The purpose of this article is to provide some insight into potential upcoming trades and portfolio management across several markets. This is an overview of our SC Weekly for our premium and expert swing members.
Markets:
The consolidation continues and we are likely in for another week or two of ranging markets; However, Gold may be telling that the next leg higher may be earlier than expected.Trade war on hold, Fed set to cut rates, and the job numbers were on point, yet the market pulled back. Are we in a holding pattern before earnings and what stocks are we looking at to buy into earnings? The economic calendar is a little thin other than Powell's testimony and release of the FOMC meeting minutes. The Consumer Price Index (CPI) is released Thursday but will there be any sign of inflation?Gold continues to hold 1400 as the dollar strengthens on the back of NFP numbers. Is this a signal that the market is pricing in the end of a bull cycle? [ihc-hide-content ihc_mb_type="show" ihc_mb_who="2,3" ihc_mb_template="1" ]
Cryptos:
BTC Monthly: (Bitstamp)
Bitcoin has diverged from the broader trend and is likely entering the parabolic stage of the market. This is going to take several months to unfold, but our next target is in the mid 20k area which we expect to happen over the course of the next 3-4 months.Keep in mind this is still a guide and not set in stone, but we are looking for a broader swing into the 35k area over the next year. We are already starting to see economic growth slowing and this will push traders and investors looking for Alpha into other markets.For those looking for additional exposure or putting fresh capital to work, anywhere under 12k is an area to be adding. Like gold I have a target level and I will position up and into 1/2 this target. Same goes with Bitcoin. I want to start trimming out in the 20-30k area not adding into it.This does not imply we stop positioning, but we will be looking to remove our capital with future position and swing trades. Removing risk capital makes one a strong hand. It enables a trader or investor to skate through a major correction and there will be another one and this is what we are preparing for now.Last year we were preparing for the rally, this year we prepare for the next major pullback. The goal is to be ahead of the market, not lagging or riding the cycle up and back down. Making 400% does no good if you don't lock in something.
BTC Weekly: (Coinbase Chart)
Bitcoin was pretty uneventful this week, and we expect another week or so of consolidation. However there has been a strong correlation with Gold recently and this may shorten the cycle and a leg higher might come quicker than we think. Even Rick Santelli is calling Bitcoin a safe haven trade, and it is becoming more popular as an economic hedge. The question big question is does Bitcoin go parabolic like 2017 diverting from the prevailing trend?The level to take out, confirming the next leg higher is 16k. This decreases the likelhood of a pullback into the 10k area, and sets up for a final leg higher. There will be several areas we will position trade out of, including the current one. A pullback from 16k will be the next.Again we want to build inventory and remove capital using position and swing trades.
BTCUSD: (Coinbase)
If Bitcoin fails to take out 12k here and pulls back, it is quite possible we see a swing lower below 8500. This is one reason I am keeping my buy orders in place. Though not a high probability scenario, it can happen, and I want to be prepared to take advantage of it.Regardless it would be a lower high and we would lean more towards taking out the 9700 level which may trigger stops and push us into the low to mid 8k area. The structure is more fitting of ranging market, and until we see some change with price action, we stay positioned. The 12,275 and 13,000 levels are important and if one or both are hit, will provide additional insight as to the type of correction. The challenge with stepping into the initial dip as we did, is we are playing the bounce, but that bounce does not have to be as strong as anticipated.We could see consolidation at the lower end of the range, which would favor a final flush of longs, and price dipping into the low to mid 8k area. However a few alts may be pointing towards that next swing higher.
ETHUSD (Coinbase daily)
Ethereum is looking bullish in the short term and we may look to add a small position in an attempt to add to our current inventory. The 320 is an important level to take out with 335 and 385 being the current high end targets. IF Bitcoin does not rally it is likely the alt market will follow and pullback.The $250 area is one I would be most interested in for being aggressive in adding inventory for the next leg higher towards $600. Since Greyscale launched it's Ethereum trust there has been a lot of strength in the chart. We will see how the day plays out but this is one on our radar.
LTCUSD Weekly (Coinbase)
It is not very clear if Litecoin is further along in the corrective cycle, or is falling out of favor with the market. I still like the chart as it is very bullish and has a distinct trend starting from the beginning of the bull rally. Attempting to rotate in and out of coins is a fools game and though we are looking to add, Litecoin is on hold right now.The 110 level has been solid support and if it continues to build support around this area we can add to our position. I want to be clear, I am very overweight personally in Litecoin but would not mind adding another position to further reduce my average cost.This would be looking for a broader move and I would be removing all my capital and adding any potential profits to my cash position. However there is another coin that may have potential for a better return.
