Who will win the battle between the bulls and the bears that is raging in the equity markets?
This morning when woke up I did what I usually do - check the pre-market prices. I saw that all three indices were down over 1% for the day. It would appear that 1-2% swings are rapidly becoming the norm in the month of December.
I will be watching the RSI indicator closely today. If you are not familiar with this indicator we have a short video that explains how it works and how you can best benefit from it. I will also show you in today's video why I'm watching this indicator and where the trigger point will come in on the major indices.
Crude oil hit my downside target of $37.50 this morning and is now trading just below the $37 level. The market action is pushing prices to the lowest levels in six years and many traders are asking themselves, "Is there a bottom to this market?" I now expect the $40 a barrel area, which previously acted as support, to now act as resistance for any rallies. I expect to see some upward bounces as technically the market has little momentum to go even lower at this particular time. Later on that could happen, but for now I think the downward push is close to being over.
I think that the current two or three day pullback in the euro is over and I expect to see the US Dollar begin to slip further against this currency in the weeks ahead.
The current setback in gold is to be expected after the sharp run-up last Friday. I have been focusing on the Market Vectors Gold Miners ETF (PACF:GDX) and I believe that GDX should find good support around the $14 level. This ETF has pulled back to an RSI support area and I expect that level to hold.
Looking at Smart Scan this morning I see that there are 307 stocks that are in long-term bullish trends and 932 stocks that are in long-term bearish trends. That is a 3 to 1 ratio in favor of the investors and traders who believe the market is headed lower. Something to think about if you are long the market.
December is definitely the month to be cautious in and I want to repeat that mantra today. Be cautious in these markets, they are volatile and trading volume is thinning out as the holidays get closer.
Stay focused and disciplined.
Every success with MarketClub,