Page menu

Friday, February 3, 2017

Market update 2/32017

Market continues to consolidate in a range as predicted. This is what the market does after a big move, sometimes for months.  This morning we see Dow futures up 90-100 points, yet it remains trapped in a tight range (see the tiny broadening triangle pattern in blue), and below resistance. I'd fade this rally.  

Looking to gold miners for a trade. 

Note: I don't normally use the leveraged ETF charts - because they tend to overshoot the target. These charts also tend to become skewed over time, because of daily (NAV) adjustments to the fund. For these reasons, I prefer to chart the underlying index. Nevertheless the $JDST chart worked as expected, back in December, and it illustrates just how nimble you must be - as a trader - to get out of the more volatile leveraged ETF's, before suffering huge losses, on a major reversal. Learning how to limit your losses, is imperative, and to be honest I'm not as disciplined as I should be. Proper money management, is far more important than being right, most the time, and charting it and trading it, are 2 separate skill-sets.  

Looking at the $JDST chart: I'm seeing a possible 40% move coming on the #JDST. This is one of the most volatile leveraged ETF's of all. 15% daily moves are common. Know your risk tolerance, before you trade.

As a side-note: Compare the red sell arrow I placed on the above chart, to the stop loss I set on the Nat Gas chart below. Yahtzee!  We'll come back to this chart...

The underlying commodity doesn't always move in lock step... but if you're going to trade miners, you should also watch gold. 
I called the top on Gold yesterday, so this is the level to watch.

Getting back to the #NatGas chart. Looks like it wants to rally back to resistance, and that helps reinforce the bullish energy trade I think I see coming (see the last 2 updates). 
Also offers an alternative trade to oil. 
#NatGas is riskier than Oil, do to it's inherent volatility, but I prefer the #NatGas chart to the oil chart. Support at 3:10 is clear. The red line on the chart isn't acting as resistance, so ignore it. Looks like it wants to trade back to the top of the range. 

That's it for today.
Have a great weekend, AA  

No comments:

Post a Comment