The Right Way To Trade

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  • Category Archives Commentary
  • Stocks, Gold & Dollar Commentary December 17, 2018

    Stocks
    A mid-week 2% rally, with the high day coming in on December 12, was followed by a sharp decline to the lowest SPY closing low (260.57) in 8 months. A bullish Weekly Squat was generated on the smallest Weekly Range in 5 weeks, with a 6 week high in the New Economy sector vs the Old Economy, along with the necessity to work off the previous Bullish Momentum, point to a 2-3% bounce off the lows, with another high day during Christmas week. SPY Fib resistance 272.35 – 276.33 (strong). After the bounce runs its course – with our Upside/Downside Volume studies deteriorating badly -  we expect stocks to break sharply to the downside, after having filled out the enormous H&S topping formation. It’s worth noting, at the present time, 52% of global markets are now down over 20% from their highs and qualify as bear markets. The US is about to play catch-up!
    Gold
    Gold fell $8 on the week, settling spot 1238.50, after running into a “brick wall” at 1250 on Cartel paper selling and new highs on the Dollar. GLD near term Fib resistance 118.79. GLD Fib resistance 122.44 (strong).
    The XAU fell slightly, but a Bearish Weekly Squat was generated, pointing to a modest selloff, with Fib support 66.32 – 65.23. We expect the PM’s to trade range-bound until the end of year. All signs point to 2019 as the
    break-out year, as the global economy goes into stall mode. All Central banks will be desperate to jump-start their economies with another round of rate-cutting and QE, and sovereign debt purchasing.
    Dollar
    Yearly highs on the Dollar, (UUP 26.12) finally clearing strong Fib resistance (UUP 26.04). We expect a weak Dollar in 2019.

  • Stocks, Gold & Dollar Commentary December 10, 2018

    Stocks
    Virtually unprecedented volatility characterized the 4 trading days, with the SPY range totaling nearly 18 points (280.46 – 262.44), closing near the lows (263.66), dropping 5% for the week. As we suggested, time is needed to neutralize the 10 month high in bullish Daily Momentum from the prior weeks trading, and fill-out the right shoulder of a H&S topping formation. A strong bounce is, therefore likely, with a high day due around mid-week. Choppy, volatile trading could extend into the New Year. Once complete, a break to new lows, projects SPY 227 – 226, over several months, into bear market territory. In the near term, SPY Fib resistance 273.54 – 276.56. SPY Fib support 260.00.
    Gold
    After 3 weeks of gold settling around 1222, the metal broke through Cartel resistance – cleared 1233 — to close 1248.50 on the week. Near term objective: 1310. The shares (XAU) rallied 5.4%, re-establishing leadership over the metal, recording a 7 week closing high. We’re starting to monitor GDX which gives us another look at volume. The 55 week mvg avg for spot gold is 1256.88.
    Dollar
    The greenback turned lower, not able to clear strong resistance (UUP 26.04), settling 25.80. A strong close under 25.45 (convergence of our fast and slow 89 lines will project UUP 24.68 – 24.32 (strong).

  • Stocks, Gold & Dollar Commentary December 3, 2018

    Stocks
    The bounce-back rally discussed last week proceeded on schedule with stocks gaining 5.5%, with the New Economy stocks also keeping pace. For the bearish case, Upside Volume did not keep up with the price gain, and near-term bearishness showed up in our volume studies. Longer term, this is extremely bearish for stocks, with the greatest decline still ahead of us. Further supporting the bears is the breakdown of LQD, which is in the process of completing the right shoulder of a bearish H&S topping formation. However, in the short term, for the bullish case, Daily Momentum was the strongest in nearly 10 months, and time is now needed to work this off. Additionally, an improvement in Market Breadth should keep stocks range-bound. This will surely test the patience of the bears. An important cycle high is due around December 11, with choppy, volatile trading, within the recent range, the likeliest scenario until the end of year. SPY Fib resistance 277.12 -286.64 (strong).
    Gold
    The metal made two stabs to get over spot 1230 and was rejected by heavy COMEX paper selling and a firm Dollar near the highs, settling virtually unchanged from the prior week (1222.50). This makes 3 weeks in a row around 1222. We’re still looking for a strong close over spot 1233 to make a run to 1310. The XAU lost 1%, but formed a Bullish Weekly Squat on the smallest range in 6 weeks. Upside/Downside Volume was bullish, and negative Momentum continues to dissipate. Look for an XAU close over 68.54 to start a bull run. The 55 week mvg avg for spot gold is 1257.04.
    Dollar
    The greenback remained firm, hovering near yearly highs, with UUP closing 25.92. Strong Fib resistance 26.04. Fib support 24.68 – 24.32 (strong).

