alice

NFTRH; Market Update, Post FOMC & BoJ

Who among us is surprised?  Volatility, noise and emotion close out another policy and media intensive week.  I continue not to see much of a stray from the view of the last few weeks.  Here is NFTRH 413’s ‘Wrap Up’ segment, which itself pretty much carried forward the theme from the previous week.

nftrh 413 wrap up segment

One notable item is that Treasury bonds are getting bid after becoming over sold.  So yields are dropping as they would if people were seeking ‘safety’ and liquidity.  We’ll look closer this weekend, including yield curves, etc.

As to the items covered in the ‘Wrap Up’, I do not see the daily chart breakout in the Nasdaq 100 (currently exciting momentum oriented TA’s) as a show stopper for the continued correction case in stocks and our target of SPX 2100 +/-.  NDX has not closed September above that level and there is a chance this could be a big, macro whipsaw.  Here’s the monthly…

nasdaq 100 monthly chart

While I continue to hold big tech in the form of Cisco and Intel, I also give weight to the idea that NDX is in a really wide-swinging uptrend channel, and the daily breakout to new highs is contained by the upper trend line.  Food for thought.

ndx daily chart

So I am still holding out the possibility that the S&P 500 sees the 2100 area or lower in the near-term.  While NDX above is dropping and filling a downside gap, some other suspects actually popped hard on FOMC in order to fill upside gaps.  Here’s SPX daily.

spx daily chart

On to our friends the gold bugs, we projected HUI bounce potential if FOMC rolled over.  FOMC rolled over to no one’s surprise, and the gold bugs (or momentum players, casino patrons, black boxes, etc.) rammed Huey upward through the EMA 50, but short of the ultimate ‘bounce’ parameter at the SMA 50.  All remains as it has been; the best support area continues to look like the 180’s to 200 based on the SMA 200 (now 198), the weekly EMA 55 (not shown, now at 203) and long-term lateral support.  There is still a chance Huey can bounce to the top green channel line, but I’m not putting more money on that chance unless I get an inkling (like the one noted Wednesday).

hui daily chart

As for global stocks, I released China (FCHI) this morning, deciding not be be greedy with some pretty good gains.  This joins EEM and AAXJ as former global holdings that I am going to keep my eye on going forward.

As noted, I tried the NatGas sector with FCG and will keep that on the leash as per the NatGas/UNG/FCG parameters noted in that update.  Here’s UNG, which came right to the noted 8.60 area today.

ung daily chart

In the last several NFTRH reports I made a pretty big deal about cash levels and while I did some trading this week, I am ending the week back in high cash mode.  That is one player acting according to his style and needs.  I don’t tell other people what to do because I don’t pretend to know what the market is going to do.  But so far this nimble attitude has worked well. I don’t trust the market right now and so it will not get my risk capital.  If we think beyond any given noisy week we can realize that gains are made over time because markets only show their hand over time.

In short, the goal continues to be to protect the majority of 2016’s gains and be ready to buy other peoples’ pained regurgitation of stocks when the time is right.  The main area of interest continues to be the gold sector, but this correction is the first significant one and it could be a bit drawn out.  The reason I did the update on Wednesday was because I sensed they were going to bull the sector but I wanted us to have readily viewable parameters about what constitutes ‘bounce’ and what constitutes a real rally and bull resumption.

Current cash levels are 88% in the brokerage account and 94% in the Roth IRA.  Trading holds a couple shorts.  I took a loss on the IWM short per the ‘above the MA 50’ parameter but yesterday added short against Ultra Bull Russell 2000 fund URTY (still could not get shares to short on TNA).  I’ve also taken up with my old friend, a straight non-leveraged short on SPY.  As for the miners, I only hold 3; KLDX, PG.to and SAM.to.

If I am wrong to be guarded now the market will give me plenty of opportunity to say to you “sorry guys, I was a bit of a sissy”.  It will also give me time to adjust.  But right now, as the lame clown shows known as FOMC and BoJ ride off into the sunset, I think the market needs to prove it is not going to further its short-term correction potential.  That means getting above Thursday’s highs, and that includes the gold stock sector.  If it does that, fine.  If not, fine.  That’s exactly how I am positioned to feel right now.