The Right Way To Trade

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  • Category Archives Commentary
  • Stocks, Gold & Dollar Commentary June 10, 2019

    Stocks
    After a gap-down lower opening on Monday, which set the SPY low at 273.09, (and the New Economy sector setting 4 month lows) –  not quite reaching Fib Support SPY 271.01 –  stocks embarked on a spectacular 4 day rally, gaining back 5.5%, on rumors the Fed will soon reverse course and start lowering interest rates. With the rally achieving a 4 month high in Bullish Momentum, and a noticeable improvement the Market Breadth, stocks now need a few weeks of sideways trading for the bullish momentum to wear off, before the next sustained down-move can begin. Major Fib resistance 290.27. A trading top is due June 12. SPY Fib support 279.11.
    Gold
    Spot gold rallied $36, settling 1340.70, its highest price in over a year. GLD printed 127.25 matching spot. Unless the market can accelerate from this level to close over spot 1360, expect a decent pull-back to fill-out the neckline in an enormous H&S bottom formation, with a low around June 25. A strong Weekly close over GLD 127.25 projects to 134.96. GLD Fib support 123.85 (strong). The gold shares resumed leadership over the metal, recording a 6 week high, despite bullion strength. Without a strong gold close over 1360, the shares should range-trade over the next 2 1/2 weeks, with a low due around June 25. GDX Fib support 22.14, 21.86 (strong). Our scenario for a strong PM breakout over the Summer is playing out. SLV broke the bullish falling wedge formation with 14.20 print running into resistance and not able to clear. A strong close over 14.22 turn  trends bullish. SLV Fib resistance 14.74, 15.69 (strong). This may seem unrelated to reality today, but for very long term traders take note: When “gold fever” hits, an XAU QUARTERLY close over 106.35 will set the stage for a move to all-time highs 232.72. Fib resistance 164.80 (strong).
    Dollar
    With talk of a fairly imminent cut in rates, the greenback took it on the chin, falling into Fib support UUP 26.00 before settling 26.04. A strong close under 25.94 will turn trends bearish.

  • Stocks, Gold & Dollar Commentary June 3, 2019

    Stocks
    Stocks plunged 2.9% on tariff threats to Mexico — met our criteria for a Weekly close under 280.57 — turning our 89 line trends lower, and are now 7.3% off the highs, confirming the bear market started last October on a Dow Theory sell signal, which was never refuted despite the 6 month rally. Average bear market lows have sliced close to 60% off the major averages over time. This bear market will likely be led by the Transports and the New Economy sector. SPY Fib support 271.01, 263.43. SPY Fib resistance 281.64, 288.80, 290.43 (strong).
    Gold
    Despite all-out war against gold by the cartel, the rush to safety on Friday was self evident, as the metal soared to close 1304.90 — a 10 week high — after trading 1274.20 a day earlier. The gold shares (XAU) gained more than 5%, and regained leadership despite the stronger Dollar. Our call for a low in the shares off a Triple Bullish Momentum Divergence was correct. Trends have turned bullish for the metal with the GLD closing 123.33. GLD Fib resistance 124.39. More work is needed for the GDX which needs a strong close over 21.76. Actual high 21.74. GDX Fib support 21.30. Silver, which has been artificially beaten down through excessive paper shorting — having excessive EFP’s going to London for paper settlement — has the biggest potential with the gold/silver ratio at 85, and over the coming bull market, has the potential to drop to 30. SLV needs a strong close over 14.26 to turn trends bullish. An SLV print 14.05 will bust the bullish falling wedge formation, leading to much higher prices.
    Dollar
    After the big reversal down last week, on renewed chaos in the currency markets, the greenback found a temporary bid and surged to test multi-year highs –  before failing — to close with a small gain for the week. A strong close under UUP 25.94 will turn our trends lower, and the start of a bear market.

