Daniel Bustamante, Instructor CFOT
We are now in 223 days without a 3% or more correction in the S&P making it the longest market streak since 1995. This will never last and there are a few things I want to discuss trade-wise in regards to this.
We rely on numbers as investors; Whether it's real estate or financial markets. Usually the "I have a gut feel' style of investing never works out, regardless of what you may tell yourself. In fact, this weekend I just finished Ray Dalio's book, Principles. I had read something similar to this before from him when I was in college and the main take away for me was to always question your perspective. For us as traders, the perspective we take is that of price charts. What are they telling us? Then from there we can add on light fundamentals and then current market sentiment.
As of right now the market sentiment is sketchy at best, but again this is perspective. North Korea tensions are high and the statements from them this morning helped this market to sell off. However, the price charts, without this news, already told us to be short or risk-off in the markets. That being said let's take a look at a few key charts.
Notes: The Yen is usually a great market indicator. It is inverse what the S&P 500 says and right now the chart tells us that this is setting up to be a bullish move higher which is bad for stocks. In my opinion, we could easily see $92.00-$92.50 on this shortly.
Notes: The interesting thing here is that this index made an all-time high today while Nasdaq and S&P futures sold off. From a traders perspective this is 'lagging' which means it should soon follow it's counterparts. As a retail investor or someone new to investing looking at this chart below you may ask yourself; "Why would I bet against this" - Well the best investments are usually counter to what the market is doing (Think BAC stock in 2009 or housing during the crash). I'm already short this using options.
WTI Crude Oil
While I believe oil trades back into the $70's within the next 6-9 months, the short-term chart tells us that a move lower is in the cards. As we approach EIA on Wednesday we're going to look for the $52.00-$52.25 area to be an opportunity to sell.
That's going to do it for this weeks outlook. Don't forget to tune in to the radio shows this week.
The Financial Review: Tuesday at 4:20 pm MST
After The Closing Bell: Thursday at 2:30 pm MST
You can stream them live online by clicking here