I just wanted to share my current thoughts and positioning on the markets as we kick-off the trading week today. Ten days ago, I posted that with a few exceptions, my positioning was very simple: Long metals, short equities. Then on Thursday of last week, I posted booking profits on the last of my metals & mining stocks (even reversing to a small short position), with the intention of most likely adding back my long exposure to that sector in the near-future. I was asked today by a follower of the site my thoughts on adding to the ANR long trade, which recently triggered an entry on a break above the downtrend line & is backtesting that trendline today, to which my reply (cut & pasted) was:
I agree that ANR looks like an objective add-on or new entry here as it backtests that downtrend line. However, my own preference is to avoid buying back any of the mining or metal stocks right now. I still think the sector needs a little more time to either consolidate (chop around) for a while or possibly even pull back quite a bit more. That may or may not happen but I just feel better being out of those stocks right now & even still have a very small short on the sector. Remember though, I’m a very active and aggressive trader so if you’re looking for a longer-term swing trade, a partial or even full position in ANR with the appropriate stops in place may very well work out. (end reply)
Again, these are just my thoughts at this time & could change at anytime. I’m still net short equities by a wide margin and with numerous short trade ideas already posted on the site, many still offering objective entries, I will also strive to add select long-side trade idea in order to keep some balance, such as the NLY long posted earlier (which I personally took across multiple long-term accounts and even a small position in the trading account for a possibly quick bounce trade: about a 1-4 weeks expected holding period).
Since the large gap down in the US markets on Thursday, we have seen the markets follow-up to the downside which helps to solidify the case that we may have put Island Cluster Reversal Patterns in place on most major US indices. It is also worth noting that the 20-day ema on the SPY is now pointing lower, which is one of the early indicators of a trend reversal (from bullish to bearish). However, this is a relatively “fast” and simple trend indicator which is fairly prone to whipsaws although the 39/13 & 26/13 ema pairs, which are less prone to whipsaws, are very close to signaling a new short-term downtrend on the daily frame as well (they will likely cross on any close at or below current levels in the SPY). Taken together with longer-term bearish technical posture of the daily & weekly $SPX/SPY charts, I continue to believe that the odds favor additional downside in the US markets in the coming weeks and favor a short equity bias at this time (or neutral/cash for those not comfortable with shorting).
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