Tuesday’s Rally Unimpressive – Yields Up – Gold Opp
The stock market had a very good rally on Tuesday, but there were only 235 more stocks going up than down. That shows some underlying weakness and a return to the narrow market. With the back of the momentum machine broken, this type of behavior is more supportive of my pullback thesis than a big run above the old highs.
The NASDAQ 100 is below. It is bouncing because it pulled back to the June low. On the next trip down I do not expect the index to hold.
Pundits are now talking about interest rates as the 10-Year has moved up strongly which I do not see happening here. I want more time to go by before I make a conclusion.
Crude oil has also bounced on the Iran news. Ignore the reason. Ignore the narrative. I would be surprised to see it trade back to $100 this quarter.
Our gold model took another position the other day in the stocks. For now, this is just a trade and not the start of something big, but I do not have high conviction on that. We are long and will sell strength until proven otherwise, especially if this brings the gold bugs out of the woodwork again. They never learn.
Google’s earnings come out tonight. They will move the market. The stock has been volatile and well off the highs. I know I do not have an edge although we have pared back our position. Good news should see a big rally. The question is if bad news will be bought because the stock is down. I don’t know.
On Monday we bought SSO. We sold some QQEW. On Tuesday we bought RYPMX, more PINK and more NFLX. We sold SSO, BUG and some GOOG.
