The Right Way To Trade

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  • Category Archives Commentary
  • Stocks, Gold & Dollar Commentary August 5, 2019

    Stocks
    Stocks fell sharply for 5 straight days, almost reaching our projected decline line of 4% – 6%, (actual decline 3.9%) in the first salvo of a much larger sell-off to come. SPY now sits in a broad area of support, having touched our two 89 line trendlines which have merged. While the stock sell-off was broad-based, led by the New Economy sector, which registered an 18 day low, it paled in comparison to the 10 year Treasury, which collapsed 6% in one day, the sharpest decline in 4 years, to 1.832%. Over the next week, or so, we expect a good bounce, on light volume, to take SPY to 295.23 – 297.90, before the onset of a more protracted decline, which will start with a Weekly close under SPY 289, turning our trends lower.
    Gold
    Another wild week for the precious metal, which ranged from 1433 to 1400 (after the Fed cut rates 1/4 point) back to 1448, closing 1440.20, the highest close in 6 years. Spot gold is projected to reach 1670 (off the H&S bullish bottom formation) by the Fall 2019, at which point a major correction is likely. GLD Monthly Fib resistance 143, 153.15. The gold shares (XAU) surrendered leadership (at least for 1 week), after dropping 7% mid-week (XAU low 86.01) before snapping back to close the week with a minor plus sign. GDX Monthly Fib resistance 33.63, 46.37. Silver gave ground vs gold, falling slightly. The bull market in silver is underway, and we expect spectacular gains ahead. Fib resistance very near term 15.73. Long term based on our Monthly chart, SLV Fib resistance 26.19, 34.63. As discussed last week, the gold/silver ratio, as a first major stop, will drop to 60, as the bull market gets underway. With gold reaching 1670, at a gold/silver ratio of 60, silver would trade to 27.83.
    Dollar
    On the news of the Fed rate cut, and with the world scrambling to repay debt in Dollars, the greenback spiked to a 31 month high (UUP 26.79), then came off by weeks-end, only up slightly (UUP 26.59). Weekly close under 26.15 to turn trends lower. UUP 25.76 strong support.

  • Stocks, Gold & Dollar Commentary July 29, 2019

    Stocks
    With last weeks resurrection of the New Economy sector into new high ground, a severe market downturn is off the table — for now! However, our bearish outlook remains intact with the Transports still 7.5% off the highs. More likely from these all-time high levels, is a “garden variety” correction in the 4%-6% range, (taking back a chunk of the 14% rally over the past 8 weeks) which would take SPY to solid Fib support in the 290 – 284 levels. From there another test of the highs. This would take the market into the October time frame, where stocks again become vulnerable, as the New Economy sector breaks down. The Bearish Momentum set-up has been completed with last weeks rally, Upside/Downside volume and Market Breadth remain solidly bearish, with the lightest volume in nearly a year. A Weekly close under 289.53 turn our 89 line trends bearish.
    Gold
    To prevent a spike in gold over 1435, the banking cartel threw a voluminous amount of paper at the market on Thursday, driving spot from 1433.80 to 1411 and back to 1425 before closing 1418.30, down $7 on the week. The shares, following the metal, ran into Fib resistance (GDX 28.36) before falling back to settle 27.28. GDX Fib resistance 30.70. GDX Fib support 25.97. GLD Fib resistance 143. GLD Fib support 132.87. Looking at the shares longer term, using a monthly chart, the XAU shows a May breakout over a 3 1/2 year period from a Monthly Bullish Falling Wedge formation, projected to 113 this year, and 198 over 2-3 years. Turning our attention to the least loved and most manipulated precious metal, silver has started to wake up from a multi-year slumber. The gold/silver ratio has dropped from 92 to 86.5 the past several weeks. With our gold projection of 1670 this year, and a gold/silver ratio falling in the intermediate term to 60, silver would be projected to trade to 27.83. SLV Fib res 15.73. SLV Fib support 14.56.
    Dollar
    New high ground as the world scrambles for the Dollar (UUP 26.58). Weekly close under 26.14 to turn tends lower. 25.75 for support
     

