The bullishness continued today and the $SPY paused right on the highs resting against the downward trend line. The ETF which tracks the S&P 500 moved through horizontal resistance and is now above all major moving averages. 

The E-Minis futures contract actually pushed slightly above its trend resistance and has a new daily candle on the other side. Both the RSIs are confirming the new higher highs so it looks like a test of the 280 for the SPY is in the cards.

The resistance levels before 280 for the SPY are 273.42 (the 61.8% Fib retracement) and 279.14 (the 78%). A small backtest after pushing through resistance or of the 100day would not be unexpected but also not necessary. 

With Gold falling out of favor with the rest of the precious metals as the US Dollar breaks out of consolidation to the upside, I thought now would be a good time to take a look at one miner in particular to put on the radar for a long position in the near future. 

Barrick Gold ($ABX) engages in the production and sale of gold and copper, as well as related activities such as exploration and mine development. 

With a decent run since March and a pullback likely coming I’ll be watching for signs the correction is complete around the $13-$11 range to enter a long position. 

So why take a look at the miners with Gold prices under pressure lately? Lets take a look at the valuations of a handful of major miners. The chart below plots the median enterprise value-to-revenues for major miners over the past 20 years. Notice that from a valuation standpoint they are cheaper today than it was in the early 2000’s when Gold was hitting $1,000 spot price. 

It also looks as if the profitability of these companies is significantly better today than it was roughly 15 years ago when Gold prices were much higher. 

Furthermore, the median 3-year revenue growth for this group has just turned positive again as it did at the start of the last major bull market for gold and the miners.

All in all, it looks as if Mr. Market is currently pricing in a much more dire situation than the companies actually face at present. In other words, this is what a margin of safety looks like. A normalization of the valuations for this group would yield a 50% gain for the stocks even without any upside in the gold price.

What a week. Just when we thought the market was breaking down it found support at the 200day MA not once but twice and on Friday’s test the SPY then reversed and pushed through both the 8 & 21day’s MAs; pausing at a short term trend resistance. 

We finished with a weekly reversal doji candle. It would be difficult to argue that the near term is not bullish with the 200day holding, the weekly candle and the daily solidly up all day through the 8 and 21 MAs. 

But that is now the past. What about next week? I can see a few likely possibilities.

  1. We push through the downward trend line resistance and continue up to a convergence around the 170 area and or trend resistance. I feel given the strength of the move Friday this is the likely the case. 
  2. Something geopolitical happens over the weekend and the SPY reverses  as it finds resistance at the 50day and the 267 horizontal resistance. All things being equal this is a possibility but I feel has a lower probability of occurring. 
  3. So is the first scenario plays out and we continue up into the next resistance areas, those are the 170 area, the 100day MA and downward trend line. If we find resistance there the SPY continues down to test the 200day or triangle support.
  4. It that resistance doesn’t hold, we continue up and test the open gap at 280.

These scenarios my seem simplistic (either we go up or we go down) but I assure you, I haven’t seen the Bull and Bear cases so equally matched and both sides will be fiercely defending their positions. 

What is my personal feeling of what plays out and would like to see happen? That is a complex question. I do not want to see the market suffer a 40, 50 or 61.8% correction and people feel the pain that comes with that. I’ve been through it and its not fun. People lose jobs and retirement accounts. But do I feel that a continued correction is the best thing for the VERY over inflated market propped up on quantitative easing since 2001 and historic central bank debt levels… Yes. 

If we were to test the highs again without a more meaningful pull back than the 10% we had in February, the danger is a much more severe and prolonged period market turmoil if we test the highs now. It is a lot to go into here but without a resetting of the in-balance of capital and debt markets (in short) the global economy simply cannot continue fueling the market through ‘easy money’ infused into the global economy. Their balance sheets are at historic levels and are already in the danger zone. Continuing adding to these levels would run the risk of not just a correction and recession but a full out depression worse that 1929. Now this is not a certainty but rather a very real possibility noted by Economists and Financiers around the world at the moment.

So would I prefer a little bit of bullishness to test the highs and a possible double top, or would I like to see the markets reset now for a more prolonged period of expansion? I choose the latter and why I would like to see resistance hold and see a continuation of the correction down to a total of 30-40%. 

