What are the U.S. Dollar and Equities Market Relationships in the Near Term

The SP 500 is likely to pullback from a 66 point rally off the 1343 pivots. Those pivots were right at a Fibonacci fractal retracement of 61.8% of the Summer rally. That rally ran from 1267-1474 as we all know in hindsight, and the correction was a normal correction within a bull cycle.

Near term, we had a nice run to 1409 and met resistance there. We would expect a pullback to the 1384 areas on the SP 500, if not a bit lower in the coming days. The US Dollar is likely to get a bounce which will also pull down Precious Metals along with stocks near term.

We think this could be a opportunity to buy as we approach pivot pullback buy points, but of course we will monitor in the event the pullback becomes more dire than expected.

Below are charts of the US Dollar and The SP 500 Index and potential near term movements to monitor. Over at our we closed out long positions in NUGT ETF with nice gains yesterday as well as stocks with trading profits while we watch the pullback action.

From COT staff writer David Banister

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Are the Utilities Bottoming?.....It’s the Season to Own Utility Stocks

Over the past week we have been keeping our eye on several key sectors and stocks for potentially large end of year rallies to lock in more gains before 2013.

Our recent calls have been RIMM (up 54%), AAPL (up 5%), FB (up 8%) so it’s been a great month thus far. That being said there are three other plays that look amazing and one of them is the utilities sector.

Looking back 30 years clearly utilities have a tendency to rally going into year end. What makes this setup so exciting is that the Obama tax for 2013 has caused many investors to lock in capital gains along with dividend gains so the utility sector has recently been beaten.

We always like to cheer for the underdogs because they can make large moves quickly and this season its utility stocks.

30 Year Seasonality – Utilities Stocks



Utility Sector ETFs:

In the graph below we show the main utility ETFs for trading. Simple analysis clearly shows the selling momentum is slowing and where price should go if it can breakout above the red dotted resistance line. Exchange traded funds XLU, FXU, IDU, and DBU are the funds we found to be setting up.



Utilities Sector Trading Conclusion:

While we feel utilities are about start moving higher it is important to mention that the broad market is setting up for a 1-3 day pullback. If the stock market does pullback this week then we should see utilities pullback also. What we are looking for is a minor pullback in XLU with price holding up above $34 while the stock market pulls back.

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Dollar tell us Stocks are Likely to Pullback – Simple Analysis

The stock market is at a very critical pivot point which I feel will generate opportunities in December and for the first quarter of 2013.

Trading with the trend is not always an easy task. It is human nature to predict and jump to conclusions and usually it’s better to trade with the trend no matter what your emotions are telling you. The current trend is down and I stick with that until we are proven wrong.

If you carefully analyze the charts below you will understand where we are trading in the market and what the risks are at this point. The question is are in the middle of a trend reversal back up, or is this just a bounce within a down trend? Either way, any pullback this week should be aggressively managed to lock in gains and tighten stops because it could go either way and you do not want to be on the wrong side of the table.

The chart below shows the US dollar index 4 hour chart. It looks as though we should start to see a bounce this week and that should put pressure on stocks and commodities.

The SP500 (SPY etf) below that shows my analysis and key price levels. I took a short position on the SPY Friday afternoon as I feel a pullback is imminent. That being said, all I need is one big down day and I will be pulling money off the table to lock in gains and tighten my stop.

For a detailed educational lesson on stock market cycles read my mini course "The Golden Nugget That Makes Traders Wealthy Trading"



My trading charts make reading the market simple, quick and precise so if you want this type of analysis and trade ideas delivered to your inbox every day including my Pre-Market video analysis then join my newsletter here at The Gold & Oil Guy.com

Chris Vermeulen

Why the S&P 500 & Gold Rallied in the Face of Negative News

The amount of negative news that we have seen recently has been mind blowing. Europe is going into recession, Greece and several other countries are on the verge of bankruptcy, the Middle East is a powder keg, and the U.S. is facing a fiscal cliff. Shockingly for most retail traders, the past week has produced a very strong return for U.S. equity indexes as well as risk assets in general.

Retail investors often times consistently lose money because they focus on the financial media and all of the negative news that is out there. Trust me, as a longer term trader and investor, there is never an absence of negative news or potentially poor economic possibilities. This is not to say that markets cannot decline, investors just need to understand that markets are cyclical in nature and do not ever move in a straight line.