  • Stocks, Gold & Dollar Commentary May 27, 2019

    Stocks
    Stocks fell 2.0% in a choppy week of trading in very light volume, as US/China trade positions hardened, but did not go to new lows, as our 89 line trendlines held support (SPY 280.57), settling on the week 282.78. With the New Economy sector leading the downside, (11 week lows when compared to the Old Economy) stocks are primed to continue to go lower, after bouncing to a high day around June 3. SPY resistance 287.31, 289.40. A Weekly close under SPY 280.57 turns trends lower with projected support targets 277.65, 271.01, 263.43.
    Gold
    Spot gold successfully tested its 55 week mvg avg (1269), actual low on 5/21 1269.50, then rallied over the next 3 days to settle 1284.70. The fly in the ointment is the relative weakness in the PM shares which fell to 6 month lows (XAU 65.85). International investors are the main constituency for the sector and multi-year Dollar strength may be playing a role in the shares unusual weakness. Triple Bullish Momentum Divergences mean we are very likely at the low. To confirm the metal low for this cycle, we’re looking for spot gold to print 1325. However, this late in the cycle, a spot print 1304.20 (7 week highs) will likely do the trick, on the way to a Weekly close over 1360 for a Summer bull run to 1600. Key metrics: GDX Daily close over 21.76, GLD Daily close over 122.52, SLV Daily close over 14.30 turn trends bullish.
    Dollar
    A major reversal on Thursday, after touching multi-year highs (UUP 26.47), the greenback closed down on the week (UUP 26.25). A strong close under 25.91 will start bear phase, and confirm high.
     

  • Stocks, Gold & Dollar Commentary May 20, 2019

    Stocks With the break-up in US/China trade negotiations, stocks had a volatile week — cratering on Monday to start the week — falling 5.1% (SPY 279.93) from the May 1 high (294.95), but managed a strong come-back, closing 285.84. With the New Economy sector giving up more ground when compared to the Old Economy –  registering 7 week lows –  and with our Upside/Downside volume studies, Momentum and Breadth still giving off bearish signals, stocks are primed for more downside, after an important high is put in around the end of May. SPY Fib support 277.65 (strong). SPY Fib resistance 290.48.
    Gold
    Bullion started the week strong, rallying into spot resistance 1298 – 1305. Actual high 1302.20. Then fell sharply for the rest of the week, settling 1277.40, after touching 1274.50 on Friday. The shares, showing surprising relative strength, actually had an up-week, with the XAU closing 67.49, a fractional gain. Key metrics to look for. An XAU Monthly close over 76.96 will start bull move, breaking speedline from 8/7/16, and crossing over both 89 line trendlines, turning trends bullish. For the metal: Spot gold print 1311 will likely take spot to 1325 and confirm the low of this cycle is in rear view mirror. Then Weekly close over 1360 will start run to 1600. All part of Summer rally, while stocks enter bear market. For metal ETF’s: GDX Daily close over 21.79, GLD Daily close over 122.61, SLV Daily close over 14.40 turn trends bullish. Spot gold 55 week mvg avg 1268.72. Mkt has had Weekly close over mvg avg for 21 consecutive weeks.
    Dollar
    The greenback was strong, matching multi-year highs (UUP 26.35) as the trade war intensified the international scramble for Dollars to meet obligations.  A strong close under UUP 25.85 will start bear phase and should coincide with market top.
     

  • Stocks, Gold & Dollar Commentary May 13, 2019

    Stocks
    On news of an impasse on trade negotiations between the US and China — and the threat of additional tariffs — stocks fell for 4 straight days, but finally found support on Friday near Fib support SPY 282.13 (actual low 282.30), a decline of 4.6% from the recent high SPY 294.95.  As expected, the New Economy sector led the downside, recording a 5 week low when compared to the Old Economy. Strong Fib support SPY 277.65. Unless China retaliates strongly by imposing tariffs on US goods and depreciates the Yuan by more than 2%, the market should bounce from an oversold condition, in choppy fashion, to SPY 291 – 293, with a major top around the end of May.
    Gold
    While spot bullion recorded a four week high (1291.20) settling for the week 1286, the shares (XAU) continued to struggle, falling 2%, settling 67.29. Volume fell off dramatically, registering 18 week lows, and less than half when highs were being made 2 months ago. At this point, the shares are not being viewed as a safe haven. We expect the stocks to re-establish leadership when stocks top out, and enter a bear market. Spot gold strong support 1248. Spot gold print 1325 will put low in. Weekly close over 1360 will start run to 1600.  GLD Fib resistance 124.39. SLV Fib resistance 14.73. GDX Fib resistance 22.50. Gold 55 week mvg avg 1268.56.
    Dollar
    The greenback continues to serve as a safe haven during the tumultuous stock and bond markets, and closed little changed UUP 26.15. The Dollar will be heading lower after stocks top. UUP Fib support 25.89 – 25.80.

