Crude oil rallied 7 points today! remember my post from earlier this week on Monday, I said that my thoughts were that crude oil was in a bottoming process, huge rally today up over $7. The positive divergence finally played out.
Also see the USO chart, which is the crude oil ETF, notice that it rebounded right off support
Here's my post from Monday click here:
Here's a weekly chart of AAPL, it has formed what appears to be a text book bear flag pattern; notice how the MACD barely moved during the bounce that formed the flag. The flag measures to the low $500's, if this bear flag plays out, and AAPL pulls back to the low $500's, then I think AAPL will be a good swing trade long candidate for a year end rally.
Silver is at an important support area, click on the two charts that I have provided. Silver needs to hold this support area, otherwise the door could open for a quick sell off to the 19.5 - 20 area. However one could also view this area as low risk place to take a Long because your stops can be fairly tight - i.e. buying support.
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- The VIX / S&P 500 system also gave a sell signal last week, which as worked out well. Remember per the rules listed on the chart, the sell signal was generated when the VIX closed below the lower Bollinger Bands and then back inside the bands. The system has about 90% winning trades.
- Last week I posted the moon cycle chart, as you can see the market has had a healthy pullback since the last cycle.
- Here's an updated daily chart of Crude Oil, the Aug/Oct 2011 bottom is closing it and positive divergence is forming via the two RSI indicators at the top of the chart as well as the MACD. Bottoming is a process, I think crude oil is in the beginnings of a bottoming process. Otherwise in the short term the 13 EMA is resistance (green MA)
- The second chart is the ETF USO, the same analysis basically applies.
I have been pointing out to our BPT members for a long time now that commodities in general have been severely lagging relative to the general stock market for many months, which has been and is a concern of mine; let's take a look a few charts:
The first chart is a daily chart of crude oil; as you can see it broke down from a bear pennant pattern yesterday and sold off strongly today, the next major support is the Aug/Oct 2011 lows. Also note the very clear H&S pattern that was in place by April and early May, this was shown to BPT members in April and early May and has more than played out. Otherwise currently the next major support level is clearly the Aug/Oct 2011 lows marked via the horizontal black line
Next here's a daily chart of the CRB Commodities Index which is a composite of 17 various commodities and therefore gives us a broad view of the commodities market in general. Back in March we pointed out to our members the very clear H&S bearish pattern. Today the CRB index broke down from a bear flag.
The last chart shows longer term view of the CRB index. As you can clearly see, the CRB index has been in a major downtrend since April 2011.
In short, commodities in general have been MUCH weaker than the general market (Dow/SPX) for a long time. My major concern is that this is not simply because the US Dollar has been stronger, that's only recently been the case since late April. My major concern and worry is that the weakness we have been seeing in commodities is being caused by a world wide economic slow down, hence less demand i.e. simply supply side economics. Anyway this is definitely some cause for concern for the future, maybe we are heading for a world wide recession/depression eventually? Something to think about.....
As you can see, the market pulled back nicely from the Moon cycle, see my previous post from the other day.
VIX Bollinger Band System Post
Also the VIX sell signal for the SPX worked out great too. To be fair however, there was a lot of technical confluence there; for example the 1363 high represented a 61.8% Fibonacci Retracement as well
Also today the VIX closed back inside the lower Bollinger Band, per the system rules listed on the chart, this represents a sell signal for SPX. It doesn't tell you how long the trade will last, sometimes a few days, sometimes a major trade, however historically it's been about 90% accurate.
Otherwise remember that Bernanke speaks tomorrow and we have a FOMC meeting, what he says could spike the market higher or cause a sell off.
Here's a daily chart of the S&P 500 which shows both the full and new moon cycles, I've also covered this chart in the newsletters, you can find it in my weekend newsletter posted below.
Today the SPX closed right on the New Moon cycle date, will this produce a short term top? Possibly, at least lately the these cycles have tended to act as inflection points for the market.
Also remember that we have a FED meeting tomorrow and what Bernanke says will likely be a big catalyst for the market either causing a continuation of the rally, or decent pullback. Obviously if Bernanke doesn't make any mention of QE or other stimulus, the market will probably sell off.
- here's a daily chart of Natural Gas, even though it has a good week last week and follow through today, if this Inv H&S pattern pans out, it could have a long way to run, pattern measurement is shown via the yellow highlighted area via the height of the pattern added to the neckline
However I would be better if Natural gas pulled in soon near the Neckline and formed a higher low (as I show on the chart via the thin blue line), that consolidation would build up energy for a strong push higher. BOIL is the ETF that we like to trade.
$GOLD - Chart Link - here's the monthly chart of gold that I've shown in my newsletters. I think it's an important chart going forward, here's a short video explaining what I'm watching, click on the link below to watch the video
http://breakpointtrades.com/jing/2012-06-18_1343.swf
here's the option chain for BOIL, the premiums are very higher
for example one could buy the stock and sell the 39 call strike for $4.1 for a covered call.
If you thought that the bottom was in for Natgas and BOIL, one could sell the 30 puts and still get a buck even though BOIL is trading for over $38, could be free money. If someone was willing to buy BOIL at $34 on a pullback, you can sell the 34 puts for $2.24, anyway some nice premiums, and if it's put to you not big deal, you were going to buy it anyway.
Hello
everyone, this weekend I decided to combine both of our weekend
newsletters (General Market and Commodity) into one mammoth newsletter,
vs having two separate newsletters. Be warned, there is a lot of detail
here with about 80 charts!
You can view the Newsletter here.
Happy Friday everyone, here's my detailed newsletter, covering the market, commodities, GDX, and trade ideas. Also please consider taking advantage of our coupon below, this special offer expires on Friday evening, so there is only 1 day left!!
You can view the newsletter here.
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