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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Jan 20 - Equities caution signal, short SPY, NFLX

Call buying has come back and very good chance of a pullback here