After falling over 5% the previous week, the S&P June contract spend this past week directionless as it contemplates the direction of it’s next move. I exited my Short position last week to enter the upcoming week Flat.
It was an ugly week in US equity markets with the S&P shedding 5.95%. The magnitude of this move has turned my model’s short term outlook for the S&P negative. As a result I went short the S&P June 2018 contract this week. As pictured above, now that support at 2630 has been breached, the next level to watch is 2532.
Since selling-off in February to a low which was more than 11% below
the all-time high reached in January, the S&P has rallied to within 5%
of the high of 2872. I believe the upward momentum will continue as the market remains biased towards upward moves.
The equity markets continued their volatility this week attributable mainly to US domestic political factors (Jerome Powell testifying before congress and an indication that trade tariffs may be coming out of Washington). Regardless of the impetus for the volatility, the market is clearly becoming more sensitive to external factors and it is a time for close stops to limit risk. I entered the market briefly on Monday with tailwinds of strong upward momentum but was later stopped-out as the move lost it’s strength and turned downward. I am currently Flat in the S&P futures market.
Since hitting an intraday low of 2532 on February 9th, the S&P has rebounded 8.49%. Based on the strength and velocity of this recovery my system shows a 4:1 bias towards a continued rebound and an eventual take-out of previous record highs. I have been Flat this market since early February however am looking to go Long on continued strength as this market continues it’s recovery.
Oil Stocks – Time to Get Back In?
For the past six months the price of Brent Crude has quietly marched upward from $44 to over $60 which represents more than a 35% gain.
Despite these gains in the underlying commodity, oil-based stocks have been slower to recover from their recent collapse, however some oil stocks have begun to show signs of strength.
One such stock is Enbridge (ENB-T) on the Toronto Stock Exchange (TSX) which has been showing signs of strength since November.
If ENB-T can maintain its current trend line and break above resistance @ $52 I will be a buyer.
After an 18 month break for personal reasons, I am back. The look is new, as I have redesigned the site but the trading strategies and investment approach are the same. I will continue to use the strategies and approaches I have developed and proven over the past 35 plus years in the markets.
Thank you to those who have sent emails over the past several month’s asking for the site’s return and I hope you will continue to follow and utilize our strategies at your personal discretion. I am glad to be back as trading and investing are my passion and I look forward to an exciting year ahead in the markets.