GLD and Other Gold Stocks - Patience

Dollar's gain means gold's loss.  Breaking the 50 EMA today does not bode well.  If the dollar continues to rally, we could see further deterioration or side ways movement in price of gold.  Long term view is still extremely favorable - Gold is in an extremely solid long term uptrend.  In the short term, a replay of Feb-March is not out of the question.  Retracing to 104-105 area is very likely. 

S (Sprint Nextel) - Buying Opportunity

Remember, buy on weakness in an uptrend, preferably around the 50 EMA, and sell once the 50 EMA does not hold.

UUP (ProShares Double USD Index Fund) - Coming trend reversal

Keep an eye on the dollar, which is picking up momentum and looks like a trend reversal may take place.  The 9 month bull rally off the March lows may be put on temporary hold. 

$BKX - Financials Showing Weakness

Financial stocks which have led the rally off the March low have now become laggards.  20 EMA crossed under 50 a month ago on the $BKX, and it's had difficulty breaking the 50 EMA since.  However, there also appears to be strong support around $43.40.  The current formation shows indecision with moderate bearish bias, and the financial leaders like GS are well underway in a downtrend.

S - Buying Opportunity

20 EMA for S has crossed 50 EMA, giving the signal to buy.  Recent up days are characterized by heavy volume.  Overhead resistance at $4.50 and $5.50 - $6.00.  Possible inverse head and shoulders pattern developing in weekly chart, with 6 month target of $9 very likely.

Entry price:

Average: $4.10
Good: $4.00
Excellent: $3.85

11/26/2009 - Thanksgiving Update

First off, I wish everyone a happy Thanksgiving - keep in mind to always spend time with your family and eat plenty of Turkey. 

World markets took a nasty hit yesterday due to news out of Dubai, and Europe down more than 3% on indexes across the board.  Dow futures are down -243 at the moment (11 PM CST), and SPX down -32 at 1,077.  1,069 will be the number to watch tomorrow on the $SPX and I am expecting a big gap down across all sectors.  I don't think the US will be able to escape this global sell off, as many US companies are involved with investors from Dubai.  Tomorrow morning could be ugly as many will jump for the exit.

So will this be a buy opportunity or is this a signal to sell?  The market is currently still above major support levels and moving averages are showing a strong uptrend, so it'll be important to look at a couple of indicators tomorrow- 

1.  Volume - If greater than previous trading days even on a shortened day, extremely negative.
2.  Closing price on SPX - 1,069 must hold.

Do not try to second guess where the markets will go based on what you know about Dubai, because you really know nothing.  The global financial systems are more complicated than you and I can ever imagine.  Follow the trend, and make decisions based on what it's telling you.

Do not automatically assume that the gap will be filled - it may, but the time variable is unknown - it could take 3 years.  Your portfolio would be wiped out by then.  

A couple months ago for one of my very first posts, I drew out the fibonacci retracement of ~1576 high to 666 low, and the 50% mark was right at 1121.  The SPX's recent high is only about 10 points off, and if the market is going to turn, now would be the time. 

US Natural Gas Fund (UNG) - Still not a buy

Over a month ago when I first started this blog, I pointed out that UNG registered a sell signal way back in the 30's in July '08, and since then, it has remained in a downtrend.  Even to this day, this fund is still in a downtrend.  This is a perfect display of why the 20/50 EMA crossover is so pivotal in determining the trend.  UNG broke the 50 EMA a few times over the last month, but it was never able to initiate the 20/50 crossover.