March Bonds Due for Dead Cat Bounce
Each evening we focus on the most interesting aspects for the upcoming trading day. The comments are based on observations of the nightly updates of the Futures and Market Bias pages. They are provided for educational purposes only and are not intended to be direct trading advice. Also, keep in mind that these remarks are made up to 12 hours in advance of the markets opening. Therefore, overnight events may alter the outcome of these observations.
At the time this is being published, the S&P Globex Futures are trading .50 points higher and the bond market is trading up 3 ticks.
For you breakout players, March Copper [HGH0>HGH0], on the Momentum 5 List, reversed yesterday’s sell off today to rally nicely to life-of-contract highs. For those familiar with stock market patterns, you might also notice that it is a high level loosely formed cup and handle. Look for a buying opportunity here.
The problem with oversold indicators is that they often become more oversold. With that said, March Bonds [USH0>USH0] are extremely oversold* and due for a “dead cat bounceâ€. Look for a buying opportunity here but don’t overstay your welcome (i.e. may be good for a daytrade but don’t try to pick a longer term bottom).
Volatility Watch
March Silver [SIH0>SIH0] remains on all three Volatility Explosions Lists. Continue to watch for a larger-than-normal move (in either direction) as volatility reverts to its mean.
February Gold [GCG0>GCG0], remains on all three Volatility Explosions Lists. Continue to watch for a larger-than-normal move (in either direction) as volatility reverts to its mean.
Best of luck with your trading on Thursday!
PS-Reminder: Protective stops on every trade!
*In my experience, bonds tend to mean revert (i.e. “snapbackâ€) more than other markets as investors begin to see value in yield.