August 17, 2017

It’s All About the New Year’s Gap. Will it Close? If so, When?

The small caps,  as seen by the Russell 2000 ETF (NYSE:IWM), remain the most resilient of all sectors within the market. The Dow (DIA), S&P 500 (SPY) and Nasdaq 100 (QQQ) have pushed back into neutral states. Since the upside gap on 1/2 the major benchmarks have struggled to advance. The large gap underneath seems to be weighing on the market which makes me more apt to lean towards the bearish side until the gap is resolved. Of course, as we all know we could see another push towards the upside, but again, with out-of-the-money credit spreads I can create a margin for error that allows me to be absolutely wrong in my assumption, yet still profit from on the trade. It all comes down to probabilities. If we are able to go out to the … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator – Gold, Oil and Natural Gas Hit Extremes

The stock market opened the day lower and toiled around negative territory in the early part of the trading session, but bounced hard during mid-day to finish in positive territory. As a result, gold (GLD, gold miners (GDX), oil (USO) and natural gas (UNG) pushed into a short-term extreme. Natural Gas is the one to watch here. Given that the High-Probability, Mean-Reversion Indicator has pushed into a short-term extreme and that the RSI (2) has moved above 99, it is highly plausible that a short-term reprieve is near (1-3 days). Subscribers stay tuned. … [Read more...]