I think it’s important to take a quick look at this chart every now and then.
A short-seller’s worst nightmare:
Source:
Treasury Yields Quick Update (dshort)
Tags: $SPY $TNX
Expert technical analysis of financial markets by JC Parets
by JC
I think it’s important to take a quick look at this chart every now and then.
A short-seller’s worst nightmare:
Source:
Treasury Yields Quick Update (dshort)
Tags: $SPY $TNX
by JC
It feels like just a month ago that everyone had forgotten about what is possibly the strongest asset on earth. Tough to name many things that are sitting at or near their all-time highs. We put out a note at the end of July about how the yellow metal loses its sex appeal when it doesn’t do anything for a while. And that’s precisely the time that we should pay a little bit more attention.
At the time, the risk/reward was right up our alley. We said that if we started to break below 150 on the $GLD that we would get much more cautious. But that as long as it held, it seemed like a good entry point. Well, over the last couple of weeks, precious metals have been on a tear and $GLD has now broken above it’s downtrend line from last year’s nominal all-time highs.
This isn’t really complicated analysis. You guys that know me and read the blog know that I’m a pretty keep it simple stupid kind of guy. And that seems to work best for me. This is your basic support/resistance and trendline analysis. But when we add some momentum into the picture, our Relative Strength Index confirms the price action. RSI in the $GLD weekly chart has maintained its bullish mode and held onto the key 40 support level throughout the summer.
Gold looks solid here guys. I think 180 is in the cards and potentially much more after that. But let’s cross that bridge when we get to it.
Tags: $GLD $GC_F $NUGT $UGL $DGP $QO_F
by JC
I know everyone hates to hear this but we are all participants in a market of stocks, and not just a stock market. It’s cliché I know, but get over it. We always say Dow this, S&P that, Nasdaq, Russell blah blah. But each of these major averages are made up of a basket of stocks, whether they’re 30, or 100, or 500 or 2000 names. So when the averages are making new highs, we want to see the number of individual stocks making new highs increasing as well. When this number is declining in an up market, we know there is underlying weakness in the marketplace.
One thing that has me worried these days is the declining number of Net New Highs as S&Ps and other averages have continued higher. Stockcharts.com has a great tool with the ticker symbol $USHL that takes the number of New Highs in the NYSE plus the number of New Highs in the Nasdaq and then subtracts the new lows in both giving us the total of Net New Highs – Lows.
Look back at what was happening this Spring as the stock market was making new highs but the number of Net New Highs was deteriorating. Boom 10+% correction. Unfortunately we’ve seen similar action throughout this summer rally.
I know I’ve been pretty bearish short-term over the last couple of weeks, so this is something we’re watching that could change our minds.
Tags: $SPX $QQQ $DJIA $SPY $IWM
by JC
I was fortunate enough to spend a few days in Boston last week. My buddy Joe Fahmy and I went to the Miami/Boston College football game and had a blast. But what I did on Friday afternoon really took my breath away. Fidelity has this ginormous chart room that is absolutely extraordinary. I shared a few of the pictures on Instagram the other day, but here are all of them in full.
How cool is this???
Magazine Cover Indicator:
The biggest chart I’ve ever seen (The 1970s alone is bigger than my desk):
by JC
Time to rock and roll.
US Equity markets are struggling to start the Football Fall season. Not really all that surprised. Two weeks ago we saw a monster intraday reversal at key resistance levels in the major averages. We put out a note that afternoon before the market closed warning readers that short-term caution was advised for the next month. Sure enough, prices have been making lower lows ever since.
If you’re a candlestick guy like me, a day like that really sticks out. Those are some of the ugliest candles you’ll ever see and it literally creates a red flag:
I’m not sure that looking at bars and line charts would have given you that extreme of a signal. Individual candles really tell an interteresting story.
So going forward, I don’t think the time to buy this dip has come. Historically, on election years, US Equities tend to roll over and bottom out in October. We went over this phenomenon a few weeks ago and it seems to be playing out accordingly so far. I’d be surprised if these seasonal trends didn’t continue.
We’re still cautious on US Equities and we’d focus our attention elsewhere. There are other areas around the world trending better in the short-term.
