -  but failing to do so, finally settling for a loss of 1.3%. More downside is in store with new targets 268.07 Р265.11. Again, strong bounces should occur at these levels, as we move toward the July 4th holiday, and an important high around mid July. There was a sharp deterioration in market Breadth, and a weakening in the New Economy sector, which recorded 6 week lows when measured against the Old Economy. An improvement in our Upside/Downside Volume studies means no immediate danger for a sharper sell-off at this point. SPY Fib resistance 275.34 Р277.12.
    Gold
    Gold fell $16 under relentless paper selling on the Comex by the banking cartel, breaking 1267 support, before finding a bottom at 1248.30. A Friday bounce brought spot back to 1253.40. Maximum gold support is 1233 (GLD 116.75). Again, we are encouraged by the continued out-performance by the miners (XAU index), which registered a 22 week high relative to bullion, and multi-week Upside/Downside Volume readings. Look for a Weekly close over 86.52, with 2 more to follow for a rapid spike to 105.49. To turn SLV super-bullish look for a Weekly close over 16.69 for a run to 18.58 (spot 19.69)!
    Dollar
    The Dollar tried to hold most of its gains, until Friday’s sell-off, closing UUP 24.94, a scant 4 ticks higher on the week. Fib resistance 25.05 – 25.52 (strong). Fib support 24.04 (strong).

  • Stocks, Gold & Dollar Commentary June 25, 2018

    Stocks
    Stocks declined 1%, after trading into our projected downside targets SPY 273.28 – 270 (actual theoretical low based upon the E-mini futures 272.68), then bounced to finish the week 274.74. A further deterioration in our Upside/Downside Volume studies, Momentum, and Breadth as well as a continued weakening in the New Economy sector means we are getting closer – but not there yet – to a major top. An important target still remains at SPY 270, and strong bounces should occur off that level. A significant high is due mid July.
    Gold
    An $11 drop in gold took spot below the 55 week mvg avg (1278.39) to close 1268.90. Thursday’s low 1260.80 exceeded our downside target (1267). With a modest sell-off in the XAU, the shares have recorded a 5 month high relative to spot gold, and we construe that as bullish, and there should be a quick recovery of the gold price. The “life-cross” on the Weekly GLD is still bullish by .96 (122.60 – 121.64). Look for spot gold’s Weekly close to exceed 1282 to prevent the 3rd Weekly close under the 89 line. SLV traded to 15.31, just 2 cents from max Fib support (15.29), then bounced to close near the top of the Weekly Range generating a Bullish Weekly Squat. To turn SLV super-bullish look for a Weekly close over 16.69, and two more to follow, for a spike to 18.58 (spot 19.69)!
    Dollar
    The Dollar held tough for most of the week, before selling off on Friday. UUP 25.05 was important resistance. (actual high 25.09). Fib resistance 25.05 – 25.52 (strong). Fib support 24.51 – 24.36 (strong).

  • Stocks, Gold & Dollar Commentary June 18, 2018

    Stocks
    On news of Trump’s tariffs, followed by tit-for-tat by China, stocks sold off Friday, after challenging the upper band of SPY resistance 279.81 (actual high 279.48), but came back to close slightly lower on the week. We are finally seeing the inklings of an important top developing, but will likely require at least 3-4 weeks to play out. On a six month low in range, a Weekly Bearish Squat developed. Our original call of SPY Fib targets 273.28 to a maximum 270.00 are still in play. Momentum bearish divergences have shown up, with a deterioration in Market Breadth despite higher highs. While the New Economy sector went to new highs, relative to the Old Economy there was a slowdown. This should become more apparent as the market goes forward.
    Gold
    The rally in the XAU to nearly 85 was short-lived when massive paper selling by the gold cartel, drove spot gold to 1275, penetrating its 55 week mvg avg (1278.57), before closing 1279.80. Strong GLD support 119.99 (1267 spot). We do not expect 3 Weekly closes under the 55 Week mvg avg. Trading volume in the gold shares reached a 17 week high and appears climactic. XAU Fib support 81.77. The market needs to close over 83.06 to get back over the Daily 89 line. Spot silver was smashed 68 cents lower at the low. SLV held important Fib support 15.50 (actual low 15.49), closing 15.60. SLV needs to close over 15.75 (Daily 89 line).
    Dollar
    The Fed raised rates a quarter point (expected), coupled with Trump’s tariffs caused a sharp 1.5% jump in the Dollar, challenging the recent high UUP 25.00. Fib resistance 25.05 – 25.52 (strong).