Monero (XMR) Weekly (Bitfinex)
Monero is one that the chart and price action has adhered strongly to the technical levels. It is a pureplay on privacy coins and it is not highly likely it will ever see action on regulated exchange, but there is potential. Currently we have an interim target of $215 but $300 is the broader target and one I will be looking to position for.
XMR Daily:
To be clear these coins are not Bitcoin and as attractive as the returns look in the end we want to own them at no cost. Initial resistance is at 115.00 but could swing as high as 130 before pulling back. If the 115 level holds we will look to buy in the 95.0-100.0 area for the next swing higher.This coin has adhered to the technicals making it more likely to predict future price action.
Crypto Summary:
Where the next leg of the market begins is simply a guess. From here we can go vertical, or see continued consolidation over the next few weeks. IF you still have capital to put to work, or are just opening a position up, there is nothing wrong with adding a position here, and buying a pullback whether in the near term, or after confirmation that we are entering the leg higher.
Forex:
DXY:
The Dollar strengthened on the back of a positive NFP number and is setting up for a potential leg higher yet maybe not so fast. We have been mentioning for weeks that the market may be ranging and this is what we are starting to see develop. This allows for us to make a few range trades, but like we mentioned with Bitcoin the risk is a break of the range and the DXY starts to trend.The 97.25 level is a key level and we are likely to see some sort of pullback, and this could print a lower high making short USD trades a contrarian play at this point. This is a very strong and clear move but we have a clear 3 wave impulse swing and we are likely to retest the 96.75 level in the near term.
GBPUSD Daily:
.The pound is on our radar for a potential long trade. The 1.2515 level is a broader support level and we are looking at a potential failed low situation. As the dollar is attempting to range so is the Pound and it offers a nice Reward to Risk profile. We want to see how the market reacts closer to the open, and will assess at that time.
EURUSD:
The last Euro trade never triggered, and we closed out the USDCAD early last week, but once again we are looking for USD shorts here. Near the lower end of support and a clear 3 wave correction the potential for a higher low may be a trade of interest. I do not like the Euro as much as the Pound right now but we will see what they look like closer to the open.
Stocks:
We are starting to see the market exhaust here and are looking for shorts. Getting short to early risks taking some pain, which is why we opted to sell Calls on the Q's in lieu of shorting outright. Once we see confirmation of the market pulling back we will look to short both the market through the QQQ or IWM and CFD's.The risk in getting short to early is a final blow off top, trapping early shorts and stopping them out before the move happens. In addition earnings season starts next week, though we get a few companies reporting this week. This makes the market more unpredictable but there are signs that the market is pricing in a pullback.
S&P:
The 3000 level was not only the first level of resistance, but a psychological one as well. The first level to look for support is around 2900. There if we see a higher low, and a setup to short we can look to be aggressive. Until we see a better structure, any trades should be deemed higher risk of failing.Like bottoming, topping is generally a process not an event, though the rug can get pulled out quickly. We may look to shave some positions or buy insurance to avoid getting caught in a market selloff. Summer months are slow, and September is historically a period where markets bottom. This may be the start of the final leg lower which will take a month or so to play out.
DAX:
The DAX is a much weaker indices than the S&P or NASDAQ as it failed to retest the ATH and is in a position to print a lower high. There are several overlapping resistance areas from 12600 to 12675 which is a tight range. This is also an area where we look for a bullish fake-out based on the previous high. I will be looking to short the DAX using CFD's in the near term, but first want to see confirmation of some sorts. The target area is 11630-11850 so there is no need to rush into a position. If the DAX takes out the 12,675 level it would be a long setup fro 13,000.We need to let the market reveal itself and not get itchy to just jump in. Unlike stocks or cryptos where you can take some pain, with futures and CFD's the pain can be extreme.
NIFTY 50:
The Nifty had one of the strongest charts pushing a new high, yet this appears to have ended just under our fake-out area of 12,200. There was a short signal but was a risky short to take on a Sunday evening until the US markets opened.I am not familiar with the stocks in the NIFTY, but this has all the characteristics of a broader market top. I would not be adding longs here, and if I was in long positions I would be looking to lock in some gains, and or hedge for a possible pullback.I say possible because we still have no defined signal other than a lower high that formed as a pinbar on the weekly. Of course this is much following the S&P which most markets do. I would be looking for a short trade around 11,500 if the setup was right.
