Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your mid-day market update for Thursday, the 13th of October.
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The light volume rally that exceeded everyone's expectations in the equity markets has finally come to an end. We were surprised, like many traders, just how far this rally extended. The major trends always win out in the end, and the major trend for the equity markets, the oil market, the silver market, and the Reuters Jefferies CRB index are all still negative longer-term. The long term trends came into play and proved how important they are in the scope of trading.
This morning I saw that Wall Street insider Raj Rayaratnam was sentenced to 11 years in prison for his insider trading. I'm all for putting people behind bars that break the security laws of the United States. The security markets have no place for individuals like this.
I'm also for putting incompetent politicians who waste our money behind bars. There should be consequences for their actions. When you have Senator Dick Durbin go on the Senate floor and say to everybody to pull their money out of Bank of America, it is an irresponsible statement and very dangerous for our fragile economy.
The reason Senator Durbin said what he did on the Senate floor, is because he cannot be prosecuted. Had he made that statement in a town hall meeting or any kind of public meeting, Bank of America could and should sue him. You can't have politicians denigrating businesses who are elected officials. Unfortunately, most of these officials have zero shame and certainly would not resign over something like this.
I hope you were able to catch our shows yesterday, at 1 PM and again at 5 PM, when we discussed how many markets could be under pressure today.
Here's the bottom line, nothing has really changed, the country and the world is in a heap of trouble and that just can't be swept under the rug and forgotten about.
Now, let's go to the 6 major markets we track every day and see how we can create and maintain your wealth in 2011.
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S&P 500 INDEX
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The low-volume rally we have seen since Columbus Day finally came to an end with the downside pressure that came in to the S&P 500 index. The long-term trend for the equity markets and the S&P 500 index is still on the downside. While this market is higher for the week, last week we closed at 1155, we still expect to see this market move down and test the recent lows. Intermediate and Long-term traders should continue to hold short positions in this index.
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Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = - 65
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Suggested S&P 500 Trading Instruments:
Non Leveraged ETF's: (Long SPY) (Short SH)
2 x Leveraged ETF's: (Long SSO)(Short SDS)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.
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SILVER (SPOT)
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It would appear that the countertrend rally in silver has come to an end with today's negative engulfing line to the downside. We mentioned this on the show yesterday and today's action confirms our belief that the longer-term trend is pushing this market lower. We believe that the markets are looking at silver as an industrial metal and if we are correct on the trend in the world equity markets, then silver should fall to around $20 an ounce. Our Chart Analysis Score just moved to a -85, indicating that momentum is picking up to the downside. Intermediate and Long-term traders should continue to hold short positions in silver with appropriate stops.
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Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trend = Negative
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = - 85
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Suggested SILVER Trading Instruments:
Non Leveraged ETF's: (Long SLV) (Short the ETF SLV)
Leveraged ETF's: (Long AGQ) (Short ZSL)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.
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GOLD (SPOT)
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The main difference between the gold and silver charts, is the long-term monthly Trade Triangle continues to be positive for gold. Gold is also showing a +55 Chart Analysis Score, indicating a trading range. Gold has reached the midpoint of the Donchian trading channel, which will probably halt its upward momentum for the time being. We would not be surprised to see this sideways action continue for another week or so. I think most traders would be better off just watching from the sidelines until the volatility subsides. Only long-term traders should maintain long positions with the appropriate money management stops in place.
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Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = + 55
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Suggested GOLD Trading Instruments:
Non Leveraged ETF's: (Long GLD) (Short the ETF GLD)
Leveraged ETF's:(Long UGL) (Short GLL)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.
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CRUDE OIL (DECEMBER)
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IMPORTANT ALERT: Please note that we are switching to the December contract for crude oil. The action in crude oil today signifies that we have more than likely put in an interim top for this market. A close in the December contract below $84 a barrel would be viewed as negative, indicating a move back down to the $80 a barrel level. Last Friday, December crude oil closed at $82.97. Let's see how it closes this week. Intermediate and Long-term traders should continue to be short the crude oil market.
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Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = - 55
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Suggested Trading Instruments:
Non Leveraged ETF's: (Long USO) (Short the ETF USO)
Leveraged ETF's: (Long UCO) (Short DTO)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.
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DOLLAR INDEX
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The dollar index is at the lower levels of the Donchian trading channel and is also in an oversold condition. Given the fact that the Chart Analysis Score is +55, we expect to see a rally and recovery most likely to the 78.50 level. We continue to be friendly to this index and want to hold long positions with money management stops. This index is coming from a large energy field that is capable of carrying it much higher. Intermediate and Long-Term traders should maintain long positions with the appropriate money management stops in place.
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Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = + 55
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Suggested DOLLAR INDEX Trading Instruments:
Non Leveraged ETF's: (Long UUP) (Short UDN)
Leveraged ETF's: (Long) (Short)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.