  • Stocks, Gold & Dollar Commentary June 11, 2018

    Stocks
    Stocks gained 1.5% last week, busting through overhead SPY resistance 274.90 (actual high 278.28) and well on its way to challenge overhead Fib resistance 279.81. With a 5 month high in Market Breadth, and only a small give-back in the New Economy sector, and with our other studies neutral/bullish, there’s little to suggest other than a fairly modest correction to SPY 273.28, to a maximum 270.00, before a challenge to new highs. An important high is due around June 15.
    Gold
    Spot gold traded in a narrow $13 range for the week, but managed a $6 gain, closing 1299, as the cartel successfully held the metal under 1300. Spot trading 1322 is bullish. Bullion’s 55 week mvg avg is 1278.55. The XAU traded in a 6 month low in range, generating a bullish Weekly Squat. XAU needs to close over 86.60 for an explosive move to Fib resistance 105.49. Spot silver led the PM’s, gapping out of a 4 month trading range, with SLV closing over the Daily 89 line (15.74). Strong support for SLV (a discount of around 5% to spot) is 20 cents lower 15.54.
    Dollar
    The greenback continued in corrective mode, on its way to UUP Fib support 24.34, after a likely brief bounce to UUP 24.80 – 24.91 (strong).

  • Stocks, Gold & Dollar Commentary June 4, 2018

    Stocks
    At the get-go, our bearish squats were satisfied, with stocks trading to one basis point of SPY support (266.62). Actual low 267.76. The rest of week was spent trading wide-ranging rallies and decline, ending about a half percent higher. Our Upside/Downside Volume studies continued to worsen, but was offset by the continued out-performance of the New Economy stocks vs the Old Economy, which went to new highs. All-in-all the market is in a stand-off, and will continue to range-trade, bound by an upside boundary of 274.90 and a downside boundary of 259.05. A break through the upside boundary, will set a new boundary 279.81. Complacency is at an extreme, with markets ignoring Trumps trade war, political strife in Italy with its wild swings in interest rates, and a DB downgrade to almost junk status. Our Daily SPY ADX is approaching a ten handle so more wild swings are likely, albeit within the range as outlined. An important high day is due around June 15.
    Gold
    The metal fell $8 (1293) but PM’s were once again led by the shares, with XAU registering an 18 week high when compared to spot. The XAU has now closed 7 days over its Daily 89 line, but with 4 months under the Weekly 89 line, needs to close over 86.63 to get the ball rolling for a rapid run to 105.49. Our Upside/Downside volume numbers on the XAU are bullish. The 55 week mvg avg for spot gold is 1278.17.
    Dollar
    The Dollar is building an important top as it ran into major Fib resistance 25.05 (actual high 25.00) UUP 24.34 Fib support.

  • Stocks, Gold & Dollar Commentary May 29, 2018

    Stocks
    News of a detente on the US/China trade war gapped stocks higher to start the week, and kept stocks slightly higher, by weeks-end, in light pre-holiday trading. Although more time is needed before any semblance of a major top, the important takeaway is our Upside/Downside volume model is starting to turn bearish. Unsatisfied Bearish Weekly Squats should turn the market lower with downside targets SPY 266.62 – 264.48. Upside SPY boundary 274.90 (actual high 274.25) remains. If broken, major Fib resistance SPY 279.81. The New Economy sector continues to lead, registering a new closing high vs the Old Economy.
    Gold
    As the US/China trade war came to an apparent truce, spot gold made its low for the week on Monday (1281.20), bur roared back by weeks end, closing 1301, led by the shares, with XAU recording a 17 week high against the metal, and actually out-performing the strong Dollar. The XAU registered 3 consecutive closes above our Daily 89 line and seem poised to challenge our Weekly 89 line (86.68). With a 9 handle on our ADX, once cleared, we expect a rapid run to Fib resistance 105.49. Spot gold over 1322 is bullish.
    Dollar
    The Dollar is near the end of a spectacular run, and should correct its gains, as an important high is being made. Expect UUP 24.41 – 24.31 to provide solid support. Major Fib resistance 25.05

