Dear Reader,
If this is your first Market Minute, welcome! Here’s what to look for in the markets today…
General Trends
It’s time to start nibbling on stocks.
The S&P 500 has reached my downside target for the recent decline. It could fall farther, of course. But conditions are now oversold enough that the downside risk is limited from here. And the potential reward now justifies that risk.
We’re entering a seasonally bullish period for stock prices. And while earnings announcements, and geopolitical events – like the French elections (April 23) and the U.S. debt ceiling deadline (April 28) – might weigh on the market, I suspect much of the concern is already discounted.
Stocks
Here’s an updated look at the S&P 500…
The S&P closed right on the support line of the declining channel pattern I showed my readers last week. This is a logical area at which to expect a bounce attempt.
Remember, the Volatility Index (VIX) is on the verge of triggering a broad stock market “buy” signal. And we’re entering a seasonally bullish period for stocks. Though, admittedly, the seasonal bullishness I was looking for last Thursday evaporated as soon as we dropped “the mother of all bombs” on Afghanistan.
Another such event could create more selling pressure in the market, which could send the S&P down toward the next support line at 2,300. But I doubt we’ll see much more damage than that. And frankly, given the current setup, a move down to 2,300 might well be a “back up the truck” moment.
We’re not oversold enough to justify traders getting aggressive on the long side just yet. But a nibble or two at these levels looks like a good risk/reward setup to me.
The next bounce should, at least, propel the S&P back up to the resistance line of the channel (2,350). A bullish seasonal environment could be enough to get us back up to 2,385.
For today, I’m leaning bullish. I expect we’ll get a VIX buy signal on the close.
Here in my Market Minute, we take a look at how the markets are setting up every morning, and get you positioned to start the day. If you’re not an active trader, I’ll show you techniques that’ll make you a far better investor.
If you are an active trader… you’ll get the inside scoop on the most important trends to watch, and ideas for boosting your returns.
You've got my take on stocks today. Here's how I see things in other major markets…
Gold and Gold Stocks
The gold sector traded higher last Thursday morning. But it gave up those gains in the final minutes of trading and closed down on the day. This is “tired” action. The sector has enjoyed a decent rally over the past two weeks. It’s in need of a break.
As I said on Thursday… Traders should be cautious about buying gold stocks right here in such an overbought condition. We may get a better chance to buy in the days and weeks ahead.
Commodities
It looks like agriculture commodities are setting up for a strong summer rally. Corn, wheat, coffee, sugar, and other commodities are forming solid bottoming patterns on the charts. We’re probably going to see some back and forth action for the next few weeks. But I like the way most of the commodities are setting up for a summer rally.
Aggressive traders might be able to profit off a quick move higher in some of the “ags” like corn and sugar – which look poised for a short-term pop. But the bigger moves, and the bigger price gains, still look to be several weeks away.
I’ll update regular readers on these trends throughout the day on Jeff Clark Direct.
Best regards and good trading,
Jeff Clark
P.S. Although I can’t respond to your feedback directly, I welcome your comments and questions. Send them to me right here.