Wednesday, January 27, 2021

VIX and Defensive Sectors React To Perceived Trend Weakness

Since early November 2020, the VIX has continued to decline and consolidate near the 22 level. Late in December 2020 and beyond, the VIX started setting up series high price spikes – which indicates a flagging downside pattern is setting up. You can see this setup across the recent VIX highs.

Additionally, the VIX has “stepped” higher, moving from lows near 19.50 to higher lows near 21.00. This upward stepping base is indicative of a shift in volatility. My research team and I interpret this data as a sign that trend weakness is starting to build after the strong rally that initiated in early November 2020.

Although we have not seen any clear sign that the markets are about to reverse or decline, this move in the VIX is suggesting that volatility is increasing. The high price “breakout”, yesterday, in the VIX suggests a flag setup is nearing an Apex/breakout point....Read More Here.

Monday, January 25, 2021

Technology & Energy Sectors Are Hot – Are You Missing Out?

One of the biggest movers over the past few months has been the recovery of the Oil/Gas/Energy sector after quite a bit of sideways/lower price trending. You can see from this XOP chart, below, a 44% upside price rally has taken place since early November, and XOP has recently rotated moderately downward – setting up another potential trade setup if this rally continues. Traders know, the trend if your friend. Another upside price swing in the XOP, above $72, would suggest this rally mode is continuing.

Recently, we published a research article suggesting a lower U.S. Dollar would prompt major sector rotations in the US and global markets where we highlighted the fact that the Materials, Industrials, Technology, and Discretionary sectors had been the hottest sectors of the past 180 days, but the Energy, Financials, Materials, and Industrials had shown the best strength over the past 90 days....Read More Here.

Tuesday, January 19, 2021

U.S. Dollar Decline Creates New Sector Opportunities to Trade

The weakness in the U.S. Dollar, which initiated after the Covid-19 peak in March 2020, has entered an extended downward price trend which is nearing a key support level near 88.33. One key consequence of a weakness in the U.S. Dollar is that other foreign currencies become comparatively stronger.

This transitional currency valuation phase creates an environment where localized foreign investments may become much more opportunistic than the U.S. stock market/sectors. Simply put, foreign investors will suddenly start to realize they are losing alpha in U.S. Dollar based investments compared to stronger, foreign currency based investments over time and move their capital.

Find out what this means for the US stock markets in my latest research report....Read More Here.

Friday, January 15, 2021

Our Custom Valuations Index Suggests Precious Metals Will Decline Before Their Next Attempt to Rally

My team prepares Custom Valuations Index charts to understand how capital is being deployed in the global markets alongside U.S. Dollar and Treasury Yields. The purpose of the Custom Index charts in this article is to provide better insight into and understanding of underlying capital movements in various market conditions. 

 Recently, we discovered the Custom Index chart shares a keen alignment with Gold (and likely the general precious metals sector). Let’s explore our recent analysis to help readers understand what to expect next in precious metals.

Weekly Custom Valuations Index Chart

The first thing that caught my attention was the very clear decline in the weekly Custom Valuations Index recently, as can be seen in the chart below. The second peak on the Custom Valuations Index chart occurred on the week of August 3, 2020. Gold also peaked at this very same time. This alignment started an exploratory analysis of the Custom Valuations Index and the potential alignment with the precious metals sector....Read More Here.

Wednesday, January 13, 2021

Review of our recent BAN trade in SILJ

After recently closing our SILJ BAN trade, I want to take this opportunity to dissect our trade, including the process of selecting the proper exit targets and protecting capital within a trade. The BAN Trader Pro strategy incorporates these same techniques automatically within the decision making process of generating signals and taking trades.

With our recent SILJ trade, we initiated the entry on the upside breakout in price on November 5, 2020 – near $15.50. This upside breakout move prompted a new BAN trade trigger with SILJ near the top of the BAN Hotlist, suggesting further upside trending would continue.

Of course, nothing ever happens 100% as expected... like the announcement of Pfizer's vaccine being 90% effective coming out only days after making the trade! The immediate downturn in price activity resulted in our SILJ trade staying below our entry price for more than 30 days. Read on to see how we still made money on the trade....Read More Here.

Monday, January 11, 2021

Revisiting Our October 23rd "Four Stocks to Own" Article – Part I

Just before the U.S Elections, we authored an article related to four stocks/sectors that we thought would do well immediately after the November 2, 2020 elections. The article highlighted how sector rotation in almost any market trend can assist traders in finding solid trading triggers. 

We picked four stocks from various sectors for this example....

AAL   American Airlines Travel/Leisure
ACB   Aurora Cannabis Cannabis
GE     General Electric Industrial/Specialty Industry
SILJ   Junior Silver Miners ETF Precious Metals Miners

When you review my Yahoo! Finance article from October 23 and the November 6 follow up article related to these stock picks, you will quickly see that all of these stocks exhibited similar types of technical patterns. They were all bottoming in an extended rounded bottom formation and had all started to near a Pennant/Flag Apex in price. Additionally, many of them, with the exception of SILJ, had set up a very clear RSI technical divergence pattern over the course of setting up the extended bottom in price.

My research team and I selected these stocks because of key expectations related to the post election mentality of investors related to various sectors. First, the cannabis sector had a number of new US states approve cannabis legislation – providing for an expected increase in business activity for the entire cannabis sector. Second, no matter who won the election, another round of stimulus was likely to be approved resulting in increased economic opportunity for companies like GE and AAL. The Travel and Leisure sector still had its risks as a surge in COVID cases could greatly disrupt future travel expectations. Junior Silver Miners was our “hedge trade”. If none of these other stocks started to rally, then Silver Miners would likely move 15% to 20%+ higher over time....Continue Reading Here.

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