Stocks and Gold rally

q0911.pngStock indexes were high today, as was the gold market. All major stock indexes closed with better than one per cent gains. Volume was light. The Nasdaq 100/QQQQ chart on the left shows how the day session started right off with a gap from the close of the previous bar, and right on the three day pivot, which is the yellow dot. This index moved irregularly higher all day to close near the high, on lighter volume than yesterday’s mostly down day. The upmove today kinked the momentum indicators up a notch, but not enough to cross the signal line on the indicator in the lower subgraph. I’ve been favoring the long side of this index for some time, and have been trading on the long side when momentum is moving up, and unless Wednesday’s session has another reversal, the momentum should be confirmed as up. The weekly chart and 60 minute chart seems to avoid some of the back and forth chop seen on the daily chart. Lending support to the bullish argument is the inverse head and shoulders formation, which is more easily seen on the adaptive CCI indicator in the middle subgraph. I drew a blue line across the neckline. The CCI histogram bars have turned positive and should turn up barring a reversal back down, which can easily happen the way these market have been behaving. My line in the sand is the yellow dot representing the three day average of the floor pivot. I guess I should say it is my dot in the sand. The regression curve is still rounding over, but if momentum turns up, a move to the top of the band where the previous swing point is would be indicated. Light volume is some concern.
The S&P chart (not shown) does not look as possitive as the QQQQ. The momentum indicator also kinked up on the S&P, but did not confirm a direction change yet. However, the structure is still pointing downward. As with the QQQQ, the open was right on the three day pivot dot and proceeded higher all day, so no shorts were indicated. Prices are sitting right on the lower error band, while on the QQQQ prices are almost to the mid-point, and the band is not yet pointing downward. If weakness comes back in to the markets, I still think the best course of action is to trade the SPY from the short side, and save the QQQQ for long trades.
gold0911.pngThe gold market has had quite a rally. Yesterday my short term momentum indicator turn down, as can be seen by the red dot on the zero line in the indicator below. I did suggest that was not a sell signal, but a sign of caution if deciding to enter the market at these levels. I still think it is better to wait for a pullback rather than chase this market up. The gold market is notorious for quick shake out reversals. Notice how nicely the three day pivot follows prices during a trend. It is simply the average of the floor trader pivot, which is simply the average of the high, low, and close. I plan an article soon on this subject. Yesterday I noted that the adaptive CCI was well over the +200 line, which is the top line in the middle subgraph. It is even higher today. I would expect a kink down in that any time now.

Leave a Reply

Your email address will not be published. Required fields are marked *