11.19.14 – Taking ‘Em Back

Yesterday’s gains turned into today’s losses with the market pulling back as Fed minutes show the governors are concerned about deflation.  The Dow Industrials slipped only 2 points to close at 17,685.73 while the S&P 500 Index fell .15%.  Hard hit Tesla and Netflix contributed to the Nasdaq Composite lost .57%.  Treasury yields rose, which usually is consistent with higher equity prices.

UNG, the natural gas ETF, gained 3.86% but was turned back trying to get through its 200-day SMA.  UVXY, the leveraged VIX short-term futures ETF, rose 5.00%.  JO, the coffee ETN, gained 3.46%.  SRTY, the leveraged short Russell 2000 ETF, was up 3.16%.  Please click on the symbols for details.

The Bollinger Bandwidth on the VIX, discussed in Monday’s blog, narrowed to .2962.  A value below .30 is considered “Squeezed” so an increase in volatility should be expected soon.  Given how the market has really done nothing but move higher since making its V-bottom in mid-October, it’s likely there will be a pullback from here.

That may impact how gold performs.  A few weeks ago GLD, the gold ETF, fell below important support around 114.65 – 114.70 as well as closing below a long-term rising trend line.  It also closed just below a 50% retracement of the rise from the July 2005 low to the September 2011 high.  This month it’s tried to recapture the 50% level but stalled and pulled back upon reaching the former support line, which is now acting as resistance.  You can see this in the monthly chart below, which can be made full-screen by clicking on it:


The former support now resistance line is blue.  A pullback in stocks of more than just a few points may provide the oomph for GLD to push through resistance.  Whether it’s able to accomplish this is something we will know, in the fullness of time.

About Dave

David Steckler enjoyed 24+ years of experience as an investment counselor and portfolio manager before retiring. A former professor at Lindenwood University in Missouri, he also was a member and past president of the American Association of Professional Technical Analysts (AAPTA), and a member of the Market Technicians Association (MTA).
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