  • Stocks, Gold & Dollar Commentary May 6, 2018

    Stocks
    A 2% drop over a two day period was promptly reversed on Friday’s bullish jobs report, sending stocks approaching, but falling short of new highs. A negative momentum day was registered on Thursday, after a record-breaking 22 consecutive days of bullish momentum. Along with that, our Upside/Downside Volume studies finally achieved a string of near-term bearish readings, as well as a trend “turndown” on our ADX. Stocks have virtually run out of room on the upside, and should now be followed by a period of weeks of modest, choppy declines and rallies, while the New Economy sector starts to under-perform, ultimately leading to an important high around the end of May.
    Gold
    The metal was rigged with paper selling pressure all week, with spot gold testing 1266, before bouncing Friday on the jobs report, settling 1279. Spot gold strong support 1248. Spot gold print 1325 will put low in. Weekly close over 1360 will start run to 1600.  GLD Fib resistance 124.39. SLV Fib resistance 14.73. GDX Fib resistance 22.50. The shares (XAU) were weaker, losing 5%, settling 68.79, and recording a 15 week low vs the metal. With our Upside/Downside volume studies continuing to show multi-week bullish divergences, any short-term weakness is looked upon as extraordinary buying opportunities. Spot gold 55 week mvg avg 1268.24.
    Dollar
    The greenback was soft, pulling back from an over-bought condition with UUP settling 25.16. UUP Fib support 25.86 – 25.77 (strong).

  • Stocks, Gold & Dollar Commentary April 29, 2019

    Stocks
    The General Market closed Friday on a new high, (fueled by a better than expected GDP report) lead by the strength of the New Economy sector, which closed at new decade highs and shows no inclination to slow down. On a bearish note, trading volume was the slowest in over a year (ex holiday weeks), while complacency levels, once again are approaching historic lows, a prescription for bad things to happen. Stocks have gained an amazing 25.2% since the bear market low on Dec.26. While stocks are likely close to a tradeable high, we see no more than a 3.5% correction at this point. For significant price weakness to set in, and Bearish Momentum divergences to set-up, at least another 20 – 40 days of time needs to pass, which would set up for an important peak towards the end of May. SPY Fib support 284.36 – 283.20.
    Gold
    On Tuesday, gold tested the 55 week mvg avg (1268.04) with low spot touching 1266. By Friday, the spot market rallied to 1289, settling 1286. It’s likely, with our projected low mid to late April for this cycle, gold has seen its low.
    A strong close over 1360 will take the metal to 1600, with the Summer months setting up for an explosive period. The PM’s (gold, silver & shares) have tested and bounced off important support levels, and are ready to move significantly higher. GLD Fib resistance 124.39. SLV Fib resistance 14.73. GDX Fib resistance 22.50.
    Dollar
    On the strength of the strong GDP report, the Dollar broke into new multi-year high ground (UUP 26.35).

