Category: INO.com Contributors

Buy Setup For Gold, Two Paths For Silver

Posted on by Aibek Burabayev

The plan posted at the end of November works amazingly well, so far as price accurately charts the preset pattern at least for the gold, which could offer a good trading opportunity soon.

Let us check the "King's" chart first to see what's happening.

Dollar Index

I switched to a smaller time frame to focus on the current leg down, as we saw on the chart before.

The U.S. dollar index (DXY) is building a slightly up-sloping sideways consolidation (orange channel). I think we can see another leg up to touch both the upside of the orange channel and the trendline resistance of the black dashed downtrend. This area around 91.5 would offer double resistance. Continue reading "Buy Setup For Gold, Two Paths For Silver" →

S&P 500 Futures Point To Higher Prices

Posted on by Mike Seery

S&P 500 Futures

The S&P 500 futures in the December contract is currently trading lower by 17 points at 3651, rallying off session lows as prices hit a one-week low.

If you have been following my previous blogs, you understand that I believe higher prices will continue, and if you are long a futures contract, I would continue to place the stop loss under the 10-day low standing at 3592 as an exit strategy. However, tomorrow it will be raised to 3626 as the chart structure will turn outstanding; therefore, the monetary risk would be relatively low for such a historically volatile commodity.

The S&P 500 is still trading above its 20 and 100-day moving average. This trend remains higher despite the recent setback over the last couple of days blamed on profit-taking and overbought trading conditions as I still think higher prices are ahead. Money flows continue to enter the equity market as the IPO phenomenon continues as several tech companies have come about doubling or even tripling on their 1st day of trading. There is still a lot of pent-up demand, especially going into 2021 when the coronavirus vaccine will start to be distributed. I see no reason to be short stocks as trading with the path of least resistance is the most successful way to trade over time.

TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Silver Futures

Silver futures in the March contract settled last Friday in New York at 24.25 an ounce while currently trading at 24.10 down slightly for the trading week still stuck in a tight 11-week consolidation pattern looking for some fresh news to push prices higher.

I'm sitting on the sidelines as I'm a trend trader and try to avoid choppy markets, and that's exactly what we are experiencing. I will still be recommending a bullish position if prices close above the critical 25.71 level, which could happen in the coming weeks as I still think historically speaking, silver looks cheap. Continue reading "S&P 500 Futures Point To Higher Prices" →

Stock Market Ready For A Pause

Posted on by Chris Vermeulen

Weeks after the Election Rally initiated a moderately strong upside breakout rally, our Custom Index charts suggest the US stock market may be ready for a brief pause in trending before any new trends continue. Global traders and investors jumped into the US stock market just days before the US elections expecting something big to take place. The rally that initiated just days before the US election pushed our Custom Index charts well into the upper range of the 2016 to 2018 upward sloping price channel. This suggests the US stock markets have ended the downward price reversion and are now attempting to extend into the upward price channel – attempting to resume the upward trending that started after the 2016 elections.

Weekly Smart Cash And Volatility Indexes

The Weekly Smart Cash Index, below, highlights the impressive rally recently and the upward sloping price channel that is back in play for price. The highlighted range of the upward sloping price channel is actually the lower half of the std deviation range of the 2016 to 2018 price channel. So, as of right now, the Smart Cash Index price level has yet to really breach the middle of this channel and is still only within the lower half of the channel. Still, the support near the lower boundary of this level has been retested two or three times over the past six months and held. This suggests the lower channel level (the lower heavy BLUE line) is now acting as moderate price support.

stock market

The speed of the recent upside price rally on this Smart Cash Index chart suggests that current price congestion may be an indication that the US stock market has reached a point where it will pause and stall a bit before attempting any new rally. From the recent lows near the end of October to the current highs, the current rally represents a 50% Fibonacci price expansion of the range from the March 2020 lows to the highs in August 2020. The 50% expansion range is a very common Fibonacci level that can typically prompt market price pauses or reversals. Continue reading "Stock Market Ready For A Pause" →

Options: Generating Consistent Monthly Income

Posted on by The INO.com Team

Generating consistent monthly income in a high probability manner in both bear and bull markets is the luxury of options trading. The core of options trading is defining risk, leveraging a minimal amount of capital, and maximizing returns. They enable smooth and consistent portfolio appreciation without guessing which way the market will move. An options-based portfolio performance demonstrates the durability and resiliency of options trading as a means to drive portfolio results.

An agile options-based portfolio is essential to navigate pockets of volatility and mitigate market downdrafts. The recent September correction, October nosedive, and election volatility into November are prime examples of why risk management is paramount. Despite the recent market volatility, positive returns in all three market scenarios were generated. Over the past 6-plus months, 171 trades were placed and closed. A win rate of 98% was achieved with an average ROI per trade of 7.6% and an overall option premium capture of 89% while matching returns of the broader market and outperforming during market downswings (Figures 1 and 2).

Options

Figure 1 – Overall option metrics from May 2020 – December 4th, 2020
Continue reading "Options: Generating Consistent Monthly Income" →

Is Fed "Independence" Dead?

Posted on by George Yacik

For the better part of the past four years, we've had to listen to the chattering classes defending the sanctity of the independence of the Federal Reserve. President Trump was routinely lambasted for constantly criticizing Jerome Powell, while several of his other nominees to the Fed, such as Herman Cain and Steven Moore, were deemed to be too cozy to Trump to warrant consideration. Both of them withdrew their nominations for other reasons, but it appeared that their nominations were DOA. For the same reason, the confirmation of the "controversial" Judy Shelton looks like it is going to die on the vine because she's been portrayed as Trump's lackey.

Yet now we have the prospect of Janet Yellen, the former chair of the Fed, being nominated as Joe Biden's Secretary of the Treasury. If nothing else, that will basically put the nail in the coffin of the notion of Fed independence. Does anyone seriously doubt that the Treasury and the Fed will be joined at the hip when the two most recent Fed chairs head those two agencies?

Yet that prospect probably won't be an impediment to her being confirmed by the Senate—on the contrary. The markets greeted Yellen's nomination with absolute euphoria, as well they should. The prospect of the Treasury and the Fed working more closely together in a time of crisis is certainly a reason for optimism. And it's certainly good for my portfolio, so I'm not complaining. But lost in all of the jubilation is that the idea of Fed independence has gone by the wayside, and nobody seems to give a hoot.

This is certainly not a bad thing. The whole idea of Fed independence was always suspect. The Fed is no more independent than the FBI or the Energy Department. It's just another branch of the government that arguably should always work in tandem with the Treasury for the betterment of the U.S. economy and usually does. Yet someone created this fiction that the Fed is somehow the moral equivalent of the Supreme Court and above politics. Continue reading "Is Fed "Independence" Dead?" →