It’s late night on Memorial Day.
The last wine cork has been popped. The coals on the barbeque have gone cold. There’s a pile of pool towels dampening the tiles on the side of the Jacuzzi. And stock futures have just opened for trading – down one point.
It looks like we’re going to start this week pretty much the same way we ended the last one: in a tight, lethargic trading range.
Here’s what to look for in the action today…
There’s not much new to add to the comments I made late last week…
The bulls have the momentum. Most of the daily technical indicators are still far from hitting overbought levels. So there’s room to run higher.
The Volatility Index (VIX) is at a 20-year low. And VIX call options are vastly more expensive than the puts. So, that’s a warning sign. And it suggests that any further gains in the broad stock market in the short term are likely to be given back in the weeks ahead.
High-yield bonds (HYG) and semiconductor stocks (SMH) continue to hold up, while the financial sector (XLF) lags behind.
For today… the bulls get the edge. But keep an eye on HYG and SMH. If those two sectors start to turn lower, the broad stock market won’t be far behind.
Gold and Gold Stocks
The gold sector continues to chop around in a tight range. Take a look at this updated chart of the VanEck Vectors Gold Miners Fund (GDX)…
This chart looks slightly bullish to me – with the action over the last two weeks forming a potential “bull flag.” If it plays out, GDX could make a run towards the upper end of its trading range near $24 per share. But it will take a solid breakout above that level to kick off a new intermediate-term rally phase for the gold sector.
I’ll update Delta Report readers on these trends throughout the day on Jeff Clark Direct.
Best regards and good trading,
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