A FORCE OF ONE
I am posting this Sunday night as there is a huge upward move in the futures happening. It remains to be seen if this move is sold overnight or tomorrow. We are extremely oversold, so even if we are going lower, a bounce is certainly overdue. Readers know I have legged into a long position in the SPY's, and that position was full as of Fridays opening, so now it is just a matter of sitting on the position and waiting to see what happens.
What I have displayed on the chart above is what Larry Williams named many years ago as the Jaws of Life. What that means is simply a formation that looks like Jaws, where you have sharply rising Bond prices along with sharply declining stock prices. This means lower interest rates happening with lower stock prices. The logic here is that money will flow to where the highest returns can be had, and in this case that would be stocks when rates get this low. A scenario like this happening at a time during the year when there is a seasonal up bias, as well as an election bias, should be about as good of a scenario for a stock rally as we could ever get. Will one happen, who knows. I like to bet on the favorites, and this would qualify, so I have to bet on the long side.
We are in such a news driven environment that anything can happen on a moments notice, but overall we should be in an environment where stock prices rise.
I did bail out of my Gold short position on Friday, I have to admit I just did not like the lack of follow through going down, and I also blew this not being short Silver instead, so I just lost my patience with it. I am now flat there having taken a decent profit out of that market. I hate logic like this but this is the world we live in now. If the stock market rallies, Gold is likely to rally and vice versa. When this did not fall out of bed when stocks did, that was not a good market reaction. All these are correlated together, so one being stronger than the mentor is not a good sign for continued declines in it.
I am still looking at Cattle for a sell signal.
I am still looking at Cattle for a sell signal. The chart below does not show anything that is a can't miss setup, but it is one I am watching for a short entry any day now.
I would love to tell you I have a ton of other setups for this week, but there are not that many. The reason for this is the title of the post. Everything is so oversold, with just an exception or two, so there are not a lot of trade setups. Since the whole world is keying off the stock market, I would expect in general to see a rally in most markets this coming week. Specifically RB looks good on the long side due to a ton of divergence in POIV.