Valentine’s Day Review
Happy Valentine’s Day indeed. US Equity indices settled at fresh all-time highs on February 14, 2017. Let’s jump right into the markets:
The current uptrend is a thing of beauty. The chart below shows the active trend in the E-mini NASDAQ 100 futures (NQ). Look at the current eight day win streak in NQ. Note that each day NQ has recorded higher highs and higher lows vs the prior session in addition to closing above the current days open.
Currently NQ is 1.76% above the active uptrend, displayed in the chart below as a blue line. That is too extended for VCM to recommend fresh positions. Our plan is to remain patient, and look to enter a fresh long position on a pull back to the trend line.
Applying similar logic to the E-mini S&P 500 futures, puts support in the 2,304 to 2,306 zone, approximately 1.4% below the February 14, 2017 settlement of 2,337.
The previous post put bonds in a range from 150 to 154 with a slight downside bias. That bias and range played out exactly over the past two trading sessions. Bond weakness February 13th and 14th found support at 150. That level remains a key downside inflection point. VCM does not have a bias as to whether or not the support will continue to hold.
Gold is getting interesting. As discussed on Sunday, gold is in a long term down trend as long as it is trading below $1,320/oz. That is obviously too far away to take a long term position. However, the daily uptrend, which has been dominant through the early part of 2017 is vulnerable to the downside tomorrow, February 15, 2017.
VCM is using $1,224.50/oz as a hard inflection point. A break below this near term trend maps to $1,195/oz. Managing risk around an inflection point can be tricky, currently we envision $1,233/oz as a hard stop loss but we hope to tighten that up and play against the break down entry point of $1,224.50/oz if the trade triggers.
Nothing to update in the crude oil market. Ranges inside of ranges with no bias or clues to larger directional move yet. Remember March options settle on close tomorrow, February 15th.
Clear downtrend against 1.0675. VCM would need to see a close above that level with continuation higher the following day in order to bet against the trend.
That’ll do it for the Valentine’s Day VCM market recap. Best of luck out there.