The Right Way To Trade

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  • Category Archives Commentary
  • Stocks, Gold & Dollar Commentary February 4, 2019

    Stocks
    With the General Market gaining 1.3% last week, led by the New Economy sector (all in the last 3 days, after the Fed took a pause in raising interest rates, and floated good news about a breakthrough in US/China trade talks), stocks have tacked on an amazing 15% from the December 26 low (SPY 233.76). Not uncommon after an initial bear market low. With economic data worsening (almost 20 large, bell-weather companies have lowered forward guidance), it’s likely stocks are close to a terminal point, having reached strong Fib resistance SPY 271.01 (actual high 271.20). Bearish Momentum is finally showing up — a necessary prelude to the coming decline — stocks should enter a choppy, trading period, over the next two weeks, before heading sharply lower. Fib support 253.34 – 251.04 should arrest the initial decline.
    Gold
    Spot gold traded 1326 on Thursday, before pulling back Friday to settle 1317.50, up $15 for the week. The gold shares led the group gaining nearly 7%, with XAU settling 75.91, and firmly establishing strong leadership, recording a 6 month high vs the metal. Daily bullish momentum went off the charts, reaching  a 27 month high. XAU resistance 82.12 – 86.70. Look for a monthly close over 78.45 to turn Monthly trend bullish. GLD res 125.57. SLV ran into Fib resistance 15.07 – 15.12. (Actual high 15.19) before settling 14.92. A brief period of consolidation is likely.
    Trapped shorts for the 4 month period between 8/18 – 12/18 will provide support under the market on any good pullback.
    Dollar
    With the Fed standing pat on interest rates, the Dollar fell slightly, and should start a decline towards Fib support
    UUP 24.68 – 24.32 (strong).

  • Stocks, Gold & Dollar Commentary January 28, 2019

    Stocks
    Stocks emerged from MLK Day, falling 2.2%, then recovered, but failed to exceed the level of the prior weeks close. An improvement in Market Breadth, led by the New Economy sector, will likely give the market a few weeks of staying power. Fifteen days, and counting, of consecutive bullish momentum needs to be “worked off”, which only the passage of time can accomplish. We’re looking for a pull-back to Fib support SPY 254.47 – 252.52 (strong), and then a bounce into early February, before stocks seek lower levels.
    Gold
    Spot gold closed the week at 1303. the highest close since May 18, 2018, and for the fifth consecutive week sits above the 55 week mvg avg (1259.24), and at an 8 month high vs the Dollar. While this bull will not be stopped, stiff Fib resistance should show up GLD 123.86 (spot 1313-1315) from where the breakdown last occurred, and the cartel should vigorously defend this area. The same situation applies to silver, with Fib resistance SLV 15.07 – 15.12 (spot silver 15.82 – 16.00). SLV close over 15.23 turns Weekly trends bullish. Gold shares (GDX) held Fib support (20.45), gapped out of its base on Friday, heading toward strong Fib resistance (21.70). GDX close over 21.82 turns Weekly trends bullish.
    Dollar
    The greenback found stiff resistance on its bounce-back UUP 25.66 (actual high 25.68), then dropped sharply closing Friday 25.44. A bear run should begin with Fib targets 24.68 – 24.32 (strong).

  • Stocks, Gold & Dollar Commentary January 22, 2019

    Stocks
    The pull-back off last weeks bearish Squat lasted exactly one day, amounting to 1%, before rallying four days (in options expiration week) for another 3% bounce to SPY 266.98, on a 14 week low in volume, (bearish) and fulfilling our projected first bounce of 12 to 14% off the bear market low (actual 13.7%). Stocks now sit at important resistance, having touched our fast 89 line on Friday. Our Upside/Downside volume numbers remain bearish throughout the 16 day rally. With the bearish Weekly Squat remaining unsatisfied, we expect a sharp pullback at any time, into Fib Support SPY 254.47 – 252.52 (strong), — then another bounce — which should be the final bounce, before stocks crater to new lows. This choppy trading will take us into early February.
    Gold
    As suggested last week, the metal hit our projected target 1294 – 1310, and is in the process of consolidating the 11% rally from 1167 in August 2018, to the prior weeks high of 1297. The 1280 Fib support level was touched on Friday, with spot closing the week 1281.30. Maximum Fib support 1269 – 1260. In keeping with golds’ safe-haven status, silver under-performed, but still closed comfortably above both our key 89 lines. It’s important for gold investors to fully appreciate that gold is in a strong bull market around the word, having reached at, or near all-time highs, in 72 countries (currencies) while being constantly suppressed in US Dollar terms. GLD Fib support 119.25. GDX Fib sup 19.67. SLV Fib support 14.07. The gold shares are maintaining bullish Upside/Downside volume readings. The 55 week mvg avg for spot gold is 1258.43.
    Dollar
    A bit of a surprise, as the Dollar (UUP) bounced back into our two 89 lines, closing 25.56. UUP should find strong Fib resistance at 25.66, before starting a bear run, with Fib support 24.68 – 24.32 (strong).

