alice

NFTRH; Market & Trading Notes

A few notes at mid-week.  After getting the dual signals on gold (ref. my crude cycle chart and the CoT report data in NFTRH 428) and labeling gold in a developing positive risk vs. reward situation, I decided to buy back SAND and BTG at around the same prices I sold them last week as part of the year-end general profit taking I undertook to give myself a conservative starting point for 2017.  But I also shorted NUGT today as an overseer of these positions.  If the miners break the channel upward I’ll likely get rid of NUGT.  But I’d like to try to hold it through the Payrolls report on Friday.

Below is how the GDX chart sits at today’s close.  Little has changed other than GDX closed above the SMA 50 for the first time; a very minor positive, considering the low volume.  The reason I bought a couple preferred gold stocks is that GDX is above short-term support at 21.50 and the previously mentioned improvement in the risk vs. reward for the sector.  Again, that does not mean bullish; it just means bull potentials are greater than bear potentials in the coming months.

I still think there is a pretty decent chance the sector can test its lows or even make new lows.  But a break of the channel to the upside would tip the odds to a try for the SMA 200 and the 25 area, near-term.  With a failure, I’ll try to go net short or simply sidelines.  With a breakout, net long.  All the while, until the correction is broken to the upside or the sector gets wiped out, I am viewing gold stocks as just another play in the market.  A break of the channel would turn the daily trend up, but the upside marker to a confirmed new bull phase is the 26 area and a would-be ‘higher high’.

gdx

I’ve also added a few non-precious metals stocks, SQM, AMGN and JNJ.  So far markets seem to be breaking upward with a renewed risk ‘on’ backdrop.  It is not surprising because whatever happened during the low volume 2nd half of December was going to be suspect.  I thought it could be bullish (Santa seasonal), but instead it faded and this week we have the reaction.  I covered the short against the Financials because while the recent rise in Treasury bonds (decline in yields) does not help them, their Q4 results have benefited from rising yields and I decided not to be standing there short in the event they start announcing a rosy picture.

Here are the charts of my ‘adds’.  They are not recommendations but they are interesting daily charts that I have decided to use in reestablishing longs (along with the likes of the Medical Devices ETF and the bombed out TEVA, as noted in NFTRH 428).

Here is what I saw in AMGN; a clear break above resistance that contained it on 2 previous occasions.  RSI and MACD are positive.  The measured target is noted by the arrow.  The stop loss is below the red dotted resistance line down to 146.  If the market holds up near-term I think this has a good shot at filling the gap and hitting the target.

amgn

JNJ is sneaking along the rising SMA 200 in a flag-like thing.  MACD and RSI are positive.  We’ll see.

jnj

I added SQM to a new multi-panel ‘resources and materials’ chart that will be included in NFTRH reports and thought ‘what the hell, let me go check the chart in detail’.  Here is what I found.  It has been hanging around the SMA 50 after giving back all of its gains from November.  I added it yesterday as it jumped but faded in-day.

sqm

SQM then popped a bit but is not overbought and could be a good play on continued economic strength, much like VMC (also included on the multi-panel chart), which as you know I’ve been watching and noting for weeks now.  TECK is included on the multi-panel chart as well.  We did an NFTRH+ ‘look ahead’ on it several weeks ago and it is making the projected downside progress.

Generally speaking on the market, I am just trying to give a picture above of how one faulty human is trying to manage it in the short-term.  There are obviously a lot of inputs just ahead.  A jobs report, a presidential inauguration, Q4 reporting season and an economy and markets that are now expected to be positive.

It won’t be as easy as setting it and forgetting it, which is why I hold long-term Treasury bonds as a counter balance.  If we work through Q4 reporting and all still seems rosy, we’ll need to take note of the over bullish backdrop, the penchant for 1st term Republicans to oversee difficult markets in their 1st year, a tightening Fed and pervasively positive expectations baked in.

Meanwhile, even during the Reagan bull era, the start was negative.  As noted recently, if the market is positive to begin the year I’ll have a trader’s mentality and a general March/April time frame for ramping up the risk management and potential bearish trading.  Here is the Reagan-Trump analog.

trump and reagan