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REUTERS/JEFFERIES CRB COMMODITY INDEX
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The rally we have seen in this index has more than likely come to an end with today's market action. As we indicated yesterday, we felt the 310 to 315 level would be enough to halt this markets current rally. A move and close below the 308 level today, we would view as a negative sign and would expect this market to back down and test the 300 level. Intermediate and Long-Term traders should maintain short positions with the appropriate money management stops in place.
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Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = - 75
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Suggested REUTERS/JEFFERIES CRB COMMODITY INDEX Trading Instruments:
Non Leveraged ETF's: (Long CRBQ) (Short the ETF CRBQ)
Leveraged ETF's: (Long) (Short CMD)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.
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As always, we rely on our market proven Trade Triangle technology for catching the big moves.
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This is Adam Hewison for MarketClub and I'll see you tomorrow with my mid-day market update. Don't forget to enter for a free 1 year subscription to MarketClub on a HP WiFi Tablet.
All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub
Forget bloddy "bottom Line"
Dont mistake to belive as a reality to the illusion,
in forth comming Week, or Month or Quarter or Year,
You will find Fresh new and new bottom lines,
Untill Colleps will taken place..
Rasesh Shukla,
India.
Chartwise, SPY nosed above 122. Mission accomplished. Now let's see if it holds. 1st pivot point resistance is 132 on monthly and weekly charts. Ding-dong battle toward the close but the bulls prevailed.
Chartwise, SPY is now five days above the 55EMA. We could still swoon by the close, in which case all my positions will be stopped out (at good profits). But we are here after three previous assaults on the 55 that failed. There is still a strong area of resistance at 122. But we have already broken through two Fib retrace lines at 114 and 118 and we are currently right on the 50% retrace, from the July high of 135. That already makes this move a rally. It could be time to take half profits and it's certainly time to tighten stops. But if SPY can hold 122, the next target is 125 (63%). After that, it's to the moon, Alice.
Am I wrong Adam? Comments would be appreciated.
Have the Trade Triangle taken every one to the cleaner on the Oil and S&P 500 yet.... ???....
really now....
Hi Adam, just noticed that both the proshare short QQQ and ultrashort QQQ just popped a negative monthly triangle. Can you see a meaningful divergence of Nasdaq and S&P? Just wondering how you would reconcile these indicators with your bearish market outlook and negative S&P monthly triangle.
Many thanks,
Mike
I think your trade triangles are going to reset today.
Will make absolutely no sense why, but then again this market has been senseless for the past 3 years.
Oil has broken above its 50 day, which means $4 gas is on its way back.
Adam or Jeremy,
This is a general question - when a trade triangle signal is generated, do we have 3 days to action it irrespective of whether its a Monthly, Weekly or Daily triangle?
thanks
Christina,
It is best to act the day the signal is generated.
All the best,
Adam
Adam or Jeremy,
have trade triangles been back tested on those double and triple leveraged ETF's? If so, what was the result? S
Shannon,
The beauty of the Trade Triangles is that they are always on the chart. Once they are placed they are never removed. This makes it easy to back test it yourself.
Best,
Jeremy
Well at least there is some justice. The small investor usually pays the price when the fat cats start playing their games. Having dealt with Merrill Lynch, by way of a previous 401k, I take a great deal of satisfaction watching the fat cats pay the price for their crimes. I know what it feels like to be a victim. It doesn't feel good.
Unfortunately, your political commentary is usually dead right from my perspective. the most courageous politician i have read about in the last 10 years is Richard Sulik of Slovakia. I wish that we will be proven wrong. I would be glad to be wrong.
Adam,
I love your market commentary but keep away from politics and what politicians are saying! As for Dick Durbin, I would say if this is a free market and bank of America wants to make a profit then people will decide what to do with Bank of America and not what Dick Durbin or any Dick Durbin is saying. However, Bank of America is going down the drain and people should probably take their money out as soon as possible...
AG
Adam, I subscribe because I have the highest regard for your market technical interpretations, and I wish that you would leave political commentary to others.
Political comment encourages emotionalism, and emotionalism is something that you have advised is best kept at a distance from our market decisions. Dan N. - Houston
Dan,
Thanks for your feedback. What is unfortunate is that the political picture both here and in Europe now plays a major part in business and trading. UGH.
It is a fact of life and trading and the kind of world we are living in.
All the best,
Adam
God Bless you.
I think the selling is done for the most part. The VIX appears to be crashing, and I still expect a grind to 1260.
I would be curious how your trade triangles have faired in long term choppy markets like this.
It looks like we will test yesterday's high by tomorrow then down fall..
The reason it fizzled out yesterday is because I finally covered my short position... right at the top.
Rajaratnam gets 11 years. These poor whipping boys.Too bad GS and JPM get away with insider trading daily as their analysts leak upcoming upgrades/downgrades to their prop desks. Well, someone had to pay. I guess Rajaratnam convictions shows how competent the SEC is.