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Commodities and stocks almost look ready for a rally or at least a relief bounce. The market is down over 5% and the normal pullback this year has been 4%. Using technical analysis and inter-market analysis we can see that the market is reaching extreme lows and this usually means we are only a couple days away from a rally.
I work with several market technicians as we all analyze the market a different way and share our work with each other to gain maximum insight on the broad market moves. We analyze momentum cycles, magnetic cycles, volatility levels, support & resistance levels, volume analysis and inter-market analysis.
Each of us has found a formula which works for our individual style of trading. And by combining our work we have found that we can collectively produce some very exciting trading signals for the broad market. We focus on leveraged index funds in order to take advantage of our insights. While nothing in trading is ever perfect, the analysis for timing the broad market is very exciting.
Here are some quick charts on where the market is trading.
US Dollar – Daily Dollar Price Chart This chart is a no brainer. The trend is down and trading at resistance. If the US dollar reverses back down we will see stocks and commodities move higher.
VIX – Daily Volatility Index Again, overall the trend is down and trading at resistance. As the saying goes “When the VIX is high its time to buy”. Just to be clear, the VIX is low compared to the previous highs set back in 2008 which was around the 80 level. But, if we want to keep things simple for the current trend then the VIX is high for our current market condition. The VIX moves in the opposite direction of the equities market.
DIA – Dow Jones Industrial Average ETF Fund Here is the Dow Jones index fund and it clearly shows that when investors are selling out of their positions and getting scared of a market collapse, volume rockets higher. When we see the price pullback to possible support levels and volume increases that is a time when we should be looking to scale into a long position for a bounce, such as now.
XLE – Energy Sector ETF You can see that the energy sector is very close to a support level and volume is high. With the US dollar about to reverse back down it will help boost this sector as it is tied in with commodity prices which rise with a falling dollar. I expect we will see a price gap lower and fill this area before moving higher.
GLD – Gold ETF Fund & Silver This chart has not changed much from last weeks report. We are getting the drop as expected this week. We could see the gap fill from early October before gold stabilizes.
Silver is in the same situation. Gold and silver move in tandem so we are waiting for a bottom before looking for a low risk entry point.
Commodity & Stocks Trading Conclusion: To keep things short and to the point, I am seeing momentum cycle lows as of today, magnetic wave lows today, and most commodities and indexes trading at support. These observations, coupled with the US dollar at a possible resistance level and market volatility spiking to an extreme high, lead me think a bounce is in the cards.
The market has had an amazing rally so far this year and I feel that we will have a solid year end rally going into Christmas. That being said, the recent sharp correction could form an ABC retrace pattern which means we get a bounce in the next week or so, then one more multi day sell off which will scare even more bulls out of the market. I am going to be scaling out of this oversold play quickly to lock in some gains while allowing a smaller position to ride for larger gains.
Crude oil fell more than $2 a barrel after a government report showed an unexpected increase in U.S. gasoline stockpiles and crude supplies rose to a two month high. Gasoline inventories climbed 1.62 million barrels last week, the Energy Department said. A 1 million barrel decline was forecast, according to a Bloomberg News survey. Crude oil inventories rose as imports advanced the first time in five weeks. Oil also dropped as the dollar gained against the euro.
“The gasoline number was a big surprise and makes people less optimistic about the economy and demand,” said Sean Brodrick, natural resource analyst with Weiss Research in Jupiter, Florida. “You are also seeing strength in the dollar, further weakening the oil market.” Crude oil for December delivery fell $2.14, or 2.7 percent, to $77.41 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $77.23, the lowest since Oct. 16. Prices have gained 74 percent from the end of 2008 and reached a one-year.....Read the entire article.
That is the big question on many traders’ minds as gold fell from a high around $1,070 to the lows seen on Tuesday.
In our new video that was shot at noon on Tuesday 10/27, we go into detail on what we think is going to happen to this market. We think you will see a refreshing view of the gold market and also the strategies that we’re employing to take advantage of the next big move in gold.
Just Click Here to Watch the Video and as always our videos are free to watch and there is no registration requirement.
Please take a moment to leave a comment and let us know where you think Gold is headed.
There is compelling evidence that we may have seen a top in the S&P index. In my new short video, I show you the evidence that I have found which may point to the fact that we are going to see a correction in this index.
While the S&P index needs to put in more work to create a major top, there are early signs that this may be happening. I think when you watch this video you will come to the same conclusion as I did in regards to this market.
As always our videos are free to view and require no registration. Please feel free to leave a comment to let us know what you are thinking about the potential top in the SP 500.
Crude oil was slightly higher due to short covering overnight as it consolidates some of Monday's decline. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near.
Closes below the 20 day moving average crossing at 75.48 would confirm that a short term top has been posted. If December extends this month's rally, weekly resistance crossing at 84.83 is the next upside target.
Tuesday's pivot point, our line in the sand is 79.39
First resistance is last Wednesday's high crossing at 82.00 Second resistance is weekly resistance crossing at 84.83
First support is Monday's low crossing at 77.97 Second support is the 20 day moving average crossing at 75.48
Natural gas was slightly higher due to short covering overnight as it consolidates some of Monday's decline. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. Monday's close below the reaction low crossing at 5.280 confirms that a short term top has been posted.