  • Stocks, Gold & Dollar Commentary April 22, 2019

    Stocks
    The market attempted to correct twice last week, only to be rescued by the unusual strength in the New Economy sector, which went on to new, decade closing highs. Volume was extremely light in pre-holiday trading. Market Breadth weakened considerably, which should lead to a continuation of the market correction — but no more than 3.5%, at this point in time, before a decent bounce to challenge the highs. SPY Fib support 284.36 – 282.13.
    Gold
    The metal was weak, falling $15, to settle at 1275.50, after testing the bottom of our projected support level 1271. Actual spot low 1270.50. Mid to late April is when a low should be seen in the PM’s, followed by a breakout around mid May, although there is a wide variance, due to constant rigging in the paper markets. However, Mother Nature will not be denied. This Summer should see explosive moves in the PM’s. A strong close in spot gold over 1360 will project to 1600. GDX Fib support 21.00. SLV Fib support 13.90. Look for strong close over 14.40 to break out of top of giant falling wedge formation, to run to 14.74 and 15.69 Fib resistance. Spot gold 55 week mvg avg 1267.73.
    Dollar
    Contributing to gold weakness was considerable strength in the greenback, which surprised us and rallied to 2 year highs (UUP 26.14). UUP 26.82 represent a milestone and 10 year highs.

  • Stocks, Gold & Dollar Commentary April 15, 2019

    Stocks
    Just when it appeared stocks were to finally undergo an over-bought selloff of some significance — in the wee hours Friday morning — Chevron decided it was finally ready to go shale big-time, and offered $33 billion for Anadarko, sparking another flight of madness, as stocks gapped higher, led by the New Economy sector, which recorded a decade closing high. The gain, however, came to only a half percent (from the previous Friday), bringing the 15 week run-up to 23%. With a 7 month low in Weekly Range, and the 2nd lightest volume in 6 months, a Bearish Weekly Squat was recorded. With technicals bearish and volume extremely light, (remember late September) stocks are vulnerable to any drop-off in economic expectations, which will be coming out in droves the next two weeks. The initial decline should not exceed 3.5%, followed by a good bounce, with SPY Fib support 281.99. SPY Fib resistance 291.
    Gold
    Gold had an erratic week, tacking on $20 by mid-week (1310.50) then falling back to settle 1290, slightly down for the week. The shares (XAU) fell 1.4%. Spot support for the metal 1281 – 1271, with a break-out coming around mid May on a strong close over 1360 spot. The shares need a monthly close over 78.05 to run to 3 digits. SLV support 13.90. A giant Bullish falling wedge formation is forming in SLV. Look for a strong Daily close over 14.40, to break out of the top of the wedge, for a move to 14.74 and 15.69 Fib resistance.
    Dollar
    The greenback was down slightly all week, registering a 3 week closing low (UUP 25.96). A strong close under UUP 25.73 could get ugly, as it would appear ready to violate a H&S bottom formation, targeting UUP 25.38.

  • Stocks, Gold & Dollar Commentary April 8, 2019

    Stocks
    In an amazing 14 week bull run, stocks have gained 22.5%, but still within the bounds of the 24% rally after the 2007 – 2009 crash. Seven straight up-days, powered Friday by a fake news Jobs Report (196,000 job gains while full time positions plunged 190,000???) have taken SPY (288.57) somewhat close to exceeding the neckline limit (290.61) basis the Daily chart. To put an end to the rally, look for a SPY close under 286.42 on Tuesday, April 9. Failing that, expect more upside after an over-bought relatively minor setback. We had expected the New Economy sector to seriously falter — which was the remaining piece of the puzzle — to indicate an impending top. Unfortunately, this did not happen, and is now less than 1% from new all time highs. SPY Fib support 279.28. SPY Fib resistance 289.41.
    Gold
    After an early bounce to 1297, spot gold retreated in choppy trading, making a double bottom 1280.50 on April 4 (matching low of March 7), before settling 1291.40. Expect important low mid April followed by mid May breakout. Spot support 1281 – 1271. GLD Fib resistance 125.89. In the meantime, the gold shares re-asserted leadership of the group with an 8 month high vs the metal. Our Upside/Downside volume studies remain extremely bullish for the shares and should lead the group higher, once the metal pushes through major resistance (Monthly close spot over 1360). SLV needs strong close over 14.36 to turn Daily trend bullish. SLV Fib resistance 14.74. XAU needs Monthly close over 78.05 to seek 3 digit levels.
    Dollar
    The greenback was little changed on the week after challenging 6 month highs UUP 26.12. (Actual high 26.10. A strong close under 25.72 turns our 89 line trendlines lower, and bear phase for the Dollar.