I, for one, was caught a little off guard Friday by the strength of the bulls and the securities markets. Is it not true that the the EURO was up against the dollar as investors interpreted recent U.S. news as signs of weakening? As many countries attempt to devalue their currency, Ben hinted at doing the same with another round of QE. That can’t be good, can it? It’s supposed to stimulate bank lending, etc. blah blah, and somehow save us from deflation – we’ll see.
So, why then are investors buying up securities, all be it in low volumes, against that backdrop of a market that is floundering, at best? I guess we were all excited about the durable goods report – sure, it was ok, but the real morning move was supported by POMO. As soon as POMO ended, the market flattened out and volume trickled through the afternoon.
It’s an interesting paradox. Currency down, gold up, energy down, security markets on a big run. Seems all just too manipulated to me – likely propped up by the Fed for the move into November elections. Have you seen the moves in the big players like AAPL, NFLX, etc? Is that real? Didn’t the government just say they may have to step in again and print money in a desperate attempt to increase inflation and employment? Maybe I’m just a little pessimistic this evening 🙂 Can’t wait for earnings season to shed light on this topic.
Anyway, I digress… let’s look at the charts and see what’s on tap for next week. We play what’s in front of us, and worry less about the macro… although it is intriguing, isn’t it?
OK, the market summary is the same everywhere you go…
- we’re testing resistance after Friday’s move with oil and financial stocks lagging.
- The risk trade is on and all eyes are on 1150 on the SPX.
- Gold/silver are flying thanks to the dollar depreciation and the likelihood of more.
- The market leaders have had major breakout moves – AMZN, AAPL, NFLX, etc. etc.
And, as you know, the retail investor is participating a lot less in trading these days compared to a few years ago. What does that mean? It means the machines/banks/and those with highly liquid risk opportunity are moving the markets. So, for me to guess where we go from here isn’t wise, because the market is a little illogical right now, in my opinion.. we have to follow the moves from day to day.
After Thursday’s move down, I was pretty convinced that the sell-off had begun. Boy, was I fooled.
So, what’s next?
I have my eye on three aspects of the market this week.
- The news – there is lots of it coming. My gut tells me that the machines have pushed this market up so they can take good short positions knowing that the numbers won’t look good, but we’ll see. If the numbers turn out to be ok, this bull move could continue through October.
- 1150 on the SPX. If we break through, I’ll scalp the hell out of the market long and may even swing some positions as long as support holds. I believe there is some money on the sidelines waiting for this level before they go in.
- Gold – There is no reason to think that gold prices will come down much as long as the dollar flushes down the toilet. I’m really hoping for some kind of small pullback this week to allow me to take positions in some of my favorite gold/silver swings – HL and SLW. I’ll also look at some of the other higher beta miners. Adding on pullbacks seems to be the play, for now.
Before I wrap this up, here is a quick look at the SPX – I’m sure you’ve seen it a thousand times, but the resistance level is obvious and where the fun begins. Should be an interesting week. I’ll post another blog later this evening at topvacationspotsx.com with some stocks I’ll be watching if we do bust through resistance levels and possibly a few setups just in case it’s time to go short.