Stocks on the Radar:
Going into earnings season we are looking at stocks that were beat up from previous guidance, expectations are low, and pay a dividend. If the market does correct we want to get paid to wait for a recovery.
Kohls (KSS):
Kohls is on my radar for an add as it pays a hefty dividend of 5.30% and is trading at a low multiple of 10.0 PE. They have been one of the bright spots in retail. There partnership with Amazon and a low market cap of 8 billion makes them a potential acquisition target.This is one we can look to sell options in the near term, or for those that buy outright, can start a small position and cost average in. Going into the fall months KSS tends to trend to the upside making this a potential summer deal.Other than KSS there are not a lot of stocks I like here with the exception of a few tech names like NVDA and MRVL which we are looking to add. Yet with the market poised to pullback it is prudent to wait as we are likely to get better prices.
Gold:
Gold is attempting to pullback, but buyers keep stepping in which is why we do not short strong instruments that break higher out of a long period of consolidation. Now I am not a buyer here, but Gold is setting up for another leg higher. Much of this will ride on Powell's speech this week and until then we will just step aside. We want to trade out of the 1360-1375 area not from 1400's unless a clear signal evolves. We have mixed signals currently but yet there is another way to play Gold here.
Silver:
Silver has failed to rally with Gold and by historical metrics is well undervalued. Last time Gold hit 1365.0 Silver hit 21.0. With Gold at 1400.0 and Silver trying to hold 15.0 it is the only metal I would be looking to add here. Now personally I do not like silver bars with the exception of Engelhard and some older collectibles.In the near term 16.25 is an area where I would stop adding as this is the breakout area where the initial target is 18.50. In the much broader term Silver can easily reach $40-$80 again. It has a history of being the poor man's Gold, and for obvious reasons, price. I like 90% silver or silver eagles, but preferably 90% silver USD Pre-64 coins. When silver rallies the premiums tend to rise with 90% silver coins making them the best bang for the buck. So how am I playing Gold with Silver here?As far as trading Silver via CFD's we are open to a trade, but we need a very clear signal as the contract size is rather large. Very difficult to trade Gold and even more difficult to trade Silver via CFD's or futures contracts as they are very susceptible to news events and sentiment.
XAU/XAG
We have written about the Gold/Silver ratio before and with Gold breaking new 6 year highs, and Silver trading near its low the Gold to silver ratio is near an ATH. To be honest I never thought we would see 90 let alone pushing 93. What this implies is one ounce of Gold buys 93 ounces of Silver. I add often to my Gold and Silver position, but am only looking to buy silver here. This is a long term play so you are not going to get rich quick. Silver tends to outperform Gold when the metals bull market really hits stride.So any Silver I add here I will be looking to turn into Gold once the Silver Bull begins. During the peak of the market cycle, the ratio dipped to below 35.0. When it dips under 55.0 I will start removing capital by selling 93 ounces of Silver, using 55.0 pieces to buy one ounce of Gold and the other 38 I will sell to cash. To make it simple, you walk into the coin dealer with 93 ounces of silver. You separate them into two piles, one with 55.0 ounces, the other with 38.0. You trade 55.0 ounces of silver for one ounce of Gold and you sell the other 38.0 ounces for cash. Hence if Silver doubles or even triples from here, you are removing your initial capital and walking away with an ounce of Gold and some cash all for free. And I love free inventory especially when the market pays me to keep it.
OIL:
I do not like Oil long or short here as there are some mixed signals. A retest of 56.0 or push lower to 55.0 and a bullish reversal I would be interested in a long. There is a potential short setup, but the broader trend is still bullish and there is evidence within the structure of a possible swing higher.I simply do not like it here and until we see a clearer setup we will step aside. .Summary:We emphasize patience with our trading strategies, and we often miss a lot of initial moves because we are patient. We also trade numerous markets because generally there is a setup somewhere and being flexible with trades is key to longer term success. We will do updates throughout the day in the chat as we want to see how the market unfolds around noon. There is always a trade somewhere. Being flexible in trading various markets allow for better trade setups than forcing trades in just one market.[/ihc-hide-content][ihc-hide-content ihc_mb_type="block" ihc_mb_who="2,3" ihc_mb_template="2" ]This article is for our Premium & Expert Swing Members. In order to access it, you must be a subscriber and logged in. To learn more click here.[/ihc-hide-content]