Based on what I was reading from most of the financial blogosphere recently, you would think that the entire world was about to end. A few blogs were calling for an all out collapse late last week or a possible crash this past Monday, November 19th. As is typically the case, the market prognosticators were wrong with the calls for a crash or an absolute collapse in financial markets.

Unlike those blogs, members of my service at the Traders Video Playbook were getting information indicating that we were expecting higher prices. At our service, we lay out regular videos covering a variety of underlying assets from the S&P 500 Index and oil futures, to gold and treasury futures. The focus is purely on analysis of various underlying assets across multiple time frames. We cover intraday time frames as well as daily and weekly swing time frames throughout the week with videos and written updates.

To put into perspective what we were seeing in the marketplace on Monday November 19th, the following charts were sent out to our members during intraday trading that day....Click here for "Why the S&P 500 & Gold Rallied in the Face of Negative News"

See you in the markets,

J.W. Jones

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Markets are Cyclical in Nature....Make sure you know these "Four Stages of Stocks"

Our good friend and trading partner Chris Vermeulen has put together an article detailing his classic economic theory that dissects the economic cycle into four distinct stages..... expansion, trough, decline and recovery. And he explains in detail why a stock is no different, and proceeds through these cycles.

Knowing this information is crucial to survival as this cycle happens on all time frames (1 minute chart all the way up to yearly charts). Harnessing this information for trade selection and timing greatly reduces the amount of trades you take, while focusing only on new leaders which have massive upside potential.

So take a few minutes and click here to read Markets are Cyclical in Nature....Make sure you know these "Four Stages of Stocks"

Natural Gas Trade Idea....Buying in the Trenches Pays Off

Recently we wrote about Natural Gas ETF UGAZ on the ATP Free Blog site as a sample of buying the dip or using the “cup with handle” dip buying for profits. Our November 11th article discussed waiting for a pullback to the 30-31 ranges on UGAZ and then going long for a reversal.

Within 48 hours the dip came into the buy range, and within a few days UGAZ ran to the $38 range for as much as a 24% reversal trade gain. Even now some 9 days later UGAZ trades around $36 per share for nice gains.

Another sample we had for subscribers was on November 7th in RIMM stock. We advised waiting for a pullback from 9.15 ranges to the 8.50-8.70 ranges. When the pullback came this is what we sent to subscribers:

ATP Active Trade Alert

RIMM- 8.64 has fallen as projected in to the 8.50-8.75 swing entry buy ranges.

This is an active trade meaning 1-5 days likely and a stop should be placed at 4-6% below your entry and NO LOWER than 8.00 for aggressive partners who take the trade.

Now on November 20th, about two weeks later, RIMM is trading near $10.00 per share. The stock fell to 8.14 during the market correction which was above the $8.00 stop and above a 6% stop loss range from entry. Partners who remained long would now be sitting on gains of 14%.

Consider joining our Swing Trading service we call Active Trading Partners and get education, advice, and on going daily updates. You will also receive our Market Trend Forecast service which covers Gold, Silver, and the SP 500 short and intermediate forecasts.

Go to ActiveTradingPartners.com and subscribe by using coupon code AD499ATP in the coupon code field at the bottom of the sign up form. Sign up for quarterly and the discount will be applied at checkout, and you will get The Market Trend Forecast for free as well.

Market at Risk of One More Leg Down in November

There is nobody better in the industry at predicting market sentiment then David Banister. And he was kind enough to share a call on the overall market before the holiday weekend. Here's why Banister thinks the bulls are in for another punch in the gut before the end of the year.....

The SP 500 declined a perfect 61.8% Fibonacci retracement of the summer rally from the 1267 lows to the 1474 highs. In our work we examine human behavioral patterns, sentiment, and Elliott Wave patterns to help with clues on market direction. To be sure, there is no such thing as a perfect technical analysis methodology, so we do our best to mix up a home cooked recipe for assistance in getting as close as we can to calling the pivots up and down.

In the near term, we notice the market has rallied out about 45 points off the 1344 pivot lows last week to around 1390 today. This retracement marks a normal 38.2% Fibonacci recovery of the most recent wave 3 decline to 1344. Typically, this is a wave 4 mini-bullish pattern as washout lows get bought and then shorts cover fueling the rally a bit higher. However, this is often when another sledgehammer comes out of left field and knocks the market down in what we would call a “Wave 5” decline to new lows on the downtrend.

