Here we are in another sea of red— not literally but as I look across the board and scroll through my twitter feed, texts, and emails… the theme is PANIC, SELL, OFFER… I just don’t get why… that being said, it doesn’t matter what happened, or why, — *where are we going next, and how am I going to manage risk through it, is what I am thinking.
After a strong rally in Gold last week, we have retraced into and through the weekend, with all the metals trading at a discount to their closing prices of last week. (Not going to even get into Platinum with all this Volkswagen talk “pricing” into it, but that market at 917 is relatively cheap imo). To me, gold is literally treasure, I mean as people want to throw it out, I have generally been a bull for the shiny historic safe haven, — every book, movie, story, almost always gold has been around, and it has had/held value above other assets and currencies. I haven’t seen many stories where gold is completely worthless, or not desired… that being said, I guess for now, even as stocks sold off today, and the USD — people didn’t want Gold. (For some reason US Treasuries were preferred as people looked for a flight to quality). — Oh.. But “we are going to raise rates this year”, ha, so not like those note and bond prices aren’t gunna have downward pressure… they were perma-bid today. Gold GC sits @ 1132 and is currently trading +.30 or +0.03% for Tuesday.
Next, even though there was a firm short squeeze and bounce higher in natty gas over the weekend, as many did expect this seasonally… this wasn’t enough to bring the energy sector higher, nor a bid to the main event, Crude Oil. The CL contract at the CME was down over -1.27, settling at 44.43… although I never like to see Oil in the red, especially in this exact market environment, we are in good company, as we have been range bound often rallying back above and through 45-47 when we have dipped to this level. I had blogged and been tweeting about the ridiculous back to back draws in the data like API/EIA for Crude inventories (but no sustained rally), I guess we will see this week starting tomorrow with API (after Tuesday close) and then Wednesday the headline EIA Petroleum Status Report will provide some serious color on the “supply” story regarding Crude. Nothing to write home about, but currently since the 5pm open, Crude Oil (CL) for Nov is trading +.09 +0.20% @ 44.52… Although this is not a large move, it is encouraging that the first reaction for whatever reason, is green, and heading towards being greater than 44.50— the key is to be around for the move higher, but sometimes we see markets have to get down, to get back up. I would not be able to really stay in Gold, or a Crude Oil especially if it wasn’t for using puts / hedging / stops, basically it is important to just be able to stay in the game and live to trade another day, so we can see if today’s trash truly can be tomorrow’s treasure.
The last market I am looking at and always focused on is the all mighty Spoos — which are the E- Mini S&P 500 Futures. The ES settled deep in the red a whooping -47.25 points, to mark at 1872.00– this level required me to step back and check out “where we are” in the stocks. I wanted to take a look at the 2 hour over a few days, and then look at a multi year in week ticks… It brings me back to the opportunity earlier this year the week of 8/24/15 as well as “coincidentally” looks similar or giving me deja vu to just past this time last year as the BTD mentality rocketed stocks higher into 2014 year-end after a dip lower last Sept-October (to this sub 1900 level). Tonight the market is in Asia-Europes hand before we get Redbook, Consumer Confidence, and really the week started– Calendar looks busy, especially come Wednesday. — The key is to be in the game for those moments, and to be able to trade them!
Currently the Spoos ES are trading @ 1877.25 +5.25 +0.28% — Let’s see where they go into EOM and weekly, as well as option month expiration approaching.
Let’s try again tomorrow. – Happy Trading.
-Bret Rosenthal