Market Recap, Friday, November 27, 2015 - SPY nYA AGG MUB GLD GDX JJC USO UNG UUP

       We only had 3 full days of trading and a half-day on Friday; therefore it is difficult to draw any conclusions from the price action during this relatively short period of time. SPY gained a fraction of a percent for the week, while QQQ lost a fraction. 
I maintain my bearish outlook for stocks in the near term. A retest of recent November lows is very likely. Should that level fail, a retest of August lows is extremely likely. Various market breadth, momentum and trend indicators that I track have not yet given an all-clear message.
       CHART OF SPY

​$SPX is gaining upon its previous all-time highs, but the broader NYSE composite ($NYA) is nowhere near its all-time highs. In fact higher price was rejected at the previous broken support just a few weeks ago. Currently we may be in the process of making a lower high. The Advance-Decline (AD-Lines) lines for $NYA are still trending lower. The Bullish percent index and % of stocks above the 200-day EMA are still in the bearish territory.
         CHART OF NYA

​Just a few weeks ago when the Federal Reserve finally made a decision to even consider increasing the interest rates at its December FOMC meeting, bonds came under selling pressure. At that point it was clear to me that this was a buying opportunity and I tweeted about it on November 10th. Since then bonds (AGG) went on a nice rebound. While the municipal bonds fund (MUB) made an all-time high. This is a counter-intuitive action, since it is a widely held view that rising interest rates hurt bond performance. This action is telling me that the bond market is sensing fear and the smart money is positioning itself appropriately by rotating into the more defensive areas of the market.
       CHART OF AGG
       CHART OF MUB

​The Dollar is gaining upon its 52-week highs following its recent breakout in early November. While there is talk about tightening the monetary policy in the United States, there is talk of more quantitative easing elsewhere in the world – this is very positive for the US Dollar index ($USD) while negative for various commodities that are priced in dollars.
       CHART OF $USD

Last week on November 17th, I believe we had a meaningful and conclusive breakdown in the price of gold. Gold closed below the recent July lows while simultaneously making fresh multi-year lows. Gold was oversold last week; it’s even more oversold now. Gold is bearish - therefore I generally ignore oversold conditions and instead look for overbought conditions to open short positions. My subscribers were alerted as early as mid-October to my view of the fact that gold presented an excellent shorting opportunity and are sitting on very nice gains since then. Please consider signing-up for my Trade Alerts Service – its well worth the small investment. My conservative estimate is that the current drop in gold price would take it to around $1000 before any kind of short covering rally materializes.
       GOLD CHART 

GDX is doing what gold is telling it to do, almost. GDX is still struggling at the previous support level of $13. So we now have a bit of a divergence – gold closed below its support, but GDX is still dragging its feet. Should GDX close below $13 though, we can easily see it trading around $10 based on the measured move rule.
       CHART OF GDX.

For a good illustration of a measured move rule take a look at the chart of $COPPER. You can see that $COPPER broke support in mid-November and before any kind of a meaningful bounce took place, it dropped around the height of the previous cup and handle-like pattern.
       CHART OF COPPER

       Oil ($WTIC) spent the last week rebounding to the previously broken support at around $43. November 24th it failed there and this Friday we saw the more serious selling take place. Oil is bearish, and at least a re-test of August lows is highly likely. That August price support at $37.75 may not hold. Will we see oil trading at $30 next year?
       CHART OF OIL

       Spot $NATGAS closed at multi-year lows this Friday. I am bit surprised at a lack of any meaningful rebound. $NATGAS hasn’t even been able to close above its 50-day moving average for the past 4 month. A close below $2.188 may call for a push to the $2.00 gas. $NATGAS is strongly bearish, but that doesn’t mean its currently a good opportunity to short. I want to see a rebound take place before I would even consider shorting again.
       CHART OF $NATGAS

That’s it for this week’s market recap,
Best Regards and have another great trading week!
 
Alexander Berger (www.MasterChartsTrading.com)