Monday, March 17, 2014
Slight Increase in Risk Appetite
Stocks stopped their fall that started March 10 with a strong rebound today. Emerging markets and large caps lead the rebound. Europe also rebounded rather strongly. We issued a Bear Alert on last Thursday based on the Market Breadth Index ($VMBI) deterioration. Should we get a correction, it will likely be a correction in the context of a bull market, in other words a buying opportunity. Nevertheless, we did open a very small short position in SDOW and TZA on Friday.
TLT lost ¾ of a percent. The momentum and volume patterns in treasuries still indicate higher prices ahead
Gold was the clear looser - down more then 1%. It also printed a bearish engulfing pattern on the daily chart. Short-term momentum has shifted down. First support is around $1345.
GDX lost 3.35% - not unusual for this volatile ETF. First support is around $25.86
Real Estate traded flat. It has been range-bound for the past 5 trading sessions. A close above $69.33 would be bullish, while a close below $67.49 would be bearish and we may see prices around $66.
EEM has been trading in a range since THE beginning of February. A decisive close below $37.05 or above $40.22 would finally clarify the direction in emerging markets.
Natural Gas rebounded somewhat. We still think that the bigger trend is down. A close below $4.341 would continue this decline to at least the $4 area.
Oil is also likely going to see lower prices ahead. Next support is in the $96 area.
Open positions: GDX, IYR, TLT, DVY, ETV
Hedging positions: TZA, SDOW, DGAZ