If December extends the decline off last week's high, the 62% retracement level of the September-October rally crossing at 4.970 is the next downside target. Closes above the 20 day moving average crossing at 5.581 would confirm that a short term low has been posted.
First resistance is Monday's gap crossing at 5.473 Second resistance is the 20 day moving average crossing at 5.581
First support is the overnight low crossing at 5.173 Second support is the 62% retracement level at 4.970
The U.S. Dollar was lower due to profit taking overnight as it consolidates some of Monday's rally. Stochastics and the RSI are turning bullish hinting that a short term low might be in or is near.
Closes above the 20 day moving average crossing at 76.16 are needed to confirm that a short term low has been posted. If December renews this year's decline, monthly support crossing at 73.39 is the next downside target.
First resistance is the 20 day moving average crossing at 76.16 Second resistance is the reaction high crossing at 76.85
First support is the 10 day moving average crossing at 75.65 Second support is last Wednesday's low crossing at 75.08
Crude oil was little changed around $78 a barrel in New York before a report forecast to show that U.S. crude inventories expanded for a third week. An Energy Department report due tomorrow will probably show that U.S. stockpiles of crude oil rose 1.5 million barrels last week, according to a Bloomberg News survey. Analysts forecast that supplies of gasoline and distillate fuel, a category that includes heating oil and diesel, declined last week.
“It’s overvalued and it may be time for a correction,” said Carsten Fritsch, an analyst with Commerzbank AG in Frankfurt. “The fundamental picture is bearish. Demand outside China is still weak and global stockpiles are ample.” Crude oil for December delivery was at $78.55 a barrel, down 13 cents, at 8:49 a.m. London time. Yesterday, it dropped 2.3 percent to close at $78.68 a barrel on the New York Mercantile Exchange, the biggest decline since Sept. 24 and the lowest settlement since Oct. 16. Prices have gained 76 percent this year and reached a one- year high of $82 a barrel on Oct. 21......Read the entire article.
The past week in gold, silver, oil, natural gas and the broad market wasn’t anything to write home about. We are seeing controlled profit taking which is making the market choppy. Many traders are getting very bearish on the market which is a good thing in my opinion. According to my market internals, sentiment and volume analysis we should get a shake out (sharp dip) which would make traders exit their positions before the market continues higher.
Some trader’s say we are in a bull market, others say we are in a major bear market. Either way the trend is up on the daily and weekly charts and companies are making money. Buying on over sold dips has been very profitable this year. Until I see things drastically change, this is my strategy for the broad market.
Lets take a look......
Crude Oil – USO Exchange Traded Fund Oil has been making a strong rally after breaking out of is multi month consolidation pattern. We are now looking for some type of pullback or test of breakout for another low risk entry point.
Natural Gas – UNG Exchange Traded Fund Natural gas is having some trouble breaking out above the multi month resistance trend line. Buying here is a 50/50 bet and I will wait for another entry point before putting our money to work.
Crude Oil and Natural Gas Conclusion: Overall, the market feels ready for quick snapback to shake traders out of profitable positions. I expect a resumption of the up trend as the market slowly creeps higher at a steady pace digesting each rally with sideways movement.
I know many people are shorting the broad market and that is not something I am willing to do yet. Until I see a drastic change, long positions are my bread and butter. Once the market does reverse, there will be plenty of time to play the short side using the Leveraged ETFs.
Commodities are taking a breather but with our support trend lines nearing I expect some movement this week.
U.S. crude futures fell on Monday, reversing direction as the dollar bounced off early lows and as Wall Street slumped after opening higher. Sources also said crude's earlier rise above $81 a barrel, which failed to take out the 2009 peak of $82 from last week, and mild U.S. weather provided pressure on heating oil.
The dollar rallied from 14 month lows versus the euro as riskier assets like commodities and U.S. equities fell. The dollar struggled earlier after an opinion piece in a Chinese newspaper said China should increase its holdings of euros and yen in its foreign reserves. U.S. stocks fell, dragged lower by materials and financial shares, erasing earlier gains.
"Crude is trying to consolidate and it's definitely sensitive to swings in the dollar," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut ......Read the entire article.
Crude oil fell below $80 a barrel as the dollar advanced from a 14 month low against the euro, reducing the appeal of commodities, and U.S. equities declined. Energy and metal futures dropped as much as 1.4 percent after the U.S. currency rebounded. Oil also slipped as the Standard & Poor’s 500 Index slumped on analyst downgrades that dragged banking shares lower.
“The strengthening of the dollar is shifting the landscape under the oil market,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. Crude oil for December delivery fell $1.55, or 1.9 percent, to $78.95 a barrel at 11:58 a.m. on the New York Mercantile Exchange. Futures have gained 77 percent this year. The dollar climbed 0.3 percent to $1.4957 per euro from $1.5008 on Oct. 23. It traded as low as $1.5063 earlier today, the weakest level since.....Read the entire article.
