Monday Morning Comments

I arrived home from vacation at 3am last night & will need some time today to catch up on the charts, reply to emails & update the trade ideas. Until then, here are a few things that stand out so far:

Regarding the broad markets, as of late last week, both the SPY (large caps) & MDY (mid-cap index) have triggered a death cross on the 50/20-day EMA pair with both the QQQ & IWM poised to follow, should those index tracking etf's experience any substantial downside this week. Historically, bullish (a.k.a. golden) & bearish (death) crosses of the 50/20-day ema pair have been a fairly reliable indicators in providing relatively early signals for intermediate-term trend changes in the US equity markets.

Although I've haven't had the time to look at every sector & commodity, the two that stand out so far are the financials (XLF) and crude oil (USO or CL futures). Nearly all of the top components of XLF have recently broken below uptrend line support as well as XLF. Personally I am short the financials, added to those positions today & will most likely add either XLF/FAS and/or some individual financial stocks as short trade ideas (BRK.B is already an Active Short Trade).

Shortly before I left town, I posted the two most likely scenarios for crude oil in this June 19th Outlook For Crude Oil post in which it was stated that "one could establish a short position here with a stop somewhat above or even slightly below the recent highs or the downtrend line off the May 6th lows, targeting either the bottom of the recent trading range OR holding in anticipation of a downside break of that range, which would likely bring prices down the 54.50 support level."

From there, crude oil did go on to not only fall back down to the bottom of the trading range but continued on to break below the bottom of the range at the end of last week, with crude futures (CL) current trading just above the 54 area. As such, this would be a good time to cover any shorts and with support on crude running from about 54.00 to 54.50, one could even take a long position in USO, UCO, or CL here with a stop set slightly below today's lows. I would only view that as a short-term bounce trade lasting a few days to possibly a week or two with an upside target of 18.90 in USO or roughly 56.25 in CL. Charts & additional updated to follow later.

2017-03-08T21:20:24+00:00 Jul 6, 2015 11:47am|Categories: Equity Market Analysis, Gold & Commodities|Tags: , , , , , , , |Comments Off on Monday Morning Comments