  • Stocks, Gold & Dollar Commentary November 26, 2018

    Stocks
    Bad week for stocks as the General Market fell 4.3%, bringing the 11 day decline to over 8%, (SPY 263.25) but holding above the October 29 low (SPY 259.85). The cycles appear to have inverted with the low coming in now, pushing the next high back to mid December. We do not expect the decline to accelerate from this level. A modest new low is likely with SPY 262.29 as a good target. With only intermediate to longer term bearish divergences on our Upside/Downside Volume studies having occurred, a bounce-back rally is needed to complete the near-term bearish pattern, before a break to new lows. Major Fib resistance 277.12.
    Gold
    Spot gold ended the short week virtually unchanged, (1222.30) after making a stab at 1233 resistance, despite the strong Dollar. Actual high 1230. Look for a Friday close over 1233 (5 month closing high) to constitute a break-out for a run to 1310. After registering a 5 week high in bullish Daily Momentum, the shares settled for a small Weekly loss (XAU 65.27). Look for an XAU Weekly close over 68.82 to turn our Daily 89 period trends higher.
    Dollar
    After a steep decline the prior week, the greenback bounced nearly 1%, with UUP closing 25.87. Strong Fib resistance 26.04. Fib support 24.68 – 24.32 (strong).

  • Stocks, Gold & Dollar Commentary November 19, 2018

    Stocks
    Stocks fell 4% on the low (SPY 267.01) before a Friday rally cut the loss in half with SPY closing 273.73. A cyclical peak is due around November 23, and with Bullish Momentum still being worked off, a bounce is likely with SPY 282.58 – 286.64 as major Fib resistance. Upside/Downside volume remain bearish. The New Economy sector failed to lead the market bounce, and recorded 10 month lows vs the Old Economy. A slight improvement in Market Breadth should sustain the bounce before heading to new lows.
    Gold
    The cartel is rapidly losing influence to control the gold price. A last ditch attempt to sell paper gold under 1200 failed with a $26 rally from the mid-week low (1195.50) to a Friday close 1222. Look for a Friday close of the spot price over 1233 to constitute a breakout, and a move to 1310. The XAU maintained leadership over the metal, bouncing 3% (66.08). Bullish Momentum divergences have fallen into place, with an Upside Breakout likely past the Thanksgiving holiday.
    Dollar
    The greenback (UUP) traded into major FIB resistance 26.04 (actual high 26.02) before selling off sharply, with a Friday close 25.71. Fib support 24.68 – 24.32 (strong).

  • Stocks, Gold & Dollar Commentary November 12, 2018

    Stocks
    A strong eight day bounce sent stocks rallying 8% off the low (SPY 259.85) to 281.22, but netting just 2.2% on the week (277.76). Three important takeaways: A nine month high in Daily bullish momentum was recorded, meaning time is now needed to work off the bullish momentum, while, at the same time, a 10 month low was registered when comparing the New Economy sector vs the Old Economy. Clearly, New Economy leadership is all but gone. Finally, with a decline of about 6% in Weekly Volume, volume failed to keep up with price appreciation, bringing our Upside/Downside Volume study into negative territory, once again. With the first cycle top coming on schedule (November 7), a more conclusive high is due around November 23, which fits with our volatile, choppy sideways trading scenario over the next few weeks.
    Gold
    While most stock markets were in disarray, the gold cartel made certain gold and silver were not considered “safe havens”, as paper selling pushed the metal below 1220 support, to a 1206 low, settling 1209. This was accomplished with the the COMEX Gold Deliverable Ratio at the 2nd all-time highest — 358 claims for every ounce available for delivery. (meridianmacro.com) The shares (XAU) fell 4.5% on 20% less volume, as our Upside/Downside Volume studies strengthened. Bullish Momentum divergences are falling into place. We anticipate another 1-2 weeks of sideways trading before an Upside breakout. This should coincide with a break in stocks.
    Dollar
    After a weak opening, the Dollar (UUP) closed slightly higher (25.83) on the way the major Fib resistance UUP 26.04.
     

