Market Overview

Pullback or Change in Direction?


There was a bit of a pullback (finally) and now there are bottom formations in the Dollar, TBonds, Gold, and Silver. The DSE is warning not to be short here for these markets. There may be a final thrust lower in the works, but the next major move in the markets should be higher.

For stocks, the next major move should be lower. They’ve completed a short term peak (or are about to) and there may even be a thrust to new highs in the near term (in the NDX for instance). In fact took a high confidence short in our NASDAQ Futures forecast this morning for a 315 point potential profit. The real time forecast is available to WaveBOOM members. This is the one position we are the most active at forecasting and the historical record is publicly available. We’ve recently updated the public tracker which now totals 11,058 points… at $50/point… I'll let you do the math.

Some of the things the DSE and ourselves are looking at include the VIX, who’s in the markets, and of course the jobs data.

VIX has closed above the upper Bollinger Band for the 4th day in a row, as of Thursday, which is rare. Typically, after a day or two above it, it closes back below it, triggering a short term SPX buy signal. In fact, the average VIX price over the past year was just under 15%, meaning the SPX was expected to remain within 15% of its current value within the next year.  THAT’S LOW!  Yesterday, it poked above 15% for the first time in 30 days.  That was the third time this year that VIX remained under 15% for 30 straight days.  Historically, this overly complacent condition leads to a 1-3 month phase of higher than average volatility, which is highly correlated with net selling action.

Who’s selling?  Corporate insiders are selling at a level that has only been matched a few times since the ’09 low.

The jobs data was just released, showing the jobless rate falling to 7%, as 203,000 jobs were added in November.  These (manipulated and meaningless numbers to the average Joe, whom is still living the economic disaster of a third world citizen) numbers show the economy is growing faster than expected for Q3, fueling fears of “tapering” starting before the end of this year.

Keeping the higher and lower view that the DSE is forecasting above in mind, here are what we are seeing unfold today.

  •  Stock index futures are sharply higher this morning on the news, but barely adding to overnight extremes in anticipation of this data being “good”.
  •  Gold spiked to a “tick” new low for the week, but reversed sharply, and is barely negative, while silver barely sold off, and should join gold in going green soon.
  •  Tbonds sold off sharply to new lows for the week, which also means the lowest prices since 2011!!!  Here too, prices reversed off that reaction, and are nearing the breakeven level, and likely heading higher today.
  •  Dollar spiked up, where it remains, and is threatening to make even higher highs soon.  This after it touched the lower BB and 50 dma yesterday.
  •  Euro is falling after yesterday’s touch of the upper BB.  

This type of analysis is covered regularly in our WaveThinking program.

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Markets Trading Ideas


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