Dear Reader,
Here’s what to look for in the action today…
General Trends
Today is option expiration day. So in addition to the regular amount of computer-driven trading programs that influence the market action, we’re also likely to see some influence from computer programs designed to squeeze as much profit as possible out of expiring option positions.
Here in the Market Minute, I share my thoughts on how the major markets are setting up for the day… and some ideas for boosting your returns. It’s how I’m going to trade my own money.
Let’s take a look at the S&P…
Stocks
The S&P 500 Index closed right on its 50-day moving average (MA) line yesterday. Take a look…
The S&P is still stuck in the downward channel pattern. And it’s still dealing with the resistance of the 50-day MA.
After yesterday’s big rally, it sure “feels” like the market wants to run higher from here. But until the S&P can break out above resistance, traders need to be cautious. We still can’t rule out another decline towards the support line of the downward channel pattern.
I’ve been arguing all week that the market is entering a seasonally bullish time period. And we did get a broad stock market buy signal from the Volatility Index (VIX). So it makes sense to lean more bullish than bearish right here. But I wouldn’t get too aggressive on the long side until the S&P can make a decisive move above resistance.
A solid close above the 2356 level should kick off a move towards 2385 or so over the next few days.
On the other hand, if the market gives back more than 50% of yesterday’s gains – which would put the S&P below 2347 – then we’ll probably be looking at a test of the 2321 level early next week.
Gold and Gold Stocks
I expect gold and gold stocks to rally a bit today as we head into the weekend. The French election on Sunday, and the looming debt ceiling deadline next week, might create some buying pressure in the gold sector today.
Yesterday, gold stocks performed a little better than the metal. That’s an improvement. But one day doesn’t make a trend. And if gold stocks are going to resume their recent rally phase, then they’ll need to outperform the metal for several days.
I’ll update regular readers on these trends throughout the day on Jeff Clark Direct.
Best regards and good trading,
Jeff Clark
P.S. I love to hear your feedback. Send your comments and questions to me right here.