Tags: $SPY $DJIA $QQQ
by JC
It’s the last week of summer and we’re not really expecting much. The final August work week is usually a snooze-fest. I hope I’m wrong, but probably won’t be. It’s just that time of year. So let’s not force anything if it isn’t there. As Ted Williams said, the most important thing is to get a good pitch to hit. Not mechanics. In other words, be patient and let it come to you. He also said that a good hitter can hit a pitch in a good spot three times better than a great hitter can hit a ball in a questionable spot. Think about that for a minute.
And with that, here are a few words of advice that some top technical traders have given us over the years:
They (traders) would rather lose money than admit they’re wrong… I became a winning trader when I was able to say, “To hell with my ego, making money is more important” – Marty Schwartz
To succeed as a trader, one needs complete commitment… Those seeking shortcuts are doomed to failure. And even if you do everything right, you should still expect to, lose money during the first five years… These are cold, hard facts that many would-be traders prefer not to hear or believe, but ignoring them doesn’t change the reality. – Mark D. Cook
The key to trading success is emotional discipline. Making money has nothing to do with intelligence. To be a successful trader, you have to be able to admit mistakes. People who are very bright don’t make very many mistakes. Besides trading, there is probably no other profession where you have to admit when you’re wrong. In trading, you can’t hide your failures. – Victor Sperandeo
There are old traders and there are bold traders, but there are very few old, bold traders. – Ed Seykota
Everything’s tested in historical markets. The past is a pretty good predictor of the future. It’s not perfect. But human beings drive markets, and human beings don’t change their stripes overnight. So to the extent that one can understand the past, there’s a good likelihood you’ll have some insight into the future. – James Simons
You have to know what you are, and not try to be what you’re not. If you are a day trader, day trade. If you are an investor, then be an investor. It’s like a comedian who gets up onstage and starts singing. What’s he singing for? He’s a comedian. – Steven Cohen
Don’t be a hero. Don’t have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead… my guiding philosophy is playing great defense. If you make a good trade, don’t think it is because you have some uncanny foresight. Always maintain your sense of confidence, but keep it in check. – Paul Tudor Jones II
Thanks guys!
Sources:
by JC
On Election years, the stock market tends to behave in a certain way. We come into years like this expecting a rally early on, correction in the Spring, new highs through the summer with a rollover that bottoms out in October and finally a year end rally that goes out at the highs.
So far, 2012 has followed this path perfectly. And it looks like that typical correction after the summer got going this Tuesday. Here is the chart showing what Election Years historically look like:
And as we can see, this dip is usually the one we want to buy. Not sure how low we can go for stocks, so we’re going to be patient. I think the action this summer has been constructive for some of the more aggressive areas. Defensive areas like Utilities, Staples, and Healthcare look scary here and I would want to touch them. I think this sort of action is solid and that helps with our longer-term bullish views. But we’re not there yet for equities. Like I said on Tuesday, there are other asset classes out there with better direction. And like I first mentioned on August 14th, Silver and other precious metals appear to be one of those. Go check out those charts both on an absolute basis and also relative to equities.
Don’t be shy to take the Dollar out of the equation
Source:
Can It Really Be That Easy? (Bespoke)
Tags: $SLV $GLD $SPY
by JC
That was a pretty big move in yields that we just saw. The gain was a quick 14% after crossing the 50-day moving average on a gap higher (see here). In total we witnessed a 30%+ move in less than a month. But then came the dreaded downward-sloping 200 day moving average putting a halt on the whole advance. At least for now.
In addition to the resistance from the slope of the longer-term smoothing mechanism, we also have to remember that key support from December through February right here at the levels. How could we not acknowledge that all of that former support should add to the supply right here? I think it would be naive for us not to recognize that some time is needed for both the moving average to at least flatten out and for some sellers to do their thing. And that’s OK.
It looks like after some time has passed, yields should continue higher and get up to the next resistance levels near 2.40%. That represents close to a 40% move from current levels. But I don’t think we’re there yet. I would wait for yields to chill out a bit, gather some composure and get ready for the next move higher. But not expecting much before Labor Day.
We’ll be looking for a move back above last week’s highs to signal that another major move is coming. But that should take some time. And again, that’s OK.
Tags: $TNX $TLT $IEF $ZN_F