Bull and Bear Market

Tech wreck – AAPL -20%, GOOG -20%, FB -28%….and the Nasdaq Futures are -15% from peak to trough. It’s getting real hairy out there – you’ve had 2 months to buy U.S. Treasuries at 3.5yr lows. I know it was difficult at the time when CNBC and Jeff Gundlach were slobbering over the “breakout in yields” and the 10yr notes was the heaviest short position on wall st. Not the case any longer – 100K contracts in the 10yr were taken off the table last week to now 357K shorts down from as much as 800K contracts shorts and below the 3 month avg of 595K net short positions. Mind you, there’s still a heavy short position sitting out there, but I do think consensus is slowing moving our way. We are immediately overbought (while stocks are flirting with oversold levels), so I do think it’s prudent to book some gains and replant the position from better prices into year end.

Stocks are breaking last week’s lows as we speak and are staring at 2630 as the next downside support area. I did expect a retest of the recent lows, but thought it might happen in the beginning of Dec. We’re oversold but a re-test of 2600 is on the table. I’m also watching the VIX for an exhaustion signal, which could indicate a near-term low for stocks.

Oil has rebounded, and I do think this is the beginning of a rally phase into year end. I do still expect rallyies to stay trapped inside of 61-62 area. More upside potential than downside potential, in my opinion, over the next 2-3 weeks.

Gold- we still like gold. I’m looking for a spot to toss this back on officially but it hasn’t given us any good entry point opportunities since it slipped back to 1200.00. I do think gold can run to 1250-60 w/ immediate upside potential to 1235.00. I’m looking for 1208.00 as re-entry point for Gold.

 

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John Caruso

Senior Market Strategist
Follow John on Twitter @JCarusoRJO. John began his career at Wilshire Quinn Capital, a Wealth Management Firm based out of Los Angeles, California. John made his move to the commodity industry at the end of 2005, and began his path at Lind Waldock, at the time the largest retail brokerage division worldwide. John did his undergraduate work at Robert Morris University in Pennsylvania from 1999-2003, where he was a 4 year varsity basketball letterman.  A self-professed “Macro Trader”, John uses a multi-factor fundamental and “quantamental” trading model in distinguishing market cycles based upon the accelerations or decelerations of growth and inflation metrics. His technical and quantitative approach is heavily reliant upon trend and market range analysis via a custom built standard deviation system in helping him make probability-based market decisions. John is an avid reader of all things pertaining to finance, and behavioral economics. Click here to sign-up for John Caruso's Trading Coach Insights. Daily information and insight on all futures marketsin ranging from metals to equities.
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