Total US market (IWV) - Uptrending, overbought, declining money flow, declining relative strength vs. large cap US stocks, neutral PG rating. At short term resistance.
US Large Caps (SPY) - Uptrending, overbought, declining money flow, improving relative strength vs. total US stocks, neutral PG rating. At short term resistance.
Developed Countries- EX US - Uptrending, overbought, persistent money flow, improving relative strength vs. SPY, neutral PG rating. Through short term resistance. Appears to have more gas in the tank compared to US. This is where I trade "poor person's covered calls" - long dated in the money calls (out as far as Sept to January), short OTM calls. Because we're overbought and rated neutral, I favor aggressive overwriting near 40 delta to allow for a 3o to 90 day consolidation before trend continuation. Might be able to get a few rolls out of the deal before (hopefully) losing the stock to the upside.
Emerging Markets (EEM) - Consolidating, overbought, declining money flow, improving but persistently underperforming relative strength vs. SPY, upgrade to neutral PG rating. Recent new price high confirmed by oscillator high. Through short term resistance and has retaken the long term Chaikin trend. Stock has potential to drift up to $58, but not great risk reward here. Neutral and possibly neutral to bullish strategies. EEM is 40% China. Watch FXI.
China (FXI) - Downtrending but flattening (after a failed breakdown, it just put in a similar high in the short term), overbought, muted, but non negative money flow calculation may be affected by gaps due to time difference, weak but slightly improving relative strength vs. SPY, Very Bearish PG rating. Bouncing down off short term resistance. While there may not be enough horsepower to breakout, I'm cautious about being too directionally aggressive to the downside here. Failed breakdowns often result in an overcorrection to te upside. While I might entertain an out of the money short call spread, to me, China is a candidate for a neutral option strategy, either double calendar/diagonal or iron condor, depending on volatility. For me, the China chart gives me more confidence to trade EEM neutrally rather than bullshly.
Eurozone and Latin America: Uptrending, overbought, persistent money flow, proving relative strength vs. large cap US stocks, very bullish PG rating, and ILF breakout to new highs. Eurozone trend a little more mature than Latin America. Latin America official "personality change". Option traders: look to Brazil as proxy.
20 year Treasuries: Second guessing trading signals is still a thing for me, 20+ years into my trading career. Very Bearish rated bonds are on their upper end of a consolidation trading range with the OB/OS oscillator overbought and near a declining long term moving average. IV rank may keep short call option premium selling off the table. So skewed double diagonal or double calendar that offers upside for sideways, downward or even slight upward price movement is where I'd look. Perhaps the best thing for the market would be for bonds to remain in a trading range. A breakout move to the upside is a flight to safety and a breakdown move means a spike in interest rates. Both could be bad for stocks. Persistent moneyflow over the past several months make a spike to the downside less likely in my opinion.
Broad commodities (DBC). Uptrending, new highs, persistent strong money flow, persistent relative strength vs spy (and most stocks). Recent short term breakout to new highs suggest much higher prices in the future using Fibonacci extensions. Price target: $23.5 (161 Fibbo) and $25.50 (200 Fibbo). Current price - $19.08. Serious traders will trade underlying futures contracts to compensate for the extra tax paperwork and price erosion that comes with holding commodity related ETF's. Or, trade companies where the stock price benefits with an underlying up move in the commodity price. Examples follow.
Very Bullish rated OII provides engineering support for offshore drillers. As the price of oil increases, the economics of extracting oil from deep sea deposits becomes more attractive. Money flow, relative strength and price pattern all showing reversal of long term bearish trend.
GDX aggregates gold minders into one tradeable instrument. GDX is pulling back (and bouncing) within the context of a multi-month uptrend with persistent money flow, a recent fast transition from Bearish to Bullish Power Gauge in less than 60 days and recent slight positive relative strength vs. SPY after a protracted period of weakness. A break above 40 gives this stock the potential to run but without the trader having to make a bet on an individual company. Price volatility makes two way trading in the form of covered stock or diagonal option trades more attractive. My pick for trade of the week is to acquire GDX as a naked, long-dated in-the-money-call tomorrow, hold the option until overbought, then sell the .30 delta near month option. Hopefully, price continues it's series of higher highs and lower lows, allowing me to leg in and out of the short option while allowing the long, in the money option to appreciate in value.
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