Markets in divergent confusion may go sideways/retrace before resuming strong rallies in unison; S&P futures continue to be directionally mixed, reports Trevor Smith of Trevor's Trading.
Divergence exists in the four major US Indices in that two are unable to make record highs in this closing week. Market internals symbols are also contradictory on direction. So, S&P futures could easily toss traders a throwback down to 3,500, 3438 zones before holiday rallies.
Bonus Trade Idea-Final Update: My December, February 2021 bullish options trade idea on Van Eck Vectors (REMX) rare-earth elements ETF did progress in that the pullback down from the low forties to the $36/share zone last month resulted in a rally to $56/share this week. It was a speculative idea that would theoretically profit from nuclear-generated electricity from its uranium holdings or from demand for military-related elements (gadolinium, lutetium, etc.) used for night-vision/stealth technology in the event that a February 2021 geopolitical conflict actually became a war. Because neither might occur, I also thought the ETF might also go up due to other rapidly depleted elements covered therein that are essential to laptop and phone screens. It is a winning trade at the moment, albeit earlier than ideal for the options expiration date.
My article on November 15 stated, "markets in trending math led to breakouts," referring to November's close. So far, it was correct, for US Indices, the euro, and crude oil made higher highs, and gold's breakdown into lower lows ended one dollar over my seemingly ridiculous $1,775/ounce target; thus, my short call spread gold trade won. My guidance to traders was to "join trends." Since trending-breakout markets can go anywhere and are difficult to calculate two weeks early, my mathematic range predictions are often less accurate in trending conditions. Five of 10 projected ranges printed as of Saturday, November 28, 2020, with other ranges being extremely close considering breakout market conditions.
Next Two Week’s Predicted Ranges (Written Saturday Night, November 28, 2020)
E-mini S&P 500
High Range 3688-3664; Low Range 3595-3580
Bearish opinion due to market internals' divergence 3500, 3438; 3141 targets are for December/January, if at all. Weekly chart bear candles in effect until January 2021.
Japanese Yen
High Range 9705-9670; Low Range 9522-9495
Expanded ranges due to trending-momentum mathematic conditions and breakouts for next coming two weeks, as Japanese yen futures did not yet experience its range breakout. Prices may exceed my ranges in current context of trending math.
Euro FX
High Range 1.202-1.197; Low Range 1.183-1.178
Neutral-bearish ranges in sideways trading based on two-day chart.
Gold
High Range $1822-$1803; Low Range $1782-1768
Neutral ranges in sideways trading based on two-day charts. Bearish monthly chart candlesticks. 50-week moving average is at $1762. I expect bullish bounces soon.
Crude Oil
High Range $4757-4650; Low Range $4350-4195
Neutral-bearish directional range in sideways pivot math with overhead technical resistance.
Prior Predicted Ranges (Written November 15 for November 15-November 30, 2020)
E-mini S&P 500
High Range 3670-3640; Low Range 3536-3465
Bearish opinion due to daily-chart candlestick patterns, associated volume spread analysis; weekly highs made early are more probable, but trending math supports far-off pricing even if bullish. Trending breakdowns likely to exceed my range toward 3438; 3141, 3078 targets are for later in November, if at all. Weekly chart doji breakdown/monthly candles in effect until December.
Actual: 3655-3542
Japanese Yen
High Range 9655-9600; Low Range 9510-9438
Expanded ranges due to trending-momentum mathematic conditions and bear bias for a third wave down. Prices may exceed my ranges in current context of trending math.
Actual: 9647-9514
Euro FX
High Range 1.195-1.187; Low Range 1.175-1.166
Neutral-bearish ranges based on two-day chart; higher and lower targets are in effect.
Actual: 1.196-1.180
Gold
High Range $1915-$1903; Low Range $1879-1863
Neutral-bearish ranges based on monthly-chart bearish candlestick patterns/valuations down to $1,775/ounce target. (Disclosure: while most of my trades are in stock indices futures, I am still in this $1890/1885-strikes short call spread bear trade to November 20 expiration that has been profitable/unprofitable many times. I'll happily exit with any profits if price falls under $1885 and warmly remember a family psychotherapist who warned anyone to stay out of oil/gold who thinks they must actively trade).
Actual: $1,898-1,776
Crude Oil
High Range $4399-4235; Low Range $3970-3824
Neutral-mixed directional range but trending pivot math will lead to wide-range, trend-joining moves.
Actual: $46.26-40.15
Trevor Smith is a technical market analyst/forecaster who is registered as a Commodity Trading Advisor. You can view Trevor’s Trading here.
