One Of The Most Helpful Things You Can Learn
After a great, albeit
long weekend up in LA (thanks for dinner Saturday night, Todd), I
simply have not had an opportunity to collect enough thoughts to put together an
article that would be worthwhile, my apologies. However, my long-time
colleague, Bo Harvey, has collected some brief and insightful thoughts that I
figured I would share with you below.
A couple of quick observations from Friday, gold
stocks once again opened strong but closed weaker, this will bear watching.
Also, I decided to put a small short position on in the
Euro (EUR) on Friday as a way to play on what appears to be some
intermediate-term strength in the dollar. I will keep you posted as this trade
unfolds.
Here’s an excerpt from
Chapter 5 of the classic book on Jesse Livermore, “Reminiscences of a Stock
Operator,” that I thought a very sage commentary on why we must give up
on the idea of trying to buy at the exact bottom and/or sell at the exact top.
While it is only human that we experience “seller’s remorse” when we close out a
position according to our methodology, as we should, only to watch it
relentlessly continue in our direction, it can be destructive if it rules our
trading decisions. BTW, if you haven’t had a chance to read the book, I would
highly recommend it–the insights are timeless and just as applicable now as
they were then:
“One of the most helpful things that anybody
can learn is to give up trying to catch the last eighth – or the first. These
two are the most expensive eighths in the world. They have cost stock traders,
in the aggregate, enough millions of dollars to build a concrete highway across
the continent.”
Turning to technicals, last week I noted time
and price symmetry in the S&P corrections since March, and, sure enough, it
didn’t play out. True to form, the market loves to throw a curveball once I
notice such a wonderfully “obvious” pattern. With that pattern no longer
relevant, I’ll let previous highs in the S&P and Naz, at 1053 and 1440, and the
50 day EMAs + up trend-lines to the south, at 1025 and 1360-1365, be my guides
on a daily chart. On a weekly chart, 1060-1070 remains a key resistance zone if
we get another push higher.
The XAU high Friday was 100 (100.40 exactly),
which is a psychologically key level, and the HUI high was just under a key Fib
resistance target at 225 (223.92 exactly). Any move over these levels will
signal continued strength in the metals, with an initial target of 110 for the
XAU. However, they are both pretty overbought and some divergences have appeared
on the daily chart, so be prepared for a possible correction. Much longer term (ie,
monthly/weekly), as long as the HUI and XAU are above 185 and 85-90
respectively, the bullish tone remains.”
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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As always, feel free to send me your comments and
questions.