7/21 Market Recap.

Posted by jon on

Spy of the week.


At last! the market took a break of the fierce up trend we experienced the last few weeks. Although we reached a new all time high on early sessions, it seems that the market took the time (And price) to rest a little and go for a small correction.

Seeing the daily chart still gives the impression of an over extended market that “should” correct itself much more than the current dip before re-establishing an upward move, but who are we to dictate the market what he should do…? Laguerre filter is pointing upward so we still look for dips for a Long entry opportunity


As for the most important support level, we have the 166 level. Breaching that and the flattening of the Laguerre filter would indicate a neutral sentiment. Remember that this level also experienced an Up gap, and event that usually tends to “close” himself on the short term. As for the next resistance level, we don’t have much of a choice, and the all times high of 170 will be the one.


The new Gold Rush?

An interesting piece of news popped up last week, without much notice from the media. This paragraph talked about a new survey conducted by Yemen General Authority of Geological and Mineral Resources, and states that this zone of arab peninsula may hide hundreds upon hundreds of millions of dollars worth of gold, silver, copper, zinc and other metals.

In Hadhramawt – eastern Yemeni province sharing a border with saudi arabia – The survey indicated reserves of over 31.6 metric tons of gold (!).

Given one Kilo of gold has a market value of ~$48,000, one metric ton represents a fortune of almost $48M. For comparison, this is far more than the gold reserves of a lot of countries the same size of yemen as Qatar (12.4 tonnes) Kingdom of Bahrain (4.7 tonnes)  and Jordany (14.7 tonnes).

Of course, for now this is one thousandth of the gold held by the aggregation of the gold held by all countries, but estimates say that the current findings could lead to a much larger discovery, one that will make the reserves of the biggest countries pale relative to  the gold buried in Yemen’s mountains…

As for the price of gold, we are observing a change in momentum.It has been a green month for gold and metals. As price surges, Laguerre Filter flattens out indicating a neutral environment and the upper channel trendline was breached. Again, the up move’s volume is still too low relative to the down move’s volume so that we cannot trust this price action too much.


Economic Calendar

As traders, we have to watch out from the moments where the FED is announcing important economic numbers. As there is especially constructed systems to trade the news, the majority of traders do not have the adequate tools in order to profit from the sharp, temporary moves and therefore wait on the sidelines until the turmoil is over.

What are the most important numbers this week that could shake the market either way? from the long list of economic numbers this week we extracted for you the most important:

Consumer Confidence – Jul 30 @ 10:00 AM.

GDP for second quarter – Jul 31 @ 8:30 AM.

Unemployment rate for the current month – Aug 2 @ 8:30 AM.

Stocks to watch.

Last week, Facebook has reported very good numbers regarding the revenue over mobile ads. This information launched the stock up %30. One day later the stock consolidated all day and we think it is apt to break the high and continue for another purchasing rush:

Applying the Darvas Box gives us 2 lines, one indicating to go Long above $34.88, with a stop loss of the recent low of $33.60. we will watch it.

Coca Cola (KO) is acting very weak lately, lagging the market. Big red days accompanied with high volume indicates an ongoing selling pressure. We think that this stock is a good opportunity to look for shorts the next sessions, looking on a smaller time frame in order to time entries with Darvas Box.


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