Weekend review and Results.

Another positive week, and month.  Signals Tweeted up 13%, almost all ETF's, no crazy penny stocks.  Signal is simply reliable, even in this whipsaw.  Details below.

For the week ahead, my view is and has been we need to get China to News Year vacation before we tip over again.  China has no choice but to devalue, and that drives the dollar, and that causes deflation.  We are far from out of the woods.

For SPY, and am watching a 61.8% retrace at 197 area as resistance.  Also, watching gold and the miners correlate with the dollar as faith in world currencies fade.

Good trading all.

Something Wicked This Way Comes

The Junk Bond Market topped in 2011, Commodities, as well, the Real Estate Market Topped in 2014, the Stock Market topped in 2015, and now we are seeing gold, U.S. bonds, and the dollar starting to positively correlate.

It is time to revisit with Mr. Exeter. He created a risk pyramid, that shows how investors cascade down from high risk to no risk assets as aversion and default gains steam.

In 2008, basically the derivative market imploded, and the Central Banks around the world applied monetary adrenaline to revive the economy, but all it did was add more debt, and soon after we started to see the risk aversion train begin anew, this time in a classic way.

We are now at the bottom tier of the pyramid.  The U.S. stock market is beginning to swing violently between off shore assets seeking yield enter our markets, to folks realizing growth is faltering and deflation is coming from China and falling oil and bailing out.  Until now, these deflationary waves would force down gold, and bid bonds, but not this time.

Gold, U.S. bonds, and U.S. dollars are being bid as they are relatively scarce from a global point of view.  Let me explain.  There is over $9 trillion in debt denominated in dollars, as the dollar rises, these debts become untenable and causes a dollar shortage which then starts a feedback loop as investors scramble for dollars to hedge their dollar credit loans.  The same for U.S. bonds, 20% of the world GDP charges you to accept their bonds, additionally China, another 30% of GDP has a currency collapse on their hand and a opaque economy, so who wants their bonds.  Thus leaving the U.S. bond market as king, with yield, and a rising currency.

The paper gold market has a very large derivative short, and the other side was long the stock market. Well oops, the stock market trade is now being unwound and gold short positions are, as well.  Plus everywhere else in the world is scrambling for gold now that the banking systems are failing to provide yield or safety. Also, the world said uh oh when the Fed raised rates, dooming their economies. Ergo gold starts to rise that week.

When our bond market starts to fail, katy bar the door on the price of gold.  To the moon.  But, I think that is a few years off though.  The stock market will falter first, and that is in process.

You have been warned.  :-)

Market is on its own until March

This is the second time that a retrace has pulled up short of expectations for me, and I consider that bearish.  We may however stay in the 1850-1910 ES range for a bit as there is a new month and Chinese New Year upon us, but I am looking for rallies to short for now.

I closed the XIV trade for a blended average loss and flipped to VXX, sold IWM flat, and XLE for a profit.  I bought BIS, which is doing nicely, and bought some SPY puts at the announcement which are up.

Still holding GLD and USO long.  I was going to short AAPL, but was already making too many trades on FED day.  I will wait for my next sell signal.  Also, if interested, TSLA is a mess, They are going to have to raise cash in a hostile environment.  This is a car company trading like an internet stock.

Finally, it looks like an overnight ramp attempt is failing.  Watching to see if we continue to fall.

Staying the Course

The only trades I made yesterday was to sell AAPL at the open (not interested in earnings trades), and put a buy stop on GLD at 106.24.  That looks likely to hit at the open if the overnight gains hold.

My view is still the same; this retracement higher is not yet finished.  Oil prices will continue to recover some more, and that releases some of this short steam.

I will reevaluate after the reaction to Yellen, but bear in mind we have BOJ afterwards, then month begin, then the Chinese New Year.  Plenty of opportunities for mischief in squeezing shorts.  Then the indexes can come down to meet their components at a 24.5% average decline.

Letting it Play Out

The market pushed down 15% from all time highs and 10% in two weeks, a snapback was due, and we got one.  Now patience comes into play.  As many tried to capture a bottom, many will try to capture the top. That simply gives fuel to the algo traders to squeeze you until big money comes back in to take us back down.

My view is the next two weeks will not be bearish.  The Fed reports this week, and next week is new money week.  I believe a Chinese New Year is in there, as well.

Right now my signals have me short volatility, and long oil, miners, Apple, and the Russell.  All closed trades this year are profitable, and results are easily beating any major index.

As a reminder, you can take a buy or sell signal and trade the ultra or buy puts and call, or credit spreads and alternatives.

Good trading.

Reversal is in Full Swing

I did not post earlier as I would have been redundant.  The move down was so severe and so fast it demanded a retrace, and so we have it.

Make no mistake though this market is in trouble.  The resumption of the selloff is likely between 1880, to 1930 area for ES (futures of the S&P).  We will just need to wait and see now.  It is the bears turn to pick tops, and the algos to screw with them for a few days.

For us, the Signal registered buys on IWM and AAPL yesterday, and those are in addition to XLE, USO, XIV, and GDX long signals.  We closed our GLD long signal with a profit earlier this week.  I am also holding 24, 26, and 27 VXX puts for next Friday.  all but the 24's are profitable for now.

I plan no trades today unless the market tells me to sell something.

Recap and the Week Ahead

Last week was a bit of a mixed bag for me.  Not sure if it is OPEX or bottoming that caused the whip saws, but it sure feels like capitulation to me.

Closed Real Estate, GLD, GDX

and AAPL shorts for profit, and lost on SPY long,  I doubled my XIV long position.  Results below.

We hit the second of my three targets I laid out in December.  We hit the gap fill and bounced, but less than I expected, and then went promptly to the August Lows.  I am expecting a bounce here, and then into the mid 1700 area before the FED March meeting.

I am looking at capitulation in Oil and Natural Gas, and am long XLE and USO.  Have buy signals on GLD and GDX and am long them, as well.

Finally, We have hit my extreme zone on UVXY and am long XIV, and hold VXX puts.

Results, Y-T-D on the signals.

Some charts