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Jeff says ...
Aug 13, 2019 06:11am EDT
S&P 500 futures are down 13 points. Gold is up another $17 per ounce. Bonds are pressing to new 52-week highs. So, we’re going to start today with the same theme that’s been in place for the past two weeks.
But, I get the feeling today is going to be a Turnaround Tuesday.
The S&P 500 dipped slightly below 2875 yesterday before bouncing just a bit higher by the end of the session. If the weakness in the futures market holds until the opening, the index will take out yesterday’s low this morning. But, that should create positive divergence on several indicators on the intraday charts. And, I suspect that will lead to a reversal by the end of the session.
Gold and bonds are rallying as “safe haven” trades. And, if stocks reverse to the upside then gold and bonds should reverse lower.
Remember, as the market bounced off of oversold conditions at the end of last week we started looking for the market to pullback again and to form a higher low. I suspect we’ll make that higher low at some point today. As I mentioned yesterday, I’m willing to start buying at 2875 or so on the S&P. Aggressive traders should have a chance to do that today. Keep some ammunition available to add more long exposure at lower prices if it happens. But, even if the S&P makes a lower low it will do so while creating significant positive divergence on many technical indicators. So, one way or another, I think stocks are higher one or two weeks from now than where they start today.
... And here's what he has to say on gold...
It’s interesting to note today how gold is trading up $14 per ounce, yet the gold stocks are down on the day.
This is a BIG warning sign.
Last week, I mentioned how the sector appeared to have experienced an exhaustive upside move. The under-performance in the gold stocks today helps to reinforce that belief.
I suspect gold and gold stocks are due for one heck of a shake-out over the next month or two. The longer-term uptrend should remain intact – meaning most gold stocks should hold above their 50-day moving average lines. But, even a test of the 50-day MA from here implies a 12% pullback for the sector.
Let’s continue to hold our shares of DUST. Keep a protective stop at 6.39 (meaning … sell the position if DUST trades at $6.39 per share or lower).
By the way DUST traded @ $7.99 earlier today
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.