Bonds (TLT) came back from the dead and gained almost 2 percent for the week. TLT is right at the 200-day moving average, challenging it from below. As I mentioned in my last week’s market recap there is now lots and lots of overhead resistance for bonds. A close above the 200-day would help TLT overcome one the first resistance levels. 

Gold lost a little over 1% for the week as it continued with a plunge from the last week. For the past 2 weeks gold is down as much as 4%. With dollar hitting new highs, gold may be poised for further weakness and a retest of at least May 1st low ($1168) is very much in the cards. 

Gold miners (GDX) followed gold lower with a loss of over 8% for the past 2 weeks. On Tuesday GDX closed below early May low at $19.25, but since rebounded. There is now resistance for GDX at the 50-day moving average currently at $19.70. Again, should gold continue its slide, GDX is surely to follow and a retest of March and possibly December lows may occur. 
Chart of GDX

       Oil started the week miserably, but had a strong finish. We have an open position in SCO (inverse crude oil) ETF still open with a stop-loss if oil closes above $62.  Charts of oil and other commodities

With oil possibly resuming its slide, I thought I would cover a couple of countries’ ETFs that are heavily dependent upon oil exports: Russia and Brazil.

         RSX – the Russia ETF is in a long-term downtrend that started at least a year ago. I am therefore ignoring all bullish setups and only looking for bearish once. RSX put in a low last December and then had a powerful rebound. Along the way there were 3 setups that appealed to me. Last setup happened on May 19th with a gap down/rebound/gap down pattern. Today RSX closed below both the 50-day and the 200-day moving averages. My best guess at this point is that we will get a weak rebound followed by more selling in RSX.
RSX chart

       EWZ – the Brazil ETF is also in a long-term downtrend that started at least last October. Again, for bearish securities I ignore all bullish setups. Last good short setup for EWZ happened in late April as a short signal was generated per our trading system. Since then, EWZ is down over 10%. EWZ is weak, oversold and staying oversold – a sign of possibly more downside to come.  
Chart for EWZand EWZ market timing chart

That’s it for this week’s market recap,

Best Regards and have another great trading week!

 ** Special Announcement**

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Alexander Berger (www.MasterChartsTrading.com)

Disclaimer, we have:

Open positions: IBB, XSD, IWM, IYR, TLT, DUST

New position: SCO

Closed position: LULU (stop-loss hit)

Many world markets are similarly bullish to various degrees. For example Chinese ETF – ASHR hit an all time high on Friday. An over 40% move up in just about 2 month! Clearly Chinese equities are overbought, but very bullish nonetheless. For me this is not a good entry point for me. I would wait for a pullback to around the 50-day moving average to even consider entering this ETF.

We had an open position in solar ETF – TAN. On Wednesday this ETF plunged down as much as 10%! A very large move for an ETF. This just goes to show that it is very important to be aware of the ETF composition. Turns out that TAN had as much as 20% of the holdings in Hanergy (a Chinese solar panel maker) making TAN a poorly diversified ETF. Wednesday Hanergy plunged 47% and trading in this stock was suspended. We exited TAN with a small loss.

Bonds (TLT) are getting perilously close to my definition of an entry into a bear market. TLT has started its rebound, but there is now quite a bit of overhead resistance around $122, $125 and $126 price levels. A failure there and a break below the May 19th low could spell more trouble for bonds.

Gold has been very choppy of late. Last week gold seemed on the verge of bona fide breakout as it closed above the 200-day moving average. This week it is back below, now with a possible support break. Since beginning of April we had no less then 3 short signals in gold. Two of the signals did not work out. Is the latest short signal from yesterday the charm?
Gold charts

Gold miners ETF – GDX has a more constructive chart as of Friday close (if you are a gold bear). It is only a couple of percentage points away from the 50-day moving average. A close below it, and especially below the May 7th low could trigger a retest of March lows.

A rebound in the dollar is putting additional pressure on commodities of all sorts. Oil was already acting weak at the beginning of the month, but broke support on Tuesday – thus triggering our short signal. USO has rallied since but is having a difficult time. I think a retest of the 50-day moving average is very much likely in the near term. 

Finally natural gas had a confirmed Bearish Engulfing pattern on its chart on Wednesday, followed by a further breakdown on Friday. Long-term natural gas (UNG) is bearish, so I am treating this rally from late April low as a rebound within a bigger downtrend. Our system gave us a short signal on Friday. We may see a partial retrace to $14.80 area and a failure there could be a nice entry point for a short. 
UNG candlestick chart and market timing chart

That’s it for this week’s market recap,

Best Regards and have another great trading week!

 ** Special Announcement**

We are weeks away from launching a stocks alert service. Please sign-up for our mailing list to be the first to take advantage of the discounted membership!

 

Alexander Berger (www.MasterChartsTrading.com)

Disclaimer, we have:

Open positions: IBB, XSD, IWM, IYR, LULU, TLT

New position: DUST

Closed position: TAN