Is The Stock Market Bull About To Become Hamburger?

The Fed talked a tough game yesterday about possible interest rate increases. Interest rate sensitive sectors got stampeded today threatening a possible end to the 7-year charge. We look at some key market setups and option trades for the next move...

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Plan Your Trade, and Trade Your Plan,
Todd Gordon

All Aboard The Gold Train

Yesterday, the Trade Triangles issued a green weekly Trade Triangle for gold. Gold (FOREX:XAUUSDO) now has three green Trade Triangles indicating that it's ready for the next upward leg in this long-term bull market.

As I have pointed out before, this quarter is the highest-rated quarter with an 83% success rate for gold trades using the Trade Triangles. Let me just be clear that this does not mean that this particular trade is guaranteed to be successful, but the odds are heavily in your favor.

I've added two charts below, a daily chart and a quarterly chart to illustrate the last time gold was in a prolonged bull market. That bull market started in Q1 of 2009 and continued for 11 quarters ending in April 2011. On the quarterly chart, you will see that every quarter for those 11 quarters the market closed higher than the previous quarter. If that same scenario plays out again, gold has 9 quarters to go.

Quarterly Chart of Gold (FOREX:XAUUSDO)

Key To Quarterly Chart

1) The start of the 11-quarter bull market
2) The RSI indicator moves to its highest levels in 3 years
3) Gold is 2 quarters into a long-term bull market

While the quarterly chart gives us a view of the big picture of how gold has acted in the past, the daily chart shows you how to use the Trade Triangles. For intermediate-term trading, you use the weekly Trade Triangle, which we just had a signal with yesterday, as the trend indicator and the daily Trade Triangle for exit and entry signals. If you are a long-term trader, then you want to rely on the monthly Trade Triangle, which has been positive for quite some time. Continue reading "All Aboard The Gold Train"

One Day Does Not Make A Trend

It's hard to believe that we just have one more trading day in January, which has been an extraordinarily volatile month and one that will certainly go down in the history books.

Many of the well-known large stocks are now in downtrends and are not likely to have major turnarounds anytime soon. One has to remember that the stock market looks six months ahead. While many of the companies are perhaps enjoying some good earnings, this may be the last good earnings season we see for some time to come.

On a brighter note, my trade in Apple Inc. (NASDAQ:AAPL) turned out well and it would now look as though Apple is going to be on the defensive for several months. I can see this stock continuing to erode down to perhaps the $80 level.

Let's look at some other well-known stocks that are all in major downtrends at the moment. Continue reading "One Day Does Not Make A Trend"

Beware Of Dead Cat Bounces

What is a dead cat bounce? It is simply a rally from a very oversold condition. That's the case today as many of the markets have literally gone straight down in the first weeks of 2016 and contributed to the worst start of any year in the history of trading.

A dead cat bounce does not mean a trend change or that you have made a major bottom in the market. Technically, a dead cat bounce is really just a short covering rally from a market that is very oversold. If and when the major indices are going to reverse the trend and move back up, they are going to have to do quite a bit of repair work to change the negative technical picture that we are currently facing.

After the close today Inc. (NASDAQ:NFLX) will report earnings - the current technical picture for this stock is mixed. The longer-term trend for Netflix is positive with a green Trade Triangle in place. However, the intermediate-term trend is down with a red weekly Trade Triangle. I would suggest standing on the sidelines at the moment. Continue reading "Beware Of Dead Cat Bounces"

Crude Oil Crashes Through $30 And The Market Follows

This is turning out to be a very expensive week for investors who are still holding long positions in this market. As I warned late last year and all this year, I felt the market was and is going to be volatile and more than likely going lower.

Let's go back several years to the first quarter of 2009 when the equity markets bottomed out and began their six-year climb to the stars.

If you look at the S&P 500, you can see that it made a low on the week of March 2, 2009 at 683.38. Six years later on the week of July 13th it closed at a high of 2126.64. I want to look at the market using the Fibonacci tool and see potentially where this index might be headed on the downside. A classic 38.2% Fibonacci retracement takes this index back to 1,574, (it closed at 1,921.84 yesterday). A 50% retracement would bring the S&P 500 back down to 1405.51 and a 62% retracement would take it all the way back down to 1236.24.

The S&P 500 closed last Friday at 1922.03 Continue reading "Crude Oil Crashes Through $30 And The Market Follows"