  • Stocks, Gold & Dollar Commentary January 14, 2019

    Stocks
    Stocks had a good week, tacking on 2.0% on four out of five up-days, closing the week out flat. The General Market has now gained 10.6 in 11 trading days since the low (SPY 233.76) on December 26, on its way to an eventual 12 to 14% bounce off its first bear market low — with the reversal of the Primary Trend having been established — this is typical of first bounces off the bear market lows as in 2000 and 2007, which saw 12% bounces. SPY 263.51 is an important Fib target. But first, a consolidation, and pull-back is likely, with last weeks Bearish Weekly Squat on a 14 week low in Weekly Range. SPY Fib support 247.17. A high day is due January 22/23.
    Gold
    Several weeks ago we put out our target for spot gold at 1294 – 1310. That target was reached with a spot 1297 print last Thursday, January 10. Fierce cartel paper selling near the highs, drove down the spot price to 1280, before settling 1288.20. Both gold and silver will likely go into consolidation, which is very healthy, and a precursor for a strong next leg up. Spot gold will find Fib support 1280. Silver 15.60. In the event of an all-out cartel raid, maximum Fib support 1269 – 1260.  Important to note that spot gold has now completed its third consecutive week over the 55 week mvg avg 1258.01, solidifying the bull move. GLD Fib resistance 123.86. GDX Fib resistance 20.77. The gold shares were flat on the week but registered a 7 month high when measured against the Dollar.
    Dollar
    The Dollar (UUP) fell decisively through our 2 converging 89 lines (bearish) to settle 25.36, and now projects UUP 24.68 – 24.32 (strong) and the start of a new down trend.

  • Stocks, Gold & Dollar Commentary January 7, 2019

    Stocks
    Wild and unexpected swings continue to characterize the markets. On news of a strong jobs report, stocks surged 3.5% on Friday, and have now clawed back 8.1% from the low (SPY 233.76) registered on December 26. With the current rally, the market has worked off the bullish momentum we’ve been waiting weeks for. With a 10 week low in range, a Bearish Weekly Squat was registered. It’s likely the Weekly Range will narrow further, as stocks approach strong resistance. The New Economy sector failed to lead the rally, recording 4 week lows vs the Old Economy. With the reversal of the Primary Trend, its only a matter of time before the markets break to new lows. But first, it’s likely a few more weeks of wild swings, with SPY 257.15 to a max 263.51 as important Fib resistance targets. An important high day is due around January 11.
    Gold
    Bullion surged $18 to spot $1296, — a 7 month high — before falling back on heavy cartel selling, settling 1284.20. The shares (XAU) surged 3.1% closing 71.87, a 5 month high.  GDX, the largest gold share ETF was equally strong, and face important Fib resistance at 21.70. The gold shares reclaimed leadership over the metal, registering a 3 month high. Spot gold (1284.20) is now 2 consecutive weeks over the 55 week mvg avg (1257.45).
    Dollar
    The Dollar continued to fall into our key Daily 89 trend lines, closing UUP 25.46. A strong close under 25.45 (convergence of our fast and slow 89 lines will project UUP 24.68 – 24.32 (strong) and the start of a new down trend.

  • Stocks, Gold & Dollar Commentary December 31, 2018

    Stocks
    Violent and unexpected wild swings characterized stock trading last week, exemplified by the nearly 3.0% swing from Thursday’s low to the close in just the last hour of trading. The new reality: More than 80% of stock trading is incredibly fast — controlled automatically by machine algorithyms and passive investing — without any human intervention. With the reversal of the Primary Trend having been established, according to Dow Theory, and not an arbitrary 20% off the high, its important to understand that the market has changed after 11 years, and buy and hold is not a formula for success going forward. For the week, stocks gained 3.0%, led by the New Economy sector which registered an 8 week high when compared to the Old Economy. At least a few more weeks of choppy, violent trading is likely, as stocks continue to work off the previous Bullish Momentum. For the first time in recent memory, not a single stock registered a 52 week high on the NYSE. SPY Fib resistance 257.15 – 263.51 (strong). An important high day is due on January 11.
    Gold
    As stocks were going through its gyrations, spot gold surged, crossing over its 55 week mvg avg (1256.96) closing the week 1280.20, and registered a 7 month high against the Dollar. Important Fib targets spot 1294 – 1310. GLD resistance 122.44. The shares gained 1.5% and lagged the metal, but Weekly Bullish Momentum surged to an 11 week high. GDX resistance 21.70.
    Silver gained 5%, gapping over a 4 month sideways trading range trapping shorts. SLV Fib target 15.07 (spot 15.82).
    Dollar
    The Dollar fell 2.0% (25.50) into our key Daily 89 trend lines. A strong close under 25.45 (convergence of our fast and slow 89 lines will project UUP 24.68 – 24.32 (strong) and the start of a new down trend.

  • Stocks, Gold & Dollar Commentary December 24, 2018

    Stocks
    The General Market crashed 7.0% last week, and has now fallen 18.5% from the high registered on Oct. 3, barely escaping bear market territory (-20%). However, using Dow Theory, a valid bear signal was triggered on Oct, 14, the first in 11 years. indicating a reversal of the primary trend. With a 10 month high in Bullish Momentum still left standing, a strong bounce of 5 – 8%, taking stocks back to the breakdown point in the H&S top, just completed, is still a good possibility. SPY Fib resistance 260.95.
    Gold
    Spot gold rallied $17, closing 1255, challenging the 55 week mvg avg (1256.52), after trading as high as 1268. The shares bounced 1.6%, falling back as it approached strong resistance GDX 21.70. Actual high 20.84. Strongest break-out volume in over a year brings with it good news and bad news. In the long term, massive break-out volume shows good buying pressure. In the short term, very often it puts in a top, requiring some consolidation. GDX Fib support 19.80. The shares still lead the metal, recording a 9 week high.
    Dollar
    The Dollar was volatile, (as the Fed raised rates 1/4 pt, with no indication of a pause) closing modestly lower (UUP 25.96). 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 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).