This was wrote on 4/10/16 but I figured some of you could still benefit from this. If it seems to be helpful and is supported on the sub reddit I will do my best to post it Sunday on a weekly bases.
Market Overlook 4/11 - 4/15/2016
This week the S&P 500 and the overall markets are resting inside of a three week consolidation. With the large number of recent Fed meetings as well as more upcoming meetings, it seems the markets are being pulled in both directions. The S&P has hit highs of 2,075 and until it can break the 2,080 level it is still in an overall bearish trend. The key for this rally to turn into a reversal is for 2,072-75 to become support instead of resistance. From there the markets will be able to move forward. April markets are in full swing and I expecting to see normal to higher than average volume in the coming weeks as building excitement into earnings season. This season we should expect a number of disappointments around the market with a few key exceptions. Retail is an area with a number of overbought stocks that are just asking for reality checks. We were treated to a number of Fed talks last week, and as usual, nothing happened.The Fed was not very aggressive at all. In fact, they expect less growth and inflation. The Fed still projects for there to be two rate hikes in 2016. I belief and have for sometime that the Fed has far less effect on the market than they believe they do. When you consider the only interest rate they actually have access to is the Fed Funds rate, which is exceptionally short term, it’s pretty interesting that they feel they can influence 30 year deliverables with their inaction. The actual market reaction to Fed leader Yellen shows any market sentiment changes caused by a “Fed Talk" is temporary. These can provide some exceptional opportunities for nimble traders to profit from these market extremes. I hope any Fed news this week causes just as much two-sided action as always.
This is my short list on things I am following and watching for in the week ahead.
For SPX I think we are seeing a few critical things here. The very first is that the market is still in a bearish trend overall. Which is odd given the last few weeks. But since the all time highs we have seen lower high patterns and despite this recent run up we came up short. Market can’t seem to break the 2,080 levels continuing the bearish pattern. If you look closely we also have an overall lower lows pattern as well. We have not retraced that much so I would not call it a break just yet. The technical analysis here is pretty neutral as well. We have a lot of conflicting indicators. The first thing that looks bullish is the moving averages, In the chart you can see we have the 10 (green) and the 20 (orange) above the 200 SMA (dark blue). In addition the 50 (red) is really curling up now. What sets me off about the moving averages are that the 100 SMA (light blue) is still below the 200 SMA (dark blue). If you look back there has not been one sustained rally since the 100 SMA broke under the 200 SMA. If we also look at some of the indicators they are not looking that great either. The MACD is sloping down however, it is still above the 0 line and still has some decent divergence. The stochRSI is looking bearish. While it is oversold and can move to overbought, most decline will remain oversold for several days, so until it crosses above the 20 line, it is bearish. For SPX we need to look for two key areas for support at resistance. Look for support at the 200 SMA and resistance at 2,080.
Here are a few things I’ve seen from a Tech analysis in Commodities.
Up first Oil /CL http://ift.tt/23y9uST
From a technical analysis standpoint, oil is looking decently bullish overall.(FA on oil says we should be at $30 a barrel, but as traders/investors we play what the market is telling us and its clear the market wants oil above $36 for now…)If you look at the MACD is moving to cross above the 0 line and the stochRSI is moving up bullishly. It's moving to pass the 80 line where it would be able to really breakout. Oil was obviously in a massive downtrend and I am not calling a bottom. The upside I do think however is limited and a bigger short opportunity may be presenting itself. If we look closely, oil has been getting rejected at the 200 SMA (dark blue lines, circled area) all year long. It hasn't been able to break at all and was even rejected quite recently. With the bullish indicators it looks like a test for the 200 SMA is quite possible. Just keep in mind there really isn't anything fundamentally bullish about oil, it just looks good on a TA level.
Up next /NG: http://ift.tt/1UW7DFS
Natural Gas has been in a long uptrend and is looking quite bullish. It has been a "buy the dip" type of commodity lately. There are a few bullish things to notice here. The first is that the fast moving averages are all trending up. The 10 SMA (green) crossed the 20 SMA (orange) and just crosses the 50 SMA (red). The 20 SMA is heading towards the 50 right now as well. In addition, all three of those moving averages are sloping up and are heading for the 100 SMA (light blue). The MACD is well above the 0 line along with the fast MA above the slow MA. The stochRSI is also still quite bullish. It is heading for overbought which could let allow for it to come down to oversold but if you look back, all of its biggest runs are while its overbought.
While /NG is looking quite bullish I do have one significant concern. The main area of concern is the circled area. If you look closely, the setup is extremely similar. In the previous setup, the 10 crossed the 20, and then later crossed the 50. The 20 was heading for the 50 and then ended up breaking it; however, it was rejected quick and made new lows.
The chart is showing that we are now in a very similar setup as we are approaching the 100 SMA (light blue). It was previously broken but came down very quick and was rejected the next time it was faced. In addition, /NG is currently in a wedging pattern. You can see the movement is narrowing down and an outbreak is due soon. With all this adding up, it makes sense that NG would be in an outbreak pattern. Breaking the 100 SMA will be crucial to continue the trend up; otherwise, expect some decent movement to the downside. (Don’t forget warmer weather is on its way and could/will affect /NG)
Last but not least that shiny stuff...Gold /GC http://ift.tt/23y9uSX
From a technical analysis standpoint, gold is looking bullish here as well. There are a lot of bearish bets being placed on gold and gold miners; however, it has been showing strong support and has not broken support since the recent run-up. Not only that, we also have every single moving average now above the 200 SMA which is very bullish. In addition, we have recently had a wedge pattern break. There was a lot of downward pressure to the support but it had a big breakout towards the upside out of the wedge. With the MACD above the zero line and the stochRSI trending bullish, it looks like gold wants to run on this breakout. If it can bounce off the support of the breakout area it could start to make some real moves towards the 52 week highs. Gold seems to be potentially channeling so do not expect new 52 week highs without some sort of a catalyst. I also think gold is being helped by a overall “mood” of uncertainty still.
Things to look for in the week 4/11 - 4/15/2016 This week the biggest thing to look for is whatever comes out of the closed door Fed meeting. This was an unexpected meeting they say is under "Expedited Procedures”. This meeting is going to be on Monday and they will be discussing rates. No conclusions can be drawn from this per se; and for reference, the last time this occurred the rates were raised roughly one month later.
April expiration is two weeks away. It’s time to think about rolling your short options to the next cycle in May to collect some more premium and reduce your delta risk. Volatility has made a bit of a comeback as of Friday, but it’s more of a rumor at this point compared to the all-star stage-show it will be when it really comes back to play. And as a derivatives trader I have but one thing to say...Long live Volatility!! Bring me back to the promise land!
Submitted April 11, 2016 at 01:48PM by jsmithftw http://ift.tt/1StLgkB
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