  • Stocks, Gold & Dollar Commentary May 21, 2018

    Stocks
    After spiking higher on Monday (almost reaching our upper SPY boundary 274.90 – actual high 274.08), the market closed the week with less than a 1% gain, on the slowest volume in 5 weeks. recording the smallest Weekly range in 4 months, producing a Bearish Weekly Squat, pointing to immediate downside SPY targets 266.62 – 264.48, where heavy downside volume needs to occur for any semblance of a future major top. At this point in time, there is nothing on the immediate horizon, other than a modest 2 – 3% correction, which should be followed by another rally towards the upper end of our boundary. The new Economy sector gave up some ground which was expected. Upside/Downside Volume remains positive. Bearish Momentum divergences can only occur after the next rally. Breadth remains adequate as 4 month highs were recorded. In the event 274.90 is penetrated, look for 279.81 as major Fib resistance.
    Gold
    In what appeared to be total desperation, the banking cartel unloaded 13,500 Comex gold paper contracts in less than 1 minute ($1.75 Billion) on May 15, driving the metal down $25. Spot closed Friday on a small bounce to 1292, holding above its 55 week mvg avg 1277.47. The shares (XAU index) held up fairly well, dropping 2%. Supporting the cartel was the continuing strong Dollar which gained  another 1 1/4% to 7 month highs, crossing above our Weekly 89 line. Spot gold closing over 1322 is bullish. An XAU close over 86.71 for 3 consecutive weeks should see a rapid run to 105.49. 84.84 should provide minor resistance.
    Dollar
    We were wrong on an immediate Dollar (UUP) correction. Instead, on higher interest rates, the UUP closed above the Weekly 89 line (24.38) Two more weeks of consecutive closes over 24.38 turns the Dollar trend up. UUP 25.05 remains long term Fib resistance.

  • Stocks, Gold & Dollar Commentary May 14, 2018

    Stocks
    Stocks ran ahead 4 out of 5 days, tacking on nearly 3%, in lackluster volume, with SPY getting somewhat close to the upper band in our forecasted trading range (274.90). Actual high 273.15. While slight negative readings have started to occur in our Upside/Downside Volume studies, it by no means suggests the market is at a major turning point, other than a steady diet of violent swings, but still within the broad trading range bound by 274.90 – 258.35, for several more weeks. Three Daily closes above 274.90 would increase the top of the range to 279.79. The New Economy sector continues to show leadership, making new highs relative to the Old Economy.
    Bullish momentum registered 12 week highs, which means several more weeks of sideways trading is likely before bearish momentum divergences start to show up. A high day is expected May 17, with a more important high around May 30.
    Gold
    The metal faced 3 major headwinds last week: relentless cartel paper selling, rising interest rates, and a strengthening Dollar, but still managed to close up on the week (1318.70) after selling down to 1303.50. Fib resistance spot 1330 – 1335 (GLD 126.12 – 126.84). While clueless Western Institutions have been suppressing the gold price for the past 10 years, actual gold withdrawals into the Shanghai Gold Exchange now approach 16,000 tonnes since 2008. The shares (XAU Index) outgained the metal slightly tacking on 1.7% for the week, but on weak volume, suggesting more sideways trading is the logical scenario for a few more weeks, before catapulting XAU to 105.49, on the strength of our ADX which has moved into “big-move” territory. Look for 3 consecutive closes over 86.00 to start the move. GLD Fib support 124.38, 124.02.
    Dollar
    Running into our 89 lines proved formidable resistance, and a Dollar correction is likely, with a big Fib support target UUP 23.65, over several weeks.