Author Archives: MPTrader

Calling the TBT Low … Where Is Yield Heading Next?

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On September 6, with the ProShares UltraShort 20+ Year Treasury (TBT) reaching a new low (33.32) in its 7-month corrective process, we noted that “Dec-Sep correction could be at or nearing a downside exhaustion.”

Our RSI and MACD indicators showed a glaring non-confirmation of the low — and sure enough after the TBT dipped to a new low of 32.99 the next day, it went on to rally over the next four sessions, and reached a high of 35.25 this past Wednesday.

On that same day, Wed Sep 20, the Federal Open Market Committee said it will keep the federal funds rate in a range of 1-1.25%, but Fed officials intimated that they may raise rates one more time by year-end, and three times during 2018, in addition to starting Quantitative Tightening in October– the slow, steady reduction of its bloated $4.5 trillion balance sheet. (more…)

Dueling Technicals on Amazon (AMZN)

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An analysis of Amazon (AMZN)’s charts on Monday identified a near-term potentially bullish formation juxtaposed against a tricky, potentially dangerous intermediate-term set up.

From a near-term perspective, AMZN on its hourly chart appeared to be putting in a “falling wedge”-type pattern (the opposite of a rising wedge), which usually represents a trend-ending formation. In this case, it would be the conclusion of the correction off of the July 27 high at 1083.20 to Monday’s low at 942.25.

Often times, the end of the falling wedge will come in the form of one final down-spike beneath the lower wedge boundary line, into marginal new reaction low territory, say beneath 940, into the 936 area, followed by a vicious upside reversal spike and the initiation of a powerful rally that will propel AMZN above 953-960 resistance to confirm the turn.  From a near-term perspective then, AMZN should be getting ready for a tradable upmove. (more…)

How Much Higher Can FCX Climb?

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A week ago, we noted to our members to keep a close eye on Freeport-McMoRan Inc. (FCX). 

The chart pattern argued for the price to thrust into a new upleg after completing a 3-week correction. 

The correction, from 15.27 on July 26 to 13.81 on Aug 11, held key multi-month support, and positioned the chart into a bullish cup-and-handle formation. 

Given the compelling technical set-up — portending greater demand and inflationary pressures in copper and others metals — we added FCX to our model portfolio on August 17 at 14.47. 

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Why Is Home Depot Stock Slumping After Earnings Beat?

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Home Depot (HD) beat on EPS, Revenues, and Same Store Sales when it reported on Tuesday prior to the market open. However, after initially popping 2.5% to 158.11 from Monday’s 154.26 close, HD reversed sharply into negative territory at 153.00/10 in pre-market action and closed the day at 150.17, down 2.6%. 
 
I am not sure what the selling is all about, except for a “sell-the-news” reaction, but one look at my 4-hour chart of HD, we can see that HD actually peaked back in mid-May, and since has established a series of lower-highs (including Tuesday morning’s spike to another lower-high). 
 
From a near-term perspective, HD needed to hold support in the 152.40/60 area to avert triggering a potentially significant sell signal from one of a handful of powerful, still relevant and profitable, brick and mortar retailers.  

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How Hot Can Nat Gas Get?

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By Mike Paulenoff, MPTrader.com

The lower-than-expected build in natural gas inventories (28 bcf vs. expected 37 bcf) in the Weekly Natural Gas Storage Report released yesterday (Thursday, August 10) goosed the price of the nat gas futures.
 
Our technical work anticipated the move, and we still see continued upside for the futures as well as for the VelocityShares 3x Long Natural Gas ETN (UGAZ).
 
The positive juxtaposition of our nearer-term momentum gauges with the sideways price action on the nat gas futures chart (July contract) was one of the indicators we used, which you can see on the chart from August 8.
 
We actually added a long trade in UGAZ back on August 2, when the nat gas futures clawed their way above important resistance at 2.835, which corresponded to a price of 11.07 in the UGAZ.
 
As we now know, natural gas rocketed yesterday above the July 31 unfilled downgap area at 2.89-2.92, towards a challenge of the next significant resistance zone at 2.97-3.00.
 
If hurdled and sustained, this will trigger potential for a run at multi-month resistance at 3.10-3.11.
 
The UGAZ has already exceeded our initial initial target of 12.40, and is up over 15% since we added it, with our next target at 13.25.

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3 Things the Charts Are Saying About the 10-Year

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Three things the technical set-up is telling us about the benchmark 10-year Treasury yield:

  1. The Momentum low of the correction after last year’s advance from 1.32% (7/06/16) to 2.64% (12/16/16) was established on 4/18/17 at 2.17%. All of the downside action in yield thereafter, into mid-late June 2017, has been unconfirmed by Yield Momentum.
  2. On 6/14/17, Yield hit its corrective low print at 2.10% off of the December 2016 high at 2.64%, which was accompanied by divergent, much higher Momentum readings. In addition, the 2.10% low represented a 38% retracement of the entire prior major upleg from 1.32% to 2.64%.
  3. The 6/26 minor pullback yield low at 2.12% followed by a sharp upmove to 2.25% on 6/28 represents a successful retest of the 6/14 low at 2.10% and a successful retest of the dominant up-trendline off of the 7/06/16 historic low yield of 1.32%. From a big picture technical perspective, benchmark 10 year Treasury Yield appears to be in very promising technical condition ahead of the initiation of a new upleg that extends its first bull leg from 1.32% to 2.64% towards a projected next target zone of 3.00%-3.15%.

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What Charts Are Saying About Tech

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The new all-time high in the Technology Select Sector SPDR ETF (XLK) established on Friday June 9 followed by a high-volume Key Downside Reversal remains the dominant feature of the post-November upleg, and was accompanied by a glaring upside momentum divergence that serves as a warning signal indicative of upside price exhaustion.

2) All of the action since June 9 has carved out a sideways digestion pattern beneath the cresting 20 DMA, usually a harbinger of approaching downside price continuation.

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