Category: Trades

I took a small loss on the SP500 trade.

The small caps were not confirming a strong thrust higher in the US markets. My hesitation proved to be correct. Intermarket analysis saved me from taking a bigger loss.

Natural gas is experiencing a classic short covering rally. This is when the shorts take their profits. In a bear market, the open interest decreases and the price increases.

The bottom in natural gas in the beginning of August, coincides with a top in open interest. This is an indication that natural gas maybe experiencing an intermediate top. With a 25% increase in price, it needs a correction. I still have a long position in natural gas, but I reduced my  position and took some profits.

All the general markets with the exception of the small caps looks ready to challenge their all time highs. I took a small long position in the SP500.

I entered the SP500 at 2970 with a stop at 2939 and a target of 3072. I also opened up a position in Vanguard 500 Index Fund in the performance tab.
My hesitation is the small caps which have a neutral/bearish look to them.

Crude oil turned down Friday keeping it bound by its descending triangle.

This indicates to me that it wants to challenge its 50$ support. With horizontal support levels, I have the “three times and your out” outlook. It tested the 50$ price in June and again in August. The third try will be reveling. Fundamentally, I think crude is a buy at 50$ and a sell at 70$, but I will let the market paint the picture for me.

The British Pound looks like it wants to make a double bottom.

A break of the 1.2 support will most likely send to its 1985 low where it almost traded at par with the USD.

The USD is slowly grinding up.

A clean break above the 103 level will be extremely bullish. No doubt the political class will try to “talk it down” if it breaks this level. Mr. Mercantilism will give us more tweets like this as the dollar rises:

Crude looks like it wants to test the $50 support level.

It has been forming a descending triangle since it topped in April. A look at the front month contract shows a daily close below $50 and crude will test $40.

$40 has been good support for crude. Depending on price action around the $50 level, I might consider going long. I will definitely be a buyer at $40.

I am closing out my gold position Sunday night.

Every investment podcast I listen to is talking about how gold is a good investment. The COT is indicating we are approaching an extreme in market sentiment. This is about the time a correction comes. A pull back to the 1380 area looks likely.

Palladium is possibly forming a double top. Depending on how the second top drags out, I will most likely go short with a break below the 1300 level.

Dow Jones trade got stopped out for a small loss.

The US market is overbought. The SP500 companies trading above their 50 day moving averages have flat lined. This is a sign to me that the market wants to correct. I have closed out most of my position except gold and natural gas. I will add to my gold position if it drops into the 1405 range.
The Fed cut the federal funds rate and the IOER. This is bullish. However, the market looks like it wants a reason to correct. The fact that it was only 25 basis points gave it a reason. I believe this correction will represent another buying opportunity.

The Dow Jones is set to make a weekly closing above its all time high.

On the fourth try, it broke its resistance and it is targeting 30,000. I went long at 27,167. I placed my stop at 27,020. This is a very tight stop and I risk getting whipped out by volatility. Looking at the price action though, it feels as though the Dow is going to slowly ‘melt up’.

Gold has formed a classics head and shoulders bottom that has been 6 years in the making.

For the past six years, there was nothing to be said about gold from a technical analysis perspective. Gold is about to have a weekly closing price well above its former resistance level. The bear market in gold is over. Within the next few years, gold will make a challenge to its all time high.
In the short term, far to many cheerleaders are coming out of the woods and jumping on the gold band wagon. A pull back to 1380 is likely.