I actually thought today might have been the day. The day the $SPY finally breaks out of its pennant and below the 200day MA. Well, it did, and then retraced that move completely ending us with what is technically considered a reversal doji daily candle. We could see a little more upside based on that but consider a couple of other things that is keeping me from jumping on the Bull train just yet. 

  1. We did break through a long term support trend line that goes back years. Yes we reclaimed it but the thing about trend lines is that the more we test and break momentarily the weaker they become. This is true for resistance lines as well 
  2. We are below the 100, 50, 21, and 8day moving averages. For me, I watch the 8 and 21 more closely. For as so long as any asset class is below those MAs I am a seller. The reverse is true for when above. Extenuating circumstances aside. 
  3. Even though we closed with a doji candle we still closed Below yesterday’s close. 
  4. Technicals: I see no sign of any bullish divergence on the RSI nor are we in oversold territory. The RSI was 43.86 on closing. The MACD is positive but the momentum has been declining meaning the strength of any uptick in price has less validity behind it. In fact, I just looked at the MACD on the E-minis and we now have the first negative daily tic on the daily. 
  5. The overall pattern just doesn’t look bullish. We are still under the falling trend line from the highs and have tested the lower support multiple times.
  6. Too many geo political uncertainties so I’ll just say: Trade, Iran, President Trump.

Bullish Case:

  1. 200day MA held today as support.
  2. Broke through but then regained trend support. 
  3. Doji daily candle. 



As an entrepreneur in a startup, how do you break free of the status quo to ensure innovation is sparking on all cylinders?

  1. Get wired for innovation. We all agree that innovation is an adventure into the unknown. If you want people to follow, you need to be able to convince them of three things: (1) your mission is worth supporting, (2) you have the competence to build a critical mass, and (3) you have integrity to look out for their best interests along the way.
  2. Lead the revolution. Innovators have more than the vision; they have the drive to lead, and the focus to stay on target. They are wired to win. Organizations don’t produce game-changing innovations; people do. They allow a leap of faith in their own ideas, as well as in the ideas and capabilities of their team.
  3. Build a culture of innovation. You need a culture where restlessness is tolerated, curiosity is encouraged, passion is inspired, creativity is expected, and people are always talking about what’s next. Ultimately, the mind-set changes so significantly that innovation is natural, and no one is conscious of it.
  4. Question the unquestionable. Outsiders ask a lot of questions because they don’t presume to know why something is done a certain way. Make your insiders think like outsiders. Provocative questions like “What if?”, “Why not?”, or “So what?” can help to get everyone outside the box.
  5. Look beyond customer imagination. First-of-a-kind products empower customers to do things they didn’t even know they wanted to do, and now can’t live without them. The computer mouse, Tivo, and Teflon are examples. Listen to customers, but remember that they can’t always tell you what they don’t know.
  6. Go to the intersection of trends. Innovators pay close attention to the early warning signs that precede major cultural, societal, and market shifts. Where most people see an isolated trend, innovators connect the dots by relating one trend to several others. They focus on next practices, versus best practices.
  7. Solve a problem that matters. The key here is to resist the temptation to pay more attention to the technology solution than the problem. Some people create brilliant solutions to non-existent problems, like maybe Segway and satellite phones. These solutions may be nice to have, but won’t ignite a revolution to get there.
  8. Risk more, fail faster, and bounce back stronger. When you pursue a creative idea that takes you beyond, fear tempts you to make compromises. If you can push through this fear and doubt, or bounce back intelligently from initial setbacks, you often arrive at something that has truly never been seen before.

I’m not a doomsday person but I’ve also been through two major bubbles and all one has to do is look themselves and see how historic this past 10 yrs has been. Not only the length coming out of the Financial Crisis but the gains as well. 

This is were relatively new traders or investors may get thrown off guard.  By new I mean since the 2009 bottom because the reality is it’s been REAL easy to be a trader the past decade compared to history. Just take a look at the massive move in the graphic from 2009 until now. The same trading methodology in a runaway (Asian Finc Crisis aside) won’t work the same in a more ‘normalized’ market. 