  • Stocks, Gold & Dollar Commentary July 22, 2019

    Stocks
    Stocks declined 1.3% last week, finding SPY support 296.50 (actual low 296.70), bounced to 300.00, before closing near the lows. Friday’s action generated the worst bearish momentum in 7 weeks, and have finally completed the Bearish Momentum set-up we were looking for, and are now ready to go down. A final rally into a high day around July 31 is expected, as the Fed cuts interest rates. SPY Fib resistance 301.25. SPY Fib support 295.64, 294.82. A Weekly close under 288.26 turns our 89 line trends lower.
    Gold
    It was a wild week for the precious metal, with a $54 range (1399.50 – 1453) settling 1425. The gold shares continued to lead the group, gaining nearly 7.0%, and multi-year highs when compared to the metal. The cartel was determined to not let gold close over 1435, as that would have likely attracted managed money, and prompted a parabolic rise. However, the “genie” is out of the box, and after some corrective action, 1670 is in sight. (Target from H&S bottom formation). The fundamentals to hold gold for the very long term has never been brighter, as 40% of global debt yield negative returns, with U.S. debt heading there as well, in a low growth stagflation economy. Silver actually rose from slumber, and out-performed gold, rising 9.0%, with spot touching 16.55, and SLV 15.54, approaching Fib target 15.73. SLV Fib support 14.56, spot 15.51. GDX Fib resistance 28.36, 30.70.
    Dollar
    A volatile week for the greenback, as it held Fib support UUP 26.10, settling 26.29. Look for Weekly close under 26.10 to turn trends lower and 25.72 for support.

  • Stocks, Gold & Dollar Commentary July 15, 2019

    Stocks
    For the shorts, it was torture by a thousand cuts, as stocks eked out gains 4 days in a row — after a sharp down Monday — but in the end managed less than a 1% gain, on the lightest volume in 12 weeks. Stroked by Fed Chair Powell after 2 days before Congress, who left no doubt that the Fed was going to save the economy with an interest rate cut in July. With the incremental gains last week, the final set-up for Bearish Momentum has now been delayed to around July 24. The Transports lag badly, and are still 8.5% off the highs. The New Economy sector is now in overbought territory when compared to the Old Economy, and has still not gone to new highs. Market Breadth is weak with only 3% of stocks on NYSE registering new 52 week highs. The initial sell-off should find Fib support at SPY 296.50 for a bounce.
    Gold
    Another volatile week for the precious metal — which found solid physical buying throughout the week at support levels — ranged from 1386 to 1426.50, settling 1415. What we’re seeing is normal price action after the recent breakout above 1360. The potential exists for a parabolic move to 1670 during the Summer, triggered by an ultra dovish Fed. GLD Weekly Fib Resistance 143,00 153.15, 167.60. The gold shares (XAU) continue to outperform the metal, registering 48 week highs. Silver has lagged badly, controlled by paper short sellers, who sell just enough every day to contain prices. At some point, every ounce will be taken and the algos will lose control.  Near term Fib resistance SLV 14.74.
    Dollar
    We were one week early on a Dollar (UUP) reversal. Look for Weekly close close under UUP 26.11 to turn trends lower and Fib target 25.72 for support.

  • Stocks, Gold & Dollar Commentary July 8, 2019

    Stocks On the strength of the “ceasefire” between Trump and Xi, stocks rallied into new high ground, with a theoretical SPY high of 299.10 recorded in overnight trading on July 4. However, the dynamics of the confrontation of the trade war has not changed. More problems on the trade front are still ahead of us, which will help instigate a recession, and trigger the bear market. On the technical side, our Volume Studies remain bearish, the New Economy sector has not regained leadership, Market Breadth is still lagging — thus, all systems are go, once Bearish Momentum Divergences have completed their set-up — likely by July 17. The first level of Fib support SPY 291.40. A Weekly close under SPY 286.40 and the bear is well underway.
    Gold
    An incredible volatile week for the precious metal, thanks to a desperate banking Cartel, which caused swings from 1409 to 1382, back to 1435 (high) to 1387, finally settling 1400. However, the 5 year break-out cannot be stopped, and the gap on GLD at 128 will not be filled, as a potential parabolic move may be underway, with spot 1670 as a measured target, based on a H&S bottom formation. Taking a much longer view, the potential for gold is much greater. The last bull market, covered 10 years, and took gold from $230 to $1900, a factor of 8. The fundamentals this time are much more bullish, with debt levels in the stratosphere, and the global economy much less secure, a factor of 8 would take a gold reset to over $8000. Think Bitcoin $18000 and the price is more than reasonable once “gold fever” hits. GLD Weekly Fib Resistance 143.00, 153.15, 167.60. The gold shares followed the metal, ending the week with a small minus. GDX strong resistance 49 – 52, which is faraway but will get there on the gold move. Silver remains the PM step-child, controlled by the Algos. At some point, every last ounce will be bought and delivered before the Algos lose control. SLV Fib resistance 14.74.
    Dollar
    The truce on the trade front brought Dollar strength, (we were wrong) and the UUP promptly gapped back over our 89 line trends to bullish. At the onset of the stock market bear, we expect the Dollar to weaken. A Weekly close under 26.08 will turn the Dollar bearish.

