Looking For One More Higher Low Before End of Year
At the start of last week I stated that I was looking for the market to bottom on Thursday or early Friday morning at the latest. On Thursday the market pushed down about 258 points, trading down to 17477. On Friday we had the jobs number. The market opened up soft before the ECB commented that they may enact more quantitative easing, pushing the market upward and closing up about 370 points. At around 3:30 I tweeted that if one had bought SPY a lot lower Thursday afternoon or early Friday morning that I would look to sell into this rally. You can follow me on twitter at “@stevekalayjian”. The exchange traded funds SPY, QQQ, IWM, and DIA were up between $3.50-4. I did not expect a 370 point rally in one day. I was expecting for it to occur over 4-6 days. I stated that I would look to be flat going into the close on Friday.
Today the market was down about 175 points at one point before settling down about 116. The market is very choppy here. After such a big push up on Friday, the market declined as people took money off the table. I do believe the market will continue to try to push upward into the end of the year.
I am looking for possibly one more pullback in the next 1-1.5 weeks. If I was a long term investor I would look to sell in the 17800-18400 range and be 100% in cash going into the New Year. I would be looking to scale out at 3-4 different price points within that range. One can always reenter the market at an opportune time. I expect a mirror of the moves in 2015 to occur in 2016. I expect a pushdown to somewhere in the mid-15000 range sometime in the second/early third quarter of 2016 before the market pushes up towards the end of the year.
I stated that I was looking for gold to hold above the 1040 level and that I would look to buy gold in the 1045-1055 range with a 1038 stop. 1040 is a very solid number and there is no way that gold breaks through it the first time and continues to push down. On Thursday gold got down to the 1046 level. Gold pushed back up and I tweeted that I would look to sell in the 1053-1055 range because I wanted to be flat going into the unemployment number. I stated that I was looking for gold to get up to the 1090-1100 range. Gold traded up to 1088 before dropping to around 1071 today. Gold is in a sideways pattern here. I am waiting to see if gold gets somewhat more overbought where I would possibly look to get short off of the weekly chart.
Oil was down over $2 today, trading around the 37.50 level. The oil stocks have been telling the story here. I see deterioration in the oil sector. I have stated that I am bearish oil. When I got the sell signal on the daily chart which mirrored the weekly chart I was looking for a pushup in oil for an opportunity where I would look to get short in the 44.50-46.50 range. Oil got up to the 43.60 level before collapsing. Oil is probably dead money here and a lot of oil stocks got hammered today. I am now looking to see if oil can get a push up to the 42.50-43 range. I am now on the sidelines waiting for the pattern to set up on the daily and possibly the weekly charts.