It's Friday... Are you in or out?

It's Friday* and a day when many traders are considering how to deal with their positions over the weekend. How comfortable or uncomfortable are you going home with a position? There are some strategies hinged on this notion, one of which we discussed in a very popular earlier video which you can click here to watch.

During the week you continually have rumors, reports, and market action as well as a host of other things that affect the market. I consider the close on Friday to be the most important close of the week. It provides invaluable insight into what is going on in the markets as well as an easy way to analyze the market.

This is what I do, I write down the previous Friday's close in the markets that I am interested in. For illustration purposes today I'm just going to include five markets. They are: S&P 500, Dow, NASDAQ, gold and crude oil.

Last week the closing numbers on Friday, June 4th were as follows:

S&P 500 -- 1064.88 (-100)
DOW -- 9931.97 (-100)
NASDAQ -- 2216.30 (-70)
Gold -- 1219.40 (+85)
Crude oil -- 75.45

If a major trend is in place, but the market on Friday is moving in the opposite direction, there could potentially be a reversal in the works for the coming week.

If one looks at our "Trade Triangle" scorecard, you will see that for the equity markets we are still showing a -85 for the S&P 500 as well as the Dow. The NASDAQ on the other hand is registering a -75.

As of right now the only negative index compared to last week is the NASDAQ. Crude oil is also down for the week and gold appears to be higher than last Friday's close in the spot market.

Gold, which at the time of this writing, is the same for the week at +85. Crude oil is lower for the week at +60. A +60 reading indicates that the market is in a trading range, lacking any strong direction.

I hope this helps you understand how the markets work and how important it is to watch how the markets close on Friday.

Have great weekend.

All the best,
Adam Hewison
Co-creator, MarketClub

*This post reflects market conditions as of noon EDT on Friday, June 11th, 2010

28 thoughts on “It's Friday... Are you in or out?

  1. Ralphie,

    Thank you for your feedback.

    If you go under Smart scan in market club you can easily find 52-week highs. It is one of the choices that you have. You can also find 52-week lows.

    I find both of these scans to be very useful in trading.

    All the best,

  2. Not sure whether this has been asked. If so, apologies.

    Is there a mechanism to quickly identify all 52-week highs and lows on a friday? Stocks, futures, options, currencies, commodities? or do you have to search them out one by one?

    Thank you.

  3. Jeff,

    That is a really hard question - since the information needed to answer it - at any moment - is restricted to the Ivy League Goldman Sachs Club that controls Wall St. with the government's blessing. Its not in the financial news or on the ticker.

    In this environment both fundamental or stochastic analysis can be dangerous, no matter how well executed or fact-based. US financial markets - at their core - are purely politically motivated - as in, political self-preservation of the current administration - regardless of party.

    My best guess is that whatever is short-term expedient to buy votes (prop the markets, slow foreclosures, modify loans, guarantee bad paper) will continue.

    They will purposefully destroy the US dollar over the next couple of years (how do you sell underwater assets? Answer: devalue the currency), they will keep interest rates artificially low, (the Fed will print money and buy Treasuries as they did last March to set off this "rally"). The Fed will buy stocks if needed to head off any major corrections (see last March or the Russian ruble crisis).

    I intend to diversify out of the US dollar to the Australian dollar, the Brazilian real and perhaps selected Asian currencies over time - on dollar rallies. Commodities are another asset class that the US government can't fully maniplulate - again, buying on pullbacks.

    Buy distressed real estate - when it approaches replacement cost - especially if you can get financing at these absurdly low rates.

    I'm also watching Treasuries - when the fear hits the markets, I would try to buy TBT - eventually the world will tire of financing our debt at artificially low rates.

    And, as last March, when panic hots the Dow or NASDAQ, start buying - the government will ALWAYS bail out their buddies - and try to reduce voter panic. It will come at the cost of the dollar and the debt for future generations of Americans.

    Until something changes politically - as in, the voters understand the game and the consequences of the con - the same cycle of asset bubbles will continue.

    Mostly importantly, I would just say examine ANY investment with the knowledge that the government and politicians will "fix it" if they can. You can be dead right in your chosen method of analysis and get killed by the government's manipulation.

