Friday, July 24, 2015

July 24 - SPY continued weakness, GDX/ GLD may be forming bottom

Unfortunately I missed out on yesterday's and today's dip in the equity indexes as I closed out my shorts too early due to the lack of participation on Weds.  It still remains possible for continued downside but I am staying clear for now as we are now oversold on the 30/60 frames.

On an intermediate term basis, I am looking to tilt more towards bearish setups as there are lots of things looking off like how the market is being held up by a handful of leaders - exhibiting strong negative divergence between small caps/ equal weighted ETF's vs SPY/ QQQ.  We are also seeing an unusually high number of 52 week lows despite having bounced significantly from the Greek debt crisis low.  I am hoping the market can bounce higher for a better short opportunity.

SPY hit the first downside target I had sketched out earlier in the week.
Becoming more oversold so risk of a short squeeze is increasing but it is possible we retrace to 50-66%.

One thing that made me a bit more cautious was the weak daily volume.  Stochs and CCI still in a solid sell signal though.

GLD seems to be bottoming, a bit late as I entered the DUST short too early but price/ volume action is becoming promising.  From the bullish percent data over the past year, having hit 0% bullish, we are at most 1-5 days from a bottom.

Selling volume diminishing although we are still moving downwards.
Now in territory similar to where significant bounces have occurred in the past 2 years.

Dollar weakness may provide some tailwinds for a potential move up in commodities such as PM's.  As of now however, while the dollar is overbought, it isn't a strong signal that it will see a dip going forward.

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May 15 - Closed out IWM puts for +120% and picked up DAL and HD Jun calls

I'm going to let the market do its thing this week and probably stay away from new positions until Friday unless something very good pop...