NFTRH Update; Gold Stocks, Energy, S&P 500, Emerging Markets & USD

I want to update the charts from the last two updates (GDX, XLE and SPX) and also have some words about the markets overall.

GDX hit the first resistance level today.  This is a point for profit takers to take at least some of their profits, for would-be buyers not to chase, for hedgers to hedge, etc.  All the while, this is still technically a bear market rally.  I continue to think that GDX can make it to around 18 and HUI to 150, but I don’t think they can do it in one big gulp.

gdx

XLE is putting in a red candle and finally slowing up a bit.  It hit the top of the NFTRH+ buy area of 55 to 60.  As you know, I did  not participate and have no plans to chase.  I am not yet sure I’ll be buying a pullback either, because I am not yet sure what the USD is going to do (more on that later).  Still looking for 63-65 as a pullback level in which to consider buying.  But again, I want to see the macro market at such time.

xle

SPX popped earlier and eased by a teeny.  I am neutral on this index and the US markets.  As noted in the last update, risk vs. reward is not nearly as good as it was at the end of September.  People have asked when I would have a signal to go short again.  Well, I am not net short but have now shorted against some stock/ETF positions I still have open.  People who played the bounce scenario could consider some profit taking.  I don’t think SPX is going to take 2040-2060 and hold it without some turbulence.

The bears still own the intermediate trend remember.  So I am hedging now but willing to go net short pending coming events.  Old friend 2020 was hit again today.  Bears might scale in from 2020 to 2060 for a trade, but I don’t think the market is going to get really bearish in Q4 due to emotional ferocity with which the bottom was formed and tested.  That’s just the view right now and with new inputs flying in daily, we will update the scenario as always.  Frankly, cash is looking better and better as market participants get braver and braver.

spx

We reviewed the AAII data in the last update.  Individuals were firming their bull conviction as the rally has moved higher.  Here is a look at Sentimentrader‘s aggregated data graph.  Dumb money is following the bounce seemingly twitch for twitch while Smart money is fading.  As noted above, risk vs. reward is no longer favoring the bulls in the short-term.

smart and dumb money

This public post showed the US dollar and Euro.  USD in particular is key to many other markets and it has been weak and on the verge of making a bearish move.  However, it has not made a lower low to September and until it does, I’d have some caution on the dollar bear scenario (and thus commodities, Emerging Markets, etc.).  Speaking of which…

EEM has finally bounced to the projected shorting area of 36, hitting 36.26 earlier today.  I made good on my threats and took it for a short (against the leveraged bull fund EDC).  The leash will be short on this, especially if the US dollar breaks down.  But I am taking the shot now.

eem

See you on Sunday with NFTRH 364.  Have a great weekend!