Monday, July 9, 2012

Monday Evening

Gold Futures (Aug) Daily
Gold has been working its way closer into the apex of a descending triangle on the daily chart... and I believe a decisive move is coming soon. Typically this setup is a bearish continuation pattern, but I have seen a lot of folks chattering about it and it makes me hesitant until I see more confirmation. Important levels on the August contract are 1530ish and 1640ish. Considering how this pattern is developing, I thought I would dig a bit more and see what else I could find.

Hulbert Gold Sentiment (Sentimentrader.com)
This indicator is courtesy of Sentimentrader.com and the Hulbert Financial Digest. It gives an aggregate of newsletter data showing net long/short exposure. It is considered to be a contrary indicator when at extremes... and as you can see, it is showing an extreme right now. This is a red flag for the bearish case considering it is suggesting the majority of Gold newsletters are suggesting flat to short positioning.

Gold Seasonality (Sentimentrader.com)
Gold seasonality is also a bit of a red flag for the bearish case. You can see that we are heading into the strongest seasonal period of the year... and that deserves some attention. August and September are the 2 most bullish months out of the year, which is likely the time Gold will be making its move out of that triangle pattern.

Overall... I get the sense that the daily chart pattern on Gold futures could easily turn into something more bullish if it breaks up and over the 1625-1640ish area. I'll be watching Gold pretty closely the next few weeks and will follow up with any new developments.

Monday Afternoon 2

SPX Daily
The S&P500 has pulled back a bit and is now approaching the 50day SMA at 1338ish. The bulls have an opportunity to turn the 50day higher for the first time since May IF they can hold it and start another push higher off that level.

On an intraday basis, S&P futures have been drifting around all morning with a negative bias.... but volume is light and is suggesting a 7-10 point range on the day session. The morning session high was 1349.50... which puts a low target area of 1339.50-1342.50. Futures are currently trading with about a 5 point discount, so that would put a low target area of 1344.50-1347.50 on SPX.

Monday Afternoon 1

XIDE Daily (11:30AM)
Did anyone take the trade?  This was the CoD on 6/28.  It's still working.

The Trade I wouldn't chase the open but I would want to get a small piece shortly after the "market on open" orders are filled. If the stock pauses or pulls back a little I would be ready to add. I think 4.00 is a reasonable target and that would be about 20% upside. With a stop just under Wednesday's low of 3.16 you'll have the 200 day above your stop and if it does trip you can watch for a bounce from 3.00 to buy it back if you like.

Monday Morning

Gator's Chart of the Day: PC
No it's not "politically correct" ... it's a stock that's ready to dive.  Panasonic has been in a downtrend since November 2010 (not shown) and it has just failed it's most recent test of the resistance line.  Also note that the 50 day simple moving average has not been relevant but the Bollinger bands have.  In the chart below (also a daily chart) we'll take a closer look at recent action.


The stock hit the resistance line and failed.  Note that it did not make it up to the Bollinger band.  This tells me the trend line is the key on the upside but the bottom Bollinger band has defined support very well. 

The Trade
There are options available so I may be in this one.  It looks like now is the time for the short sale (or put buy) and the stop should be set just above the trend line somewhere around 8.15.  That would be a loss of about 4.5% assuming the short is put on near 7.80.  Absent any company specific good news (and I would expect bad news rather than good) the bottom Bollinger band is the target to exit the trade. 

Be aware that there is a dividend and the ex-date is Sept 27th.  I expect the trade to complete before the end of July but a second opportunity could arise so if you are also looking for a "rinse and repeat" trade keep that date in mind.

Notes: All figures are from Finviz.  I cannot explain why Worden has made the last 2 candles green.  They should be red.