Russell Rebalance

We had the Russell 2000 rebalance on Friday which can be a big deal for some traders. It happens every year in June and is very interesting to see what made the cut. Do yourself a favor and do some research about what stocks made the cut and what was dropped.

Russell index constituency is based on several factors, though market capitalization is the primary determinant. Strong performance among mid-cap stocks could prevent small caps from moving into higher indexes in large numbers. Value stocks might also be more likely to move into indexes, while growth stocks on the margins are more likely to be dropped. Growth stocks that fall out of the indexes are particularly vulnerable, because these are typically more volatile. Investors can also expect companies that have suffered due to global macroeconomic volatility to be at risk of exclusion. Basic materials and energy companies are particularly at risk, since taking raw material prices has wreaked havoc on their bottom lines.

RUT weekly holding the small breakout. Weekly MACD about to cross up.

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SPY Consolidation

Should be a quiet end to the week. See how things go. These are quite normal conditions for this time of the year. I saw a good presentation on Youtube. Worth a watch. Anton dishes the dirt on some unscrupulous practices in the industry.

Anton Kreil Annihilates Retail Brokers and “Trading Educators

 

SPY weekly not likely to make a new high this week. Has held above supertrend since the election. If that changes, then I will take a closer look at potential downside. Nothing to see at this time for the bears.

VIX daily MACD is below the center line so I don’t expect too much activity.

MTUM weekly still holding up well.

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Biotech Breakout

Biotech’s are looking very bullish off this very long term basing pattern. I have had IBB on my swing low watch since early this year. Obviously you have to follow what Trump is saying regarding biotech. The latest headlines seem that Trump may be more soft on drug prices than was first thought. Too early to say if this is the beginning of a new uptrend. Have to see more details as they come out about Trumps policy.

IBB monthly swing low, this is the first time this year that the candle has been above supertrend and the MACD is crossed up.

IBB weekly is showing a range breakout.

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Crypto’s Update

Just a quick update of the crypto currency price action study. This study is just using my basic method which anyone can use on anything. I am not telling anyone to buy or sell anything. Apparently verataseum is doing well and it is not yet trading on the major exchanges, so I might start to follow it when it does.

BTCUSD daily bitcoin showing the last long exit. There has not been a long entry since. This is a sideways consolidation at this time. Bitcoin has been made legal now in India so it will be interesting to see how they take to it.

ETHUSD daily ethereum showing the last long exit. There has not been a long entry since that point.

 

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Bonds Bid Risk Aversion

Long bonds have been bid as some risk assets see outflows. Stocks, junk bonds and oil are all under pressure but nothing out of the ordinary at this stage. If you look at oil futures, they are in contango, which means that oil traders expect higher prices for oil in the future. If you want to get some important trading education, do some research about contango and backwardation. It is very important to understand the relationship between the charts I have shown below.

TLT daily 20yr+ bonds. The flattening yield curve is the biggest problem for the Fed going forward.

VTI daily market index fund slipped into intermediate bearish with price just back under supertrend. Still in uptrend.

Oil weekly is in a bear market. See if the key support between 44.00 – 40.00 holds.

JNK daily junk bonds high yield has large exposure to the oil price.

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Pound Shorts Pile Back On

The pound is back in play on the short side this week. There has been some very nice trading with the renewed selling. Very nice.

GBP daily pairs look rangy but perfect for my short term volatility method. Good story too. It’s never just about the technical analysis.

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FANMAG’s Watch

Well, so much for all the headlines of the ‘tech wreck’ that people seem to be so enamored with. Fear porn has become the new normal. You have to avoid pundits with these sensational headlines, because they have been saying the same old spiel for the last eight years. That is what gets readers unfortunately. If you take a balanced outlook like I do, nobody is interested.

I was listening to an interview with Jim Rogers the other day. He said you will know when the next crisis is here, when you see something go broke that you didn’t know could go broke. He said I am looking for something like a large pension fund or a country, something like that. That is when I will start to pay attention and not until then. He said the trouble will start where nobody is looking, then it will spread from there.

The new acronym is FANMAG. It is a bit broader than the FANG stocks. In any case they are still in a strong uptrend. Certainly nothing out of the ordinary.

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Charts Of Interest

Just a few charts of interest. Fairly quiet week as traders assess where to go from here. You have to just trade the plan. I will know when the top reversal is here because I wont get any long entries on my method. I don’t have to be smart or be good with timing. My system does the work for me.

VTI daily has broken out with the weekly MACD crossed up.

SVXY daily short volatility has broken out meaning traders are bullish on stocks.

UNG daily is testing the key support.

TLT daily continues to stay bid post FOMC. The spread between the 2yr and 10yr is collapsing. It is on track to go inverted by 2018 which is almost certain to signal a recession in the U.S. if the Fed is too aggressive with their hawkish guidance.

Gold daily is testing the trend support.

 

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Forex

There a quite a few nice trades in FX this week. These are some of the pairs that I am following and trading.

Continue reading

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Quad Witch To End The Week

Quadruple witch to end the week can cause some heightened volatility. I don’t take any new stock trades on during this session. I just maintain my stops on my open trades. It’s nothing to be concerned about in most cases.

SPHB daily high beta couldn’t break out of the heavy resistance. Just something to keep an eye on.

NDX daily holding support with the flat kijun sen for now. The weekly MACD is still crossed up. See how it goes next week.

DJIA daily industrials are holding this breakout in spite of the weekly MACD being crossed down. See if it holds into next week.

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