Let's take a look at the markets as of last weeks close using SPY, SLV and XAU. They show a conflicted market that is trying really hard to establish some lasting trends. We'll have to wait and watch to see if any segments of the market or the general market can manage to do it.
The daily data on SPY looks like a mess - but with a new high registered on last Thursday and a small uptrend since the first of July. This uptrend has been marred by several whipsaws which has limited the profits of trading it. Right now, the MRO is below zero (bullish) and is waffling around like a drunken sailor on ice skates. As long as the MRO stays below zero without a valid SELL and the %R is climbing or at the top of it's range, the market is going to be upward bound. I'm long, but only modestly and in a position with a very close stop for now.
The weekly SPY Chart has finally - some three weeks after the MRO rolled over, given a valid BUY which may prove out the daily data on a longer basis. It's always a good entry point for a trade when the weekly and daily charts are in gear together which they are for SPY at the moment. Given the volatility that exists, I'd recommend a smaller position that can be supplemented should things keep going up. Gut says it won't happen - reality may have a different position on the matter.
On the precious metals front, which I pointed out a week or so ago looked to be in a corrective mood, is still without real direction, as XAU is rocking and rolling back and forth in a quite wide trading range. Right now, the MRO is going down through zero and has generated a valid BUY. My confidence in the staying power of this signal is only modest - but we don't trade on what my "confidence" whispers to me. This kind of market is a trader's dream as you can hop between long and short and back as the market waffles. The broad trading range benefits the trader in that up and down moves are stretched out sufficiently to make it worthwhile to do the work!
The weekly chart of XAU is on a valid SELL. Isn't it neat how the MRO gave a valid sell the same week the XAU penetrated the longer term uptrend! It tends to do that which pleases me. Right now, the MRO shows signs of starting roll over and the %R has flattened out. This is not a confidence builder for me until we get a valid BUY - which we might get this week but must wait and see. This may turn out to be a whip-saw into another up leg. It also shows that the longer term trend is putting pressure on the sellers! I still hold (and will hold) a core position in both gold and silver ETF's on the long side and they are making money for me every day the market's open..
SLV Daily data has been on a valid BUY since the second week of July. All that waffling around for the whole month of July is why you use a trading system and never trade on suppose this or that or "it feels"! While waffling in a downward direction, the MRO never gave a valid SELL, so we held onto the trade. August rolled around and the MRO dropped through zero (bullish), the %R rolled under and started up and the BUY signal that gave me quivers for three weeks is now profitable. How long? Don't ask me but the MRO is below zero (bullish) and if it hangs out down there we'll turn a nice profit on the trade. (Please note that the MRO is trying to roll under at the moment which may or may not portend another SELL.... Ain't just hanging out and waiting Hell!)...
On Friday last, the SLV weekly data gave a lovely bounce off the longer term uptrend (that goes back to 2009), the MRO reversed down and the %R turned up. This is a "more strength" signal, (or a BUY if you don't have a position in it) making the short term trade much more confident in its execution. We have not had a valid weekly SELL in SLV in a long time..
Also, I mentioned in a article a while ago that all ETFs are not created equal. In silver, if you want to trade it via the ETF route, use SLV, not SIL. Just compare the two day by day and you will see why.
You all know that I do not make long term forecasts with the MRO trading system as it is strictly a short to medium term tool for trading. But I want to show you one more chart of VTI (which I use as a general market proxy).
This is as long term as I get and I use the monthly data to underpin the fact that while we have short and medium term BUY and SELL signals within the bar high and lows for each month, the fact that VTI is on a SELL using longer term data keeps me alert for trading in the shorter term, knowing the overall bias at this moment for the general markets is D-O-W-N. Never forget that..
It might change this week or later this month, but for the moment that's the way it falls (pun intended).
Have a great week and above all, have some fun while you do it!
