"I am the danger" - Walter Hartwell White

October 21, 2014

Gold Miners

We keep seeing headlines about Japan buying stocks and the ECB buying corporate bonds and all of that.  So I took a long hard look at Gold Miners.   After doing some work, I took a long this morning in the highly speculative gold miners ETF JNUG.

We can see the recent consolidation has started working off a major oversold condition.  This thing appears to be a choppy mess, but surprisingly the 10D MA is curling higher.  I also find the RS downtrend break interesting.  Today's gap up is what i'm trading against.  There is clearly some resistance at 22 and above that there is room until we hit the falling 50D in the 23's.  It may be best to wait until 22 gives way.  

The weekly view shows the GDX testing 2013 lows.  Who knows how this plays out, but there are oversold conditions being worked off with the MA's still needing to catch up.

    Trade 'em well!  Thanks for reading

October 20, 2014


One emerging theme in the markets is the giant consumer tax cut via falling gas prices.  With this tax cut and the U.S. holidays coming up, Dave Chappelle says it best:

Women be shoppin'!

They be buying bags

They be buying product

They be shopping on the TV

They be using coupons 

They be buying their kids sporting goods

They be buying their babies toys

They be buying their favorite coffee

They be buying ugly shoes

They be buying for their pets

Men be shopping too!

They be fixing their cars

They be fixing their homes

They be buying hunting/fishing gear 

Imagine if we could knock gas prices down a little further?

I want to watch these consumer names as a tell on the group.  I look at the consumer/retail group as a directional toss-up.  We'll see if people really be shopping as we get closer to the holidays and get through earnings!

Trade 'em well

Some market thoughts

There is compelling evidence for both another sharp drop in the coming weeks and a meaningful bottom.  The weight of the evidence leads me to think we are headed significantly lower from here.  Or perhaps better put, i'm willing to miss fresh + trading opportunities to the upside for now, because the downside risk is unusually high.  Earnings complicate things as well from an investing standpoint.

Buyers Wednesday and Thursday did a fantastic job buying with a cushion.

The price structure in the indices are pretty fragile.  Last week's late week saves were impressive and saved some uptrends.  There are open measured moves significantly lower all over the place.  By the way, there were no price divergences on the recent low.

Right now there is very little in group relative strength analysis that supports any market bottom.  The price structures mostly suggest continued defensive positioning.  The one interesting space shaping up is housing and home maintenance.  That might be the most bullish thing I've seen this week.  Or it might just be a sign folks are taking that extra gas money to do necessary repairs on their homes.

Sentiment makes as compelling a case as any for this current bounce to be meaningful.  The Ebola story went from stable to completely out of control on a very small scale in just a few days.  If we measured the RoC of the story, momentum likely bottomed out at least near term.

The central bankers think they can keep the markets up, but the broad worldwide picture seems to indicate it's too late.  The law of diminishing returns has been in play for years now, and QE has been reduced to a crutch to keep the European bond market together.  That'll only last for so long.

Volatility is awesome right now.  If you lack conviction in stocks, you can play other markets.  Short Nat Gas has been a trade that I've shared on stocktwits.  The movement is spectacular with gap downs and rips during the day.  Also, the short yen trade looks pretty interesting.


All ideas shown on this blog represent the authors opinion based on the data available.