Investors should watch both the 20 day moving average which is declining and around 1392 or so, and the 1388-1392 38% Fibonacci retracement areas for resistance. Only a strong close over 1392 can eliminate the potential for one more leg down to the 1316 areas on the SP 500 before the month of November comes to a close. With that said, we expect a rally in December for the markets and hope to see this barrier taken out soon, but would advise traders to tread with caution until such time.




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Stunning Accuracy of key tops and bottoms, rallies and corrections in silver, gold and the SP 500 with 3-5 weekly updates. Includes regular daily forecast updates on the markets and precious metals that are outside the box.


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Keep Your Eye On Trends & Reversals..... SPY, RIMM, KOL

Today our trading partner Chris Vermeulen gives us some trades to keep an eye on....

The equities market technically still has another day of positive momentum behind it and with a short holiday week higher prices are favored.

This morning in the video I mentioned how oil continues to look untradible because of the sharp news related swings and lack of clear chart patterns. Yesterday it rallied over 2% and today is back down 2%.… Steer clear of this beast…

SP500 (broad market) continues to grind sideways/higher today. Volume is very light which bodes well for lower prices in the coming days. I would love to see a Pop-N-Drop tomorrow which is when the index gaps higher at the open into a resistance zone at which point we would be looking to get short (buy the SDS).

Research In Motion shares hit our first resistance level after being upgraded this morning…. Buy the rumor sell the news…? If you are long taking some money off the table here is smart play and to move your stop to break even or better.

Coal sector is looking tasty today and we may take a long position in KOL, but I will update if I do so.

Chris Vermeulen

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Did Speculators Bail Too Soon on Natural Gas?

From Stephen Schork of The Schork Report....

Last Wednesday, Thursday and Friday spot CME natural gas futures tested the 2011-2012 Fibonacci 62% retracement at 3.806 (continuous contract), and each time the market closed its session below 3.800.

The bull’s latest rallying cry is last Thursday’s weekly storage update in which the EIA reported the first delivery of gas for the winter. However, as noted in the The Schork Report on Friday, a delivery at this point of the season is not unprecedented.

Be that as it may, after natural gas prices troughed in late August and peaked in the middle of October, open interest for the CME futures had declined by around 5%. Thus, the market has set ammo aside that can be (and perhaps already is) employed to push the market higher.

From the perspective of the term structure, the contango on the balance of winter strip to next summer narrowed from minus 0.111/Dth to minus 0.060/Dth last week. What’s more, as illustrated in today’s issue of the The Schork Report, weather for two-thirds of the country favor the bulls through the end of this month.

Did Speculators bail too soon on natural gas?

Per Friday’s CFTC report, the futures position in CME gas for producers rose by 5.4% to 40,101 net shorts. Over the last two months the short position held by producers has doubled. On the other side of the ring, the futures position in CME gas for speculators narrowed for a fourth straight week. As of last Tuesday, money manager’s length fell by 5% or 5,999 contracts, while their shorts dropped by 2½% or 3,936 contracts. As a result, their net position in the market has morphed from 43,045 longs (which was their 11th longest position recorded since the CFTC began disaggregating the data in 2006) to 2,583 shorts.

As far as this week’s technicals on the CME go, bids through last week's 3.830 high print clear a path towards $4 and our 4.005 weekly inflection point. Above here we will look for momentum towards our 4.220 upper limit. On the other hand, offers through last week's 3.650 midpoint alerts to follow through weakness towards our 3.575 lower inflection point. Offers below here clear a path towards our 3.360 weekly limit.

To receive a complimentary copy of today’s FULL research note, request a complimentary trial at www.SchorkReport.com. Please put CME in the source code field.

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Transocean Releases Fleet Update Summary

Transocean (NYSE: RIG] today issued a monthly fleet update summary which includes new contracts, significant changes to existing contracts, and changes in estimated planned out of service time of 15 or more days since October 17, 2012. Backlog for new contracts or extensions associated with continuing operations since the October 17, 2012 fleet status report is approximately $1.1 billion.

Estimated 2012 out of service time for continuing operations increased by a net 25 days; 2013 out of service time decreased by a net 39 days. Estimated out of service time on rigs classified as discontinued operations increased by a net 93 days for 2012 and decreased by a net five days for 2013. The net increase in out of service time for discontinued operations for 2012 and 2013 includes 86 days to complete repairs on the GSF Key Hawaii.

Click here for other highlights from the report

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