Tuesday, June 18, 2019

Market update 6/18 - Best Call Of The month - The Reversal In Biotech Stocks

It seems like all I use this blog for, anymore, is to declare victory, and today should be no different...

Last week - as the broader market continued to trade mostly sideways, and directionless, I started looking for a sector trade. In gold, gold miners, $SOX, Biotech

While I found a bearish trade in $SOX that worked in my favor, I also identified a bullish pattern in the biotech sector - a bullish inverse Head & Shoulders pattern - as seen on the chart below.

This turned out to be the better trade, as short sellers continue to be squeezed into the summer break, as usual.  

$XBI - Bullish inverse H&S pattern highlighted in purple.


$XBI ended up another 4.74% on Monday, while the 3X leveraged Biotech bull ($LABU) ended up a whopping 14.12%! That's what you call "a good trade", any day of week, and especially on light summer volume. While this rally could continue, I expect to see some consolidation at my red line, and I think it's better to "snipe gains" wherever you see them, in this thinly traded market. 

As far as the broader market is concerned, we've seen very little movement since my last blog update. The $VIX continues to hold up, and the market rallies we've seen so far have been short lived, and
I suspect today's little relief rally on Draghi dovishness will be no different.

Never trust summer rallies. The short sellers continue to cover, and it's too easy for the hedge funds to squeeze the retail short sellers out of one stock/ sector, or another.

This morning I'm reviewing the charts and see the #REIT sector was up nearly 7% on Monday!
This looks like short capitulation, in an illiquid market. This is what you expect to see at a major market top!  

 

We've seem money rushing into 30 year treasuries, and gold, and even Swiss bank accounts. This doesn't give me confidence. The relatively high $VIX remains a cloud over the market, as does the German $DAX - pinned. 


Regardless of my mostly bearish analysis above, we're getting into summer trading, and anything can happen over the next few weeks/ months. We could see the $DAX continue to hold up, and US markets retest the recent highs.

Below you can see the DOW trading into a little upturned triangle pattern - in blue, and bouncing off my stop-hunt - in pink, and OPEX is this week. That alone can hold the market up. But from there I'm still expecting a sharp correction, ahead of the 4th of July.

That's all I got for today, and I have some REIT charts to update this morning.

Follow me on twitter @3XTraders for the latest technical analysis, and real-time updates. 
AA      














Thursday, June 6, 2019

German $DAX continues to lead US markets - Market update 6/6/2019

Something I didn't have time to mention in yesterday's update is that the $DAX has been one of my most reliable leading indicators since the Dec swoon.

$DAX up US equities up. $DAX down US equities follow. This won't always be the case, but as long as Europe remains in focus, this is the one to watch. PIIGS are still a factor. Italy remains in a deep bear market. New media would rather blame Trump, but he's not the cause of the panic buying in bond markets.

Getting to the technicals: Based on the $DAX chart below, I can't see how this rally continues.

I'd say we go back and retest support, at the very least.

 

To make things stupid simple:

1. The $DAX bottom came in in Dec.

2. It rallied into a bullish channel.

3. That trend broke along with the 50 day ma.

4. Now we see it back-testing the bottom of that broken channel. This typically doesn't end well.

For more acurarate Technical Analysis, and you can follow me @3XTraders, and you can donate to help the cause using the link to my PayPal located in the left hand menu on this website
AA  



Wednesday, June 5, 2019

Absolutely Killing It! Kick-Ass Market Update 6/5/2019

It's been around a month since the last update, and since then we've see a nice little pullback to the DOW target I laid out last week, and confirmed on several different charts. Below is a simplified
version of charts you may have seen me tweet out recently. Shows a Doji reversal, at a key Fibonacci target. Stupid simple 







This time I decided not to rely so heavily on patterns on short term charts. I instead relayed on longer term charts, and the bearish pattern on the $VIX. This selloff have been very orderly and the $VIX never even got about 20.



You can see where the $VIX fell out of the bearish triangle yesterday morning, and this caused panic buying, just as I predicted - in another Tweet. Classic reversal.

 But wait there's more!

 

I also called the rally in the Mexican Peso, and the reversal on the $USD. 

 Here I am mocking the Dollar bulls, from my twitter feed - on May 30th


And here's the breakout and back-test of support - at my pink line - spotted on the PESO on May 31st

And below are the results only 2 days later:


We also saw a massive reversal in Gold, and Silver, which I've remained bullish on for the past several weeks

Of course it takes constant vigilance and patience to be right all the time, but the technical charts never cease to amaze me. I think I haven't missed a beat since the January surprise of 2018, when the $VIX bear ETF imploded. Not everything is predictable, but I find most things are...

Market opens in 10 min., so I have to cut this blog short.
Follow me on Twitter for the latest market analysis.    

AA