We first start with the McClellan Oscillator. A thrust of this strength out of an under cut low of 2018 points to a very high probability the ultimate bottom was formed on March 23rd . We entered our TQQQ trade on this date at $33.
One can see the weekly 200 moving average capped our initial rebound which is common. We expect price to grind higher into the week of April 13th. At that point a sizable drop should occur into the third week of April forming a higher low than March 23rd. We will most likely exit our longs prior to that pullback.
Although gold is showing positive technical signals we anticipate gold will need a few more weeks of consolidation to break through 1700. Mid April we will look to enter into a long position if things go as currently planned. We expect the next trough to hold above the 1550 support level. There will be a huge opportunity in metals shortly. In the coming weeks we will be entering large positions !
One can see that gold miners are ultimately still stocks and subject to following the stock market at times. The 200 weekly moving average also capped the miners advance. Later in the month of April/early May we expect the miners to put in a multi-month top.
With the Russians dumping and flooding the market with as much oil as possible to pay bills with the Saudi’s on their heels, one should expect no sustained bounce in oil until seasonality peaks into summer. Already there are reports of oil storage facilities at 90% capacity, meaning there is no room left to store oil! This indicates production will be tempered in the next 60 days and should allow price to have a mini bounce into early May with the stock market. Certainly not the type of risk reward we look for in a trade.
The bull market is alive and well. DO NOT LET THE DOOM AND GLOOMERS TELL YOU OTHERWISE!. This happens during every significant correction. Once a treatment is approved by the FDA it will buoy the world economy. We don’t need a vaccine for the stock market to rally. The market is forward looking and it already knows a vaccine will be here within 12 months. Yes there maybe mutations of the corona next year, but treatments will be in place to cut that crisis off at the pass. Remain calm and practice social distancing.
HFZ