  4. Hi Adam

    Nice video as always. Is this rule just for commodities or can it be used for equities, bonds, etc. Also does the inverse of this rule work as well ie can you short a 52 week low and expect it to open lower on the following Tuesday.


    1. Sham,

      Thank you for your feedback.

      I believe it works better on the Forex and commodities markets. The inverse does hold true, that is if the market makes a 52 week low the chances of it being lower on Monday are pretty good.

      All the best,

  5. I've held Gold Miners for over 8 years and Gold ETFs for 4 years plus. They (ETFs) make up 85% of my Pension. I believe the price will continue to rise (its never linear) towards $2k, after that who knows but the more the Central Banks print the more it will rise and silver is under valued!

  6. What did we learn last year, folks?

    Its a completely rigged game - the government (ie. the Fed) will step in and do whatever it takes to prop up the market. And all other assets. It will devalue the currency as needed, suppress interest rates and undercut the price of gold. Nothing has changed in Washington. if another crisis "arises" bet on the same scheme.

    Shorting is playing against the house. You may make a bit in short term but you'll eventually get ripped off by the Feds.

    There is no "fundamental" market - its a political market - as in, Washignton buying votes with your retirement and your grandchildren future.

  7. Don't be fooled by upcoming rallies, overall markets worldwide are showing signs of significant rollover in coming months, very possible to test July 09 lows, maintaining small short positions from here, maintaining long position for gold as more quantitative easing will increase later in the year.

  8. Hi

    I was wondering if we can a apply the same rule for a 52 week low close on Friday and go short that they and cover the next Thuesday?

    Thanks for you advice


    1. Gerardo,

      Thank you for your question. The answer is yes you can go short on a 52-week low and cover Tuesday.

      All the best,

  9. VTR is looking strong....thinking about getting in. Short goog and a bit concerned based on end of day strength into close.

  10. I think the market has a leg up in the short term. The February low has been tested and quickly bounced up which is a good indication for the bulls.

  11. I am long BSBR.
    P/E 10 and earnings improve qoq by reduction in NPL and loan losses
    25% capital ratio (Twice the regulatory limit)
    Market cap = shareholders' equity (Low valuation criterion)

    5% GDP Growth
    40% debt/GDP
    Budget surplus
    FIFA 2014
    Olympics 2016

    Good luck to all. Be sure not to buy what the crowd is buying and not to sell what the crowd is selling.

    1. I have been long gold since it was at $400 an ounce with some of my money (long term investment) and I trade it to. I might consider exiting it when it gets to $2000 or higher, I will have to wait and see what's up at that time.

  12. I'm short but at a distance. I've been selling call option spreads which will tolerate sideways or even an upward creep. For instance I sold the 115 call for JUL and bought the 117 call for a credit in SPY. So this position will allow for quite a pop, it'll decay in value over time and even the contraction in implied volatility works tremendously in my favor.

    I have similar postions in FXE, FXC, RIMM and PCLN.

    These positions allow me to sleep easily over the weekend and during those days during the week when I am busy with my day job.

    1. Don't worry. Be happy your short.

      The overall market along with commodities is headed lower in the immediate, intermediate and longer term.

      Below are some of my targets:

      Dow - 8500 (summer's end)
      S&P - 900 (summer's end)
      Gold - 1400 and then 900 (1st qtr 2011)
      Soybeans - 800 (July's end)
      Dollar Index - 84 t0 83 (by July the 4th)

      Take it or leave it the world is going to heck in a handbasket, so be ready to profit from it!

    1. I went short based on the 100 trade triangles with a "strong downtrend driven by market forces and insiders". Now after a 300 point rally I should be ready for a reversal next week because of the negative 75 triangle set. Time to hedge!

      1. The market has a tendancy to rally when we are approaching a triple witching Friday. The Thursday of the week before that "triple witch" is usually the time to be in or get in to take advantage of some profits. Not withstanding some ugly news the S&P will rally another 10 to 25 points by the June triple witch options expiration Friday. After that it's a guessing game as they are trying all they can to hold this puppy up, but definetly the last half of July or August it is over and down we go. The house of cards will fall, and please don't get mad with me if I am off by a month.

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