Success in the markets only comes with well-defined risk control procedures and knowing where potential traps might be. This market could be setting you up for a mighty big fall. Netflix has reported a well-received quarter and this morning’s Leading Indicators Report didn’t trip us up. You still have to be very cautious.
There are nine economic reports being released in the next four days that will move the markets up or down. Add in earnings reports from the likes of Apple, Facebook, Amazon and Under Armor and this week promises less certainty and more volatility.
The trap has been set…. You’ve been lulled….
Until we clear the $1,867-price level on the S&P 500 and finally clear the $3,570 – $3,600 price range on the Nasdaq the market is prone to violent selloffs. The market will lull you into a false sense of security. It will rise on low volume to the key levels I just mentioned and sell off violently and wipe out any newfound gains.
Can you see this coming? You bet; watch how bonds act everyday this week. They will signal whether this move is real or not. If bonds break decidedly lower then the move higher in stocks is real. If bonds hang around old highs or rally then beware… it’s a trap!
So how do you play this… stay nimble and look for the strongest markets. Right now one of the best markets is found in oil. Crude is setting up beautifully around the $104-price level. If crude continues its current pattern look for crude to shoot up to $106 and then $111. The easiest way to participate in this move is using an ETF based on crude. USO is a fine choice. Look for USO to move up ton $39-$42 depending upon how steep the climb in crude becomes.
If you’d like to hear my expanded thoughts on the markets, stocks and commodities you can listen to my radio show or watch my weekly video. Here are the links –
If you have any questions or would like help setting up a successful investing strategy please email me – Tim.Reazor@NorAmAsset.com
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