  • Stocks, Gold & Dollar Commentary July 1, 2019

    Stocks
    Stocks will likely have a brief rally when the futures start trading Sunday night, on a Trump “blink” allowing Huawei to, once again, buy high tech equipment from American firms, in exchange for the purchase of farm products from the US. The farm vote is essential for Trump to get re-elected in 2020. The gains will be fleeting, with the US heading for recession. Our Upside/Downside Volume studies remain solidly in the bearish camp, despite the recent run-up. We’ve been waiting for Bearish Momentum Divergences to show up, and they have already, and will intensify after the July 4th holiday. Market Breadth is bearish and the New Economy sector is still 4% from the highs, and is still significantly off the highs when compared to the Old Economy. To kick-off the bear, look for a SPY Weekly close under 285.60. SPY Fib resistance 295.00, 296.44.
    Gold
    The metal continued its break-out week by trading to spot 1438, only to be bombarded, in what may have been a record volume of Cartel paper shorts, driving the spot price to 1399.50 on the low, before settling 1409. I repeat from last week: On an intermediate term basis, spot 1670 is a realistic price this year, which would fulfill a H&S bottom price target. Longer term, we expect to see 2500. Silver followed gold, with SLV clearing 14.16, turning our 89 line trendlines bullish. SLV Fib resistance 14.74 (spot 15.70). The gold shares added 2.5% to last weeks 8% gain, and show more than a 30% rise in 5 weeks. The perfect gold call option position going forward from here is a fully paid for junior gold corporation (or junior ETF) with proven reserves, highly leveraged to the gold price, (mining costs all-in close to current gold price) in a jurisdiction with international treaties, with history of rule-of-law. These stocks have never been cheaper when compared to the S&P. GLD Weekly Fib Resistance (which will NOT change) 143.00, 153.15, 167.60.
    Dollar
    The greenback (UUP) barely moved, closing slightly better (UUP 25.97). With China and the US back talking, there should be good movement (down) starting next week. UUP should find support 25.72.

  • Stocks, Gold & Dollar Commentary June 24, 2019

    Stocks
    News that Trump and Xi agreed to meet at the G20 in Japan on June 28 to discuss trade, drove the SPY to new highs on Thursday (SPY 296.44). On weakening Breadth, the SPY new high was not confirmed by the Transports, which remain nearly 1300 points from new highs, and the New Economy sector, falling short by nearly a like amount on a percent basis. As we suggested, stocks will need time to work off the bullish momentum, from what is now a 9% rally that started on June 3. This process of creating Bearish Momentum Divergences will need a few more weeks to complete. Once complete, we expect stocks to resume the bear market. A key level of support that needs to be broken on a Weekly close is SPY 284, for the bear to start in earnest. SPY Fib support 289.83.
    Gold
    The metal had a break-out week, soaring to 1406, settling 1399. GLD has a huge gap at 128, and it remains to be seen whether this will be closed right away. With the cartel still intent on suppressing gold, a retest of the breakout is a distinct possibility. On an intermediate term basis, spot 1670 is a realistic price this year, which would fulfill a H&S bottom price target. Longer term, we expect to see 2500. Silver followed gold, with SLV clearing 14.16, turning our 89 line trendlines bullish. SLV Fib resistance 14.74 (spot 15.70). The gold shares rallied 8%, and despite bullion strength, managed to register a 10 week high against the metal and nearly a yearly high against the Dollar.
    Dollar
    The greenback closed the week on a downer, (UUP 25.95) losing 1.4%, and closing under our 89 line trendlines, indicating a bear trend is beginning. The Dollar (UUP) should find support UUP 25.72 for a bounce.

  • Stocks, Gold & Dollar Commentary June 17, 2019

    Stocks
    Stocks topped last week after a stunning 7% run over 6 days, and should now spend a few weeks of sideways trading, bound by a range of 291.50 on the high and 283 on the low, until sufficient Bearish Momentum Divergences show, to propel stocks below our 89 line trendlines at 283 on a Weekly closing basis. Trading volume was at a 7 week low, and a Bearish Weekly Squat was generated. Market Breadth fell considerably and the New Economy sector failed to show leadership, closing on the lows for the week.
    Gold
    The metal traded at its highest level in over a year, but as it threatened a Friday close over 1360 on a Weekly basis (actual high 1358), pulling in all the trend-followers, the cartel bombarded the futures with paper shorts, driving the metal down $21 off the high, a bounce brought it back to close 1341. Spot should find good support 1320 (GLD 124.54). Gold is poised for a sustained upside breakout this Summer. The reason the metal found impenetrable support around 1266 has to do with Russia, China, India and Turkey, who continue to buy physical at a prodigious rate. The gold shares led the metal last week with an 8 week high when compared to spot. SLV tested the bullish falling wedge breakout (13.72) and are poised to clear 14.16 to turn our 89 line trendlines bullish. GDX Fib support 22.73.
    Dollar
    The greenback has held firm for the past 6 weeks, trading in a 47 point UUP range. (26.47 – 26.00). Closing 26.31. Our ADX is trending toward “big-move” level, and should break lower this Summer as gold heads higher. A Weekly close under UUP 26.02 will turn trends bearish.

  • 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.