4:00 pm ET: The major averages continue to consolidate. The bad news is that the volatility is on the rise; the good news is that the Dow Transport Index (DTX) has stopped its decline. What isn't clear is if this is just a temporary pause in its downward movement or the beginning of a reversal in direction. Until we have more information, I would be loathe to take on new bullish positions (at least full ones). Perhaps investors are waiting to see what will happen in tomorrow's presidential debate...
Noteworthy on other fronts: The Vietnam etf (NYSEARCA:VNM) continues to drop. Today it broke $16 support and appears intent on testing its previous low just above $14. It's too bad that if you want to be in on this trade you'll have to find some shares to short as there are no options on this issue. In commodities, the sugar etf (NYSEARCA:SGG) gapped through $75 resistance yesterday and advanced another 2% today (which is a pretty big move for a soft commodity). It sure appears as if it wants to test its previous high at $90 but first it must clear the $80 hurdle. Those of you who would like to sweeten up your commodities exposure by participating in this trade should understand how global climatic conditions and weather forecasts affect crop prices.
Trade Update: Nat gas continues to climb
Yesterday we noted the break out in the nat gas etf (NYSEARCA:UNG). Today was another bullish day with the UNG tacking on another 1.2% to yesterday's 4.6% move. The double levered long etf (BOIL) was up 2.6% while the tripled levered fund (UGAZ) gained 3.9%. If you got in on this trade, I'd recommend riding it out until the UNG hits $24 ($1.40 above today's closing price) which is a point of resistance. After that I'd take some profits or if you want to stay with it, make sure you put in trailing stops to protect profits. (It's best if these are mental stops as sometimes market makers will take out a physical stop-loss just for the heck of it.)
Trade Alert: Apple testing major support!
All of you iheads holding Apple stock should begin monitoring your position. Today Apple (AAPL) tested major support at $650. Fortunately, the stock rebounded from that level but should $650 not hold, then it could easily fall to $600. You may wish to set a (mental) trailing stop loss or protect your position with put options should the stock begin to unravel.
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