To put things in perspective, running the fibonacci retracement from the 09′ lows to the near recent highs we can see that even what is considered a normal and healthy pullback to the 38.2% Fib would put the $SPY at $202.84. Now this is just what is considered a normal and healthy pullback for any asset class when Fib levels are applied to. But now take into account that ‘we’ the U.S. and the whole world is leveraged 2X the levels of 2008. If the markets begin to really roll over the next major Fib level that has the equal strength and attraction to if the 38% should not hold as support is the 61.8% at $151.7. To my amazement, that level lines up almost perfectly with the highs of 2008. The 2008 high and 2009 lows are circled in the graphic which also includes the Fibonacci Retracement levels. 

If you weren’t paying attention to the markets in 2008/09 the fear on the street was something most traders have never experienced and in told we dropped 90 basis points. Now that is arithmetic and not logarithmic but the reality still stands that most are not, and in my mind always should be, prepared for the possibility of a real, meaningful correction; not a little 10% correction which is about the extent of the drop in February of this year. 

So, just throwing it out there to put a little fear in some who have never been trading or investing at the time of a series correction. I’m not saying it’s going to happen but it doesn’t hurt to be aware of what is in the realm of possibilities. 



Estee Lauder is looking like an ideal short candidate. Broken and retest channel support and looking at the financials, there has been a 61% in selling by insiders. Their cash on hand is 1.3 with a pretty heavy debt load to equity at .73$%.

A stop above the recent high with a first target of the top of the open gap at $120 offers a decent trade setup. 

If we take a look at the weekly SPY chart we see to appossing reversal doji candles converging on just about where we closed Friday. So besides intra week moves, we really haven’t gone anywhere. Just squeezing tighter between now two pennants.


Because of this and falling to achieve a lower low, I have to move my bias to more neutral. Although we are technically in an intermediate trend down, the amount o

f attention on the downward trend line ‘could’ cause a massive squeeze through as shorts stops get trigger. In short, the “short” trade is becoming crowded with many expecting to take out thelows. Crowded trades always make me uneasy because of the stop loss squeeze potential. 

Another variable we need to consider though is the new month, May. The dreaded “sell in May and go away” is more than the numerous catch phrases and superstitions on Wall Street, its actually quantifiably proven that May has produced more negative returns following than any other months. 

Given all this I will be not beholden to any direction and look for the early signals of a direction. 


I’ve been sifting through the Consumer Staples sector as it has lagged every other sector yr to date and is considered a defensive sector against an economic downturn which I believe will happen sooner than later. Let’s face it, in a recession, we still eat cereal but don’t need to upgrade to the latest iphone. 

$GIS has tested support and broken out of a downtrend channel ever so slightly. Since General Mills has gotten pulled along with the rest of the sector it has a P/B ratio of 5.13 now making it an attractive Value Investment. A safe stop loss of just below $30 and a first target profit in the mid $50s offers an attractive Value Risk to Reward trade. 

Also, the time seems to be right now to add a long position as there is a series of RSI bullish divergences on the daily chart. 


As everyone should, I have a portfolio and part of that portfolio consists of my active trading portfolio set aside for short term trades via options, futures and currencies. Since these asset classes are some of the riskiest I have another portfolio set aside that consists of more long term investments. Typically stocks and fixed income or high yielding assets whose purpose is to be held more than a year if not longer. 

For me, once, hopefully, gains in my active trading account reach 75-100% gains I take the majority of gains and transfer to the longer term portfolio. Well that time has come and I want to make sure I make a transfer incase what I think the market is going to do happens (Read: Latest Post).

One sector that has my attention because it hasn’t had the advance that the broader market or tech has in Consumer Staples. One ETF that represents this sector is the $XLP. There are rumblings on the Street that because of its underperformance and repetition to me a defensive play during market downturns it may be time for the XLP to play catch up and outperform in the short term other sectors that get more attention in bull markets like technology (represented by the tech ETF $XLK).

Now being over Forty (but just barely) I have to be a little more prudent as can’t afford a drawdown in my account nor have as much time to recover as I did when I was Twenty. Regardless, even from a trading perspective the performance of these two sectors can also give us trading clues as to over and undervalued sectors at the moment.