Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
However, this fund is not like inverse ETFs; SDS, DXD, SOXS, QID, DUST, and so on.
Basic Materials is not ‘popular’. At least, not yet.
That means the fund is illiquid with larger spreads (bid/ask). In addition, it takes a good few minutes after each open for those spreads to calm down and narrow up.
It’s not for the inexperienced.
Summary:
As we’ll get into tomorrow, ‘normal’, is gone.
There’s not going to be ‘normal’ (a personal opinion) in the lifetimes of anyone reading these updates.
That doesn’t mean there are no opportunities.
Basic Materials, DJUSBM, is about to, or already has (potentially) started its downside reversal.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
At this juncture (2:40 p.m. EST), price action in GLD has verified the down trend and is pulling away; confirming that last week’s action was a major trap for the bulls.
Although not required by this site as there are no recommendations or advice, as a courtesy housekeeping notes are provided:
The DXD trade was exited at about break-even. Price action is moving too low (DIA higher) for continued maintenance on this trade.
A short position in the mining index GDX (Major Miners), was opened at DUST 18.86, when it bacame obvious that GLD was pulling away from the trend as shown.
Hard stop DUST, 18.45 (not a recommendation, not advice)
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
In the past three days, bonds (TLT) penetrated support and stopped dead.
Anytime a market penetrates support or resistance and halts, it’s an indication that something’s up.
Either the market‘s absorbing transactions at that level to continue on, or it’s a reversal about to happen.
With all that’s known on the short position by the speculators as well as another Van Metre report, bank lending standards, probabilities point toward bond reversal.
The dollar is already reversing higher. Gold has been viciously slammed lower and the overall market’s hovering at all time highs.
The Dow edged lower at the last session. This session in the pre-market (9:01 a.m., EST) it’s lower again at -1.94 points or -0.66%.
If the Dow (DIA) gets below the 290- area, it’s below resistance and another move higher may be difficult indeed.
We’re short the sector via DXD (not advice, not a recommendation). A new daily low for DIA will allow our position’s stop to be moved to DXD 13.49.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
It’s possible during the last session gold (GLD) received a final mortal wound to the hyperinflation argument.
Price action in the December contract (GCZ20) dropped over 100 points in a matter of hours.
A retrace is expected … it’s just part of market behavior.
However, even as gold edges higher, the Junior Miner’s, don’t seem too eager to follow suit.
Price action in GDXJ has risen just slightly with JDST down 0.50% in pre-market.
The dollar (UUP) has reversed as expected. It’s got a long way to go higher for any kind of test on wide, high volume action. Dollar higher, gold typically, lower.
The short position in the Dow (DXD) has retraced somewhat in the early hours.
As it stands now, the retrace is about 1/3rd of the overall gain thus far; perfectly acceptable.
The focus for the firm’s trading at this point is on the Dow and related markets. If the position is increased at these levels (and the analysis proves to be incorrect), it could be stopped out the same day.
So we’ll wait to add … for now.
Separately, it should be noted that every single market assessment in the previous update was correct:
GDXJ in up-thrust reversal condition … check
GDXJ finished at high on Friday, Monday’s typically down … check
Gold retraced to 50%, lower price action expected … check
Dollar in its own reversal set-up … check
Dollar up, gold down … check
All that list means, is at this juncture the markets are being correctly interpreted.
Those interpretations are being done intuitively and without indicators.
Intuition can be skewed by events unrelated to the markets. For now, it’s operating correctly and we’re going to focus on the Dow.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
Was that it?. Did we see the all time high in the markets, Monday?
The short answer of course, it’s not known.
The longer answer is, to go short the market at this point (Monday’s session) was a low risk entry; not advice, not a recommendation.
The inverse chart of the Dow, DXD (above) shows our initial entry. We’re green at the end of the day and have hard stop, GTC, at 13.32.
Tomorrow’s open could be a gap-lower for the Dow, that spends the rest of the session attempting to retrace higher. If so and depending on the behavior of that price action, it may provide an opportunity to add to the position.
Separately, the gold and related GDXJ, JDST had such sharp moves during Monday’s session that JDST was exited completely and yielded a gain of about 12%.
Gold is likely to retrace higher and possibly offer another low risk (short) position in the miners via JDST.
The trading actions are being directed by the market. It would be nice to have a slower more well behaved situation. However, that’s not the case and the trading response matches the market (price action) dictates.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
The Danger Point® 