Market Recap Friday, December 24, 2015 - SPY tLT MUB PFF UUP GLD GDX USO UNG

The bulls were able to make some progress during this short trading week. SPY gained almost 3% to close at $205.68. If you have been reading my writing for the past few months, you would have noticed that I have been bearish on stocks. For now the long-term bearish case remains alive and well. There is plenty of resistance in the $206-$208 area. This Christmas Eve’s action was notable for the fact that markets sold-off literally in the last 5 minutes of trading to close in the negative territory for the day. One could argue that a shooting star candlestick was printed on Friday. This was all on holiday volume though, so I would like to see more confirmation of resistance next week.
CHART OF SPY

Bonds lost for the week, but I think TLT has held support for now in the $120 area and bounced back on Friday. As I mentioned last week, TLT seems to be less affected by the short-term interest rates rise, then by the general amount of fear and unease in the markets. If stocks sell-off in a more meaningful way bonds are almost guaranteed to benefit.
TLT CHART
Municipal bonds pushed ever higher and made another all-time high, albeit, I think munis are now somewhat overbought and may pullback to around $109.30 or so.
MUB CHART
​Preferred stock fund (PFF) offered a good setup several weeks ago and here at www.MasterChartsTrading.com we went ahead and took this buying opportunity. Correlation-vise, preferred stock occupies a sort of middle ground between stocks and bonds. Owning some preferred stock could be viewed as a nice diversification tactic away from regular stocks and bonds.
CHART OF PFF

The Dollar weakened and closed below its 50-day moving average. It is looking like $USD (DXY) is headed for another retest of a support level around $97. Long-term $USD is still very much bullish, so if you trade currencies, this could be a buying opportunity once support is held. In any case, for now weaker dollar is relieving pressure on the various commodities.
CHART OF $USD (DXY)

Gold has struggled following a close below support in mid-November. Neither the gold bulls nor the gold bears are so far able to gain the upper hand. Long-term gold is bearish. Short-term we may see a push to around $1100, possibly even $1160 area. The way I look at it is: the higher gold pushes, the better the shorting opportunity it becomes.
CHART OF GOLD
       GDX again held support in the $13 area last week and bounced. Friday GDX ended just below the 50-day moving average at $14.27. Maybe we are seeing some sort of a bottoming action in GDX (I am not a perma-bear)? I am seeing a higher high in the Advance-Decline lines for GDX as well as the On-Balance Volume indicator – all before a higher high in the price itself. This is a bullish divergence and should be paid attention to. Maybe we will see higher prices ahead for GDX. I am guessing $16 area is not out of the question, especially if the Dollar comes under more pressure.
CHART OF GDX

Oil ($WTIC) also bounced back above the broken support and is now trading for around $38. We could view this week’s rebound in one of two ways. This rise in prices formed a rising wedge. Rising wedges in a bearish security are bearish continuation patterns. Or we could say that the support break was rejected for now and prices have bottomed. Only time will tell, but it’s entirely possible that the upper $20s for oil would materialize in the next few months.
CHART OF OIL
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Of the commodities I monitor, natural gas was the clear winner this week – it popped over 18% in a classic short-covering rally. December 14th, NATGAS gapped down at the open in what looked to me suspiciously like a selling climax. I marked it on the chart with a question mark – this week I removed the question mark. As with many other commodities, NATGAS is still in a bear market (just last week NATGAS hit prices not seen since 1999). Depending on where this latest rebound will carry the price, a nice short setup could be brewing.
CHART OF NATGAS

Finally, during this holiday season, I wanted to urge those who are reading these words or watching the video presentation on YouTube, to consider donating some of the profits you made this year to a charity of your choice. This will not only help a good cause, but will make you feel good! Here is a quick Google search of charities for you to consider donating to.
       
 
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That’s it for this week’s market recap,
Merry Christmas and Happy New Year!
 
Alexander Berger (www.MasterChartsTrading.com)