Here’s what to look for in the action today…
General Trends
In the final hour of the day yesterday, the S&P 500 went from +1.50 to -2.50. The index closed down 0.1%.
Meanwhile, in the final hour, gold stocks – as represented by the VanEck Vectors Gold Miners Fund (GDX) – went from -0.25 to just -0.02.
Okay… neither of these are big moves. In the bigger picture, this sort of action is just “noise.” But, in a tight trading range market, traders are going to look for any sort of evidence that confirms their convictions.
In my case, I’ve been arguing that as money comes out of the stock market it’s likely to find a home in the gold sector. As miniscule as the moves were during the final hour yesterday, they still support my thesis. So I feel compelled to point them out.
What can I say? I’m only human.
The Market Minute is where I share my thoughts on how the markets are setting up each day. They are just my thoughts – but I hope they make your trading day more profitable.
So, let’s get started with stocks…
Stocks
The bulls are running out of time… again. If the market is going to push into the 2411-2442 zone, then it needs to start moving toward that level right away. Going into next week, the seasonal trends start to turn bearish. So the rest of this week is the best chance the bulls have to push things higher.
The S&P 500 has support at its 9-day exponential moving average at 2390. If the index breaks decisively below that level, then the momentum shifts bearish. So it’s important the S&P holds above 2390 if it’s going to make a higher move over the next few days.
I still think earnings reports are going to be supportive of a higher market – especially earnings reports in the retail sector, which is already pushing higher from the setup I showed you yesterday.
But, I also think any further gains in the broad stock market from here are going to be short-lived. So I’m looking for extremely overbought conditions to give us a few good short-selling setups.
The bottom line is this… stocks look poised to move higher for the rest of this week. But, if the S&P loses support at 2390, then look for a more significant correction to start sooner rather than later.
My minimum target for the S&P is 2411. A strong rally could power the index as high as 2442.
Gold and Gold Stocks
Gold and silver traded lower yesterday. But mining stocks managed to recover their early losses and close basically unchanged. It’s bullish for the gold sector when mining stocks perform better than the metal. And, while one or two days don’t make a trend, the sector is acting well. Indeed, if you bought a gold stock or two during the weakness yesterday, then you’re probably in a good position today.
And, when the broad stock market does enter a more significant correction phase, gold stocks should perform well as a defensive trade.
I continue to like the idea of buying into the mining sector on any weakness this week.
I’ll update Delta Report readers on these trends throughout the day on Jeff Clark Direct.
Best regards and good trading,
Jeff Clark
Mailbag
Editor’s note: Thanks to all of you who've sent questions and comments for Jeff. Please keep your feedback coming right here. Today, a handful of praise for Market Minute…
Hello Jeff, I'm working on educating myself to become a better trader, and recently signed up for your daily newsletter – greatly appreciate it. I need to “complete” my education before retirement in a few years and Thank you for sharing the Guide to Option Trading. Well written, learned a lot already!
– Richard
I've been a subscriber to your “Market Minute” for a few weeks now. I look forward to receiving it every morning, and I must compliment you on your insight and analysis. Plus, you're teaching me about indicators I never knew existed! Continue with your great work.”
– Dave
This is great analysis…..thanks. Do you cover Oil and Oil stocks as well?”
– Stan
Jeff comment: Occasionally I do, Stan, when there’s an important movement in the sector. See the 5/4 issue for example.
Thank you for your brief… succinct comments on “the markets” today. It is truly refreshing. I look forward to following you in the future.
– Bill