GENERAL MARKET COMMENT:
David Nichols said pre-market:
The trading action in equity markets still looks to me like a typical test back down, prior to the main uptrend re-establishing itself.
So far this move down does not look too ominous. A test down to touch the previous swing high is so commonplace that it is not even noteworthy. Markets are constantly "inhaling and exhaling" in their movements, and at this point I consider this just a normal "inhale" (pullback) ahead of a potentially much larger "exhale" (trending move up).
If the SPX is able to bounce off this 1223 area -- and we may have to wait until options expiration is out of the way for this to happen -- then a bullish pattern should continue to unfold. Accordingly, here is my road map up to 1280.
Please keep in mind that this is the maximally bullish scenario, which should remain intact as long as the SPX stays over 1217. If it plays out this way, it should be clear sailing all the way up to SPX 1260. That is the spot to look for resistance, and potentially a multi-day pullback -- most likely back to 1245. After that pullback from 1260, the final move up to a top at 1280 should come quickly.
If the markets can't muster a rally, and instead head down in earnest, breaching SPX 1217 in the process, then the bullish scenario is not necessarily vanquished. At that point we'd have to throw out this maximally bullish road map, and we'd have to deal with a more difficult trading environment. Essentially we'll have to wait for the fractal patterns to re-set and re-emerge if the SPX sinks under 1217.
But for now, this current upside fractal looks very promising, and I like a speculative trading position here for a run to 1280, with a stop on a close below 1217, or 1214 intraday.
Gold had a big day up on Thursday, and the upside pattern is now confirmed and looking good. This up day in gold happened on a day that the dollar was also strong, and this is one of the best confirmations of gold's strength that we could see. It's undeniably bullish.
Gold should get to $476 on this move, with perhaps a brief pullback at $463. I'm using the December gold futures contract, symbol GCZ5, for these figures.
The XAU index of gold and silver stocks, which is a derivative play on gold, is also on fire right now.
If you're long XAU options, I would recommend taking these off at $110, which could come up quickly from here. I have a higher target on the XAU up at $120, but I don't think it will get through $110 on the first try. With options it's not much fun to suffer through a pullback, as the premium can get sucked out of calls very quickly in this situation. And XAU calls are expensive too. So I'm planning on taking profits at $110, and monitoring this index for a re-entry.
UP on ABNORMAL VOLUME *
HOLX 51.30 +4.38 +1,369
VIVO 18.25 +0.55 +1,220
TRN 39.35 +1.15 +869
CTHR 24.96 +2.68 +566
SMTS 24.44 +1.04 +520
MEE 54.13 +2.63 +514
LSTR 39.86 +2.00 +485
OPWV 19.52 +0.85 +460
CLF 81.29 +2.39 +414
AIT 34.95 +0.58 +410
DEX 27.76 +0.85 +403
PRA 45.82 +0.69 +392
LOJN 19.65 +1.36 +386
MGRC 28.68 +0.59 +375
HNI 59.44 +1.09 +358
GLW 20.21 +0.64 +338
GNSS 23.43 +0.58 +336
PENN 32.26 +1.05 +320
BVN 30.87 +0.62 +302
BECN 31.81 +1.13 +266
DOWN on ABNORMAL VOLUME *
OPEN 21.74 -1.35 +3,369
OI 20.95 -2.72 +2,263
CLC 29.21 -2.14 +1,216
FUL 29.66 -2.79 +1,057
FO 85.26 -2.24 +636
SMBI 25.90 -0.93 +610
SLGN 33.14 -1.40 +584
HW 36.25 -1.81 +499
DGIN 25.50 -0.98 +442
FORR 19.69 -0.61 +427
JLL 46.02 -1.48 +418
EPAX 20.87 -0.55 +413
NPO 32.60 -0.55 +412
CNF 49.87 -0.92 +398
SMMX 26.50 -0.52 +378
BOW 30.80 -0.61 +376
SHPGY 37.28 -0.65 +367
FORM 25.49 -1.24 +349
SRCP 19.80 -0.60 +331
CLHB 30.55 -1.24 +313
* IBD as of 10:45am
Answer to previous Question of the Day: VLO
TRADES OF YESTERDAY (for me)
SOLD ENER @ close @ 37.60
SOLD Oct 22.50c on CRM @ 1.60
Answer to coolweb - I don't use S/L as such since I'm watching the markets real-time constantly with "alerts" set (my computer with issue audible & blinking signals) @ critical price & volume points on positions + extensive list of stocks I'm interested in either for buy or sell. I also often hedge with options where appropriate (see above). On CRM institutions have been buying on & since spike up on Tues 9/13 so I converted to covered call position as it showed some weakness (I don't believe its overbought) .
