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Wednesday, August 30, 2017

Best Trade of the Week - Market Update 8/30/2017

As we approach another holiday, we're already seeing volume dry up, and anyone who's been following me knows that most holidays bring with it, inexplicable market rallies, due to short covering...

I used to think holiday trading was unpredictable, but no... The $VIX typically remains low, and goes even lowers as volume drys up, and it's not a good time to be short any market.

Best trade of the week was yesterday - Tuesday - where we saw the $VIX whipsaw into the top of a broadening range, and the market trade back to the bottom of the range, just as I had predicted a day earlier. It wasn't a big move, but I suspect that is as good as it's going to get. 

If you're a bear, I think you take the rest of the week off, and next week, as well. If you're a trader, then just keep an eye on the $VIX, and rally back to the top of the range. 

I think there's a good chance gold, and gold miners reverse to the downside, but this trade has been harder to predict than most. I doubled down on DUST at yesterday's open, and took profits towards the end of the day, just to help cover some loses. I also think Copper is about to reverse, and we could see profit taking there, ahead of the holiday. For some reason commodities often see bigger moved around the holiday's, but also offer bigger risk.

If you're going to trade metals, then I'd also be watching a $USD ticker, because that is the Dollar (short) trade is probably the most crowded of all, and a short squeeze there should take care of the rest.

One more thing to mention about the gold trade, is that contracts expired yesterday, and this often works the same way as OPEX.... Gold is pumped into the expiration date for a reason. Because like every other market, it's rigged.

Speaking of Rigged you see the NASDAQ $VIX (the $VXN), being hammered down - by the powers that be - as Labor Day approaches. As long as they can continue to manipulate the $VIX, volatility, and fear is contained. This could continue into Sept window dressing season, I suppose, but we'll see what happens when traders return from their Summer break.

I prefer Canada's $TSX if you want to stay long. They don't celebrate Labor Day as far as I know.

 Gold looks like it's whipsawed into a triangle, and thrust out the top. That would mean a serious reversal into a powerful wave C, but I'm not too sure on this.

The $GDX also seems to be whipsawing in a broadening pattern. That target would be the bottom of the pattern. I'm not sure on the EW count, but the pattern is clear.

The stop hunt on the $GLD looks like 124. See what looks like a wave B triangle.

Another think I'd want to sell here is 20 year treasuries. I think there is a leveraged Treasury bear (ETF), but I don't have time to check it out, or to see if it's liquid. Use limit orders!

Have a great Labor Day, and I'll see you on my Twitter @3Xtraders

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