  • Stocks, Gold & Dollar Commentary November 5, 2018

    Stocks
    Stocks made new lows (SPY 259.85) to start the week, then proceeded to rally 3% off the low, finally settling 271.89, up 2%. The market is going through the time consuming process of “filling out” the right shoulder, of a massive H&S top, going back to Feb 9. For the weeks trading, there was an improvement in Upside Volume, which leads us to conclude that several more weeks of volatile, sideways trading with an upside bias is the likely scenario. An important high is due around November 23. SPY Fib resistance 277.98 – 282.71 (strong).
    Gold
    The gold cartel, with timely, massive paper selling drove the metal by mid-week to spot 1211.50 — but failed to keep it under 1220 — finally settling 1232.50, virtually unchanged from the prior week. To put the amount of market manipulation in perspective, in the past 10 years while the cartel was unleashing millions of paper contracts to set the price under the physical market, China and India have accumulated 29,000 tonnes of gold, the total mine production for that period (www.goldchartsus.com). At some point this manipulation will not work, as Mother Nature can’t be fooled forever. The gold shares (XAU) resumed leadership, recording a 3 week high vs the metal, on a 9 month high in Upside Volume. A break over 82.58 will project the shares to Fib resistance 102.62.
    Dollar
    As long rates gapped to the highest level since March 2017, the Dollar managed a small gain (UUP 25.71) on the way to major overhead Fib resistance 26.04. Strong Fib support UUP 24.69.

  • Stocks, Gold & Dollar Commentary October 29, 2018

    Stocks
    Stocks were hit hard, falling 5%, (the full decline from the high is 11%), but recovered some ground at Friday’s close, after reaching the base of the right shoulder in, what will be seen, as a massive H&S top formation, going back to the February 9 low. SPY came within one point (262.29) of touching Weekly Fib support 261.25. The right shoulder now needs some filling. With the 2nd highest volume in 18 weeks, the sell-off appears climactic. Remarkably, while the FAANG stocks were mostly brutalized, The New Economy sector as a whole showed relative strength when compared to the Old Economy, recording a 2 week high. A period of 2 to 5 weeks of choppy, volatile, sideways trading with an upside bias is the likely scenario over the next month, with high days due, on or around November 6 and 23. SPY Fib resistance targets 278.88 – 283.20.
    Gold
    The yellow metal was firm, after testing 1220 support, then bouncing as high as 1243, finally settling 1233. The Bearish Weekly Squat badly damaged the shares, with XAU falling 7.0% (65.17), on a multi-month high in volume, as weak holders bailed out. We’ll look for a Bullish Weekly Squat around Major Fib support 62.95 to start next rally for an eventual break-out through 82.76.
    Dollar
    The Dollar traded to a 6 month high (UUP 25.75) as a Bearish Weekly Squat formed, indicating the Dollar should weaken in the near-term. Strong Fib support 24.64. Strong Fib resistance 26.04.

  • Stocks, Gold & Dollar Commentary October 22 2018

    Stocks
    Coming off the onslaught of the prior week, stocks bounced 2%, then fell-back to close virtually unchanged. Our studies remain solidly bearish, with Leadership being the most notable, as The New Economy sector fell to 6 month lows vs the Old Economy. While SPY may break under the recent low (270.36), and find Fib Weekly support 267.79 – 261.25, a few more weeks are likely needed for the right shoulder, of a massive H&S top, to be filled. Fib resistance 283.32 – 286.63. An important cycle high is due on, or around, November 3.
    Gold
    Despite a 10 week closing high in the Dollar, gold managed to overcome cartel paper selling, and close 1226.50. This week is critical to see if spot can hold the 1220 level, which may be tested. The shares (XAU) managed a 9 week high, but with a bearish Weekly Squat formed, a pullback into Fib support (67.56-66.44) is possible before moving higher. XAU 83.69 is the key level for a major break-out in the shares.
    Dollar
    The Dollar, once again, tested Fib resistance 25.53, and closed at a 10 week closing high (25.46). Strong Fib resistance 26.04.

  • Stocks, Gold & Dollar Commentary October 15, 2018

    Stocks
    The General Market fell nearly 8% last week, as a heavy dose of Downside Volume finally hit stocks, further intensifying our bearish Downside Volume numbers. In panic selling, SPY broke strong Weekly Support (273.36), bouncing Friday to close 275.96. A bounce is now likely over the next 3 weeks for SPY to reach a maximum comeback 286.63, with an important cycle high due on, or around, Nov. 3. With our studies (Volume, Momentum, Leadership & Breadth) now solidly bearish, we expect the downturn to continue, once the rally terminates.
    Gold
    The metal rallied $14 closing 1217.50, but failing the 1220 level on Friday. Spot needs to clear 1220 for a move to 1245 and 1310. The star for the PM’s were the gold shares (XAU) rallying 6%, confirmed by a 9 month high in volume. The key level XAU needs to clear falls to 83.81, with target 102.62 Fib resistance.
    Dollar
    The Dollar (UUP) hit Fib resistance 25.53 (actual high 25.54) then fell 1%, before closing Friday 25.33, Strong Fib resistance 26.04. Fib support 24.68 – 24.32 (strong).