The Trend Is Up, But Consider This…
Sometimes even the best
set-ups simply do not work. Case in point, yesterday afternoon I
took a short in Newmont (NEM). The 5-minute
chart was set-up beautifully.
I got filled at 38.41, so far, so good. Then, of
all times mind you, the S&P’s decide to throw off the bullish tone for the day
and crater.
Normally, this is good for stocks, if you are
short. However, gold stocks can be funny. There are days when the trade in
synch with the market, then there are days when they trade counter to the
market.
However, a more obvious, and overlooked indicator
was flashing a big ref light, I ignored it, relying more on overhead resistance
on NEM to see me through. It was a costly
mistake.
The chart above is the
Dollar Index (DXC). This is probably the better indicator for
trading gold stocks. A weakening dollar typically brings out the gold bugs, as
in this case. All losing trades are easy to pick apart in retrospect, however,
in this instance I did fall prey to getting to hung up on the technicals that
had got me in the trade.
I am still finding this market quite challenging,
from a trading standpoint at least. Moves are muted for the most part,
although, like yesterday afternoon, expansion bars suddenly appear from
nowhere. All my colleagues are finding this market quite choppy. There may be
some break on the horizon. A slew or earnings are due in the next few days. As
mentioned yesterday, the market is priced for perfection, the bulls better hope
that earnings beat by more the bull-shit penny game and top line revenue growth
starts showing up.
Let’s face it, yes the trend overall is up, but
we still remain locked in one big old trading range. Conviction continues to be
rare. Protect your capital, this is no time to be the hero.
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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As always, feel free to send me your comments and
questions.
Dave