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BLUE CHIP DAILY TREND REPORT
FRIDAY, DECEMBER 27, 2019
Raising target cash allocation to 10-15%
MARKETS OVERVIEW
THURSDAY’S CLOSING PRICES
S&P 500, +16.53, 3239
10-year US Treasury Yields, -.05, 1.905
Gold, +9.60, 1514.40
WTI Crude Oil, +.57, 61.68
NYSE New 52-week Highs: 342
Blue Chip Daily focus names on the list (by volume):
SPY, BAC, EEM, HL, C, IWM, BABA, JPM, V, NEM, XLK, XBI, SHOP, GS, TAL, AGN, MAS
Nasdaq New 52-week Highs: 145
Blue Chip Daily focus names on the list (by volume):
AMD, AAPL, QQQ, MSFT, INTC, TSLA, SWKS
Top 10 Core ETFs (listed by Daily RSI):
1. QQQ (Nasdaq 100)
2. SPY (S&P 500)
3. XLV (Healthcare)
4. XLK (Technology)
5. EEM (Emerging Markets)
6. FXI (China)
7. VGK (Europe)
8. GLD (Gold)
9. KWEB (China Internet)
10. IGV (Software)
Top 5 ETF performers for the day (all markets):
GDXJ, EWZ, GDX, PALL, COPX
“Blue Chip Daily” Focus Names Top 10 performers for the day:
AMZN, LK, SHOP, KL, SNAP, AAPL, TAL, C, PAYC, FNV
2018 MARKET BOTTOM RECAP
Last year at this time, on 12/26/18, markets had reached severely oversold by a variety of technical and momentum metrics, as I posted on Twitter over that prior weekend. The CNN Fear/Greed Indicator was down to 3, a sign of extreme pessimism, major ETFs were very oversold, measured by daily RSI, and market momentum indicators were near decade long or all-time lows (see below):
CORE ETFs DAILY RSI, 12/24/18
MARKET MOMENTUM DATA, 12/22/2018
At that time, the reward vs risk became heavily skewed toward taking the long side, as I had been max-short QQQ from mid-November, with smaller shorts in crude oil (USO) and Nvidia (NVDA), and scaled out of my shorts and started scaling into SPY long.
11/7/18
11/12/18 & 11/14/18 QQQ Short
11/16/18
As markets became extremely oversold, and pessimism was very negative across the board, I started to scale in to SPY on 12/21/18 and then took an all-in max-long position on 12/26/18.
FAST FORWARD TO TODAY…RAISING TARGET CASH ALLOCATION
S & P 500 and Nasdaq reached new all-time highs yesterday. Both SPY and QQQ have closed higher each of the last 11 days, and 14 of the last 16. SPY Daily RSI is at 79.78 and QQQ Daily RSI is at 80.78, both at the high end of their ranges. SPY is +29.22% year to date and QQQ is +38.59%. Apple stock, the largest in the US markets, is +83.79% YTD. Charts are still bullish and the trend is up.
SPY DAILY 12/26/19
QQQ DAILY 12/26/19
At the October 2019 lows, I went to 125% long:
At this point however, the reward vs risk is no longer skewed to the upside, and my target cash allocation here is
10-15%.
For intermediate to longer-term position traders like myself, there is no need to fight the tape, try to call a top, short anything or deviate from the longer-term process. From a risk management point of view, a 10-15% cash allocation here does fit the bill. In a scenario where markets keep rising, an 85-90% allocation captures most or all of the move, especially if one is holding leading stocks, yet provides a buffer when the eventual pullback or reversion to the mean sets in. This is not a place where I would start to dial back leverage and margin and would have raised stops on any secondary, shorter-term and non-core positions. Once again, not a broad-based market call, but a risk management adjustment.
Gold and Gold Miners continued with their bullish breakout, with spot Gold moving away from $1500 (1514) and Crude oil pulling away from $60 (61.68) and Amazon, AMZN, our “Chart of the Day” for 12/18, made the biggest move in my focus group stocks today, +4.45%, to a 4 1/2-month high, closing at 1868.
SPOT GOLD DAILY 12/26/19
AMZN DAILY 12/26/19
FRIDAY’S “CHART OF THE DAY”
Martin Marietta Materials
MLM
$278.69
A large cap leader in the building materials space, MLM made a new closing-high on Thursday and broke above the key 275 level. Shorter term momentum is trending higher, and the rising 100-day moving average has held this uptrend since late January of this year, with a successful test in November, just under 250. The 100-sma is 5.8% below at 262.42, and further support below that is the 246 level which has held twice, in September and November.
For now, the trend is up and charts are bullish. Those who have traded with the charts this year and stayed away from the prediction game, have had record years. My firm view is if traders spent alot less time trying to predict or explain market and stock moves and much more time reading what markets and stocks are actually doing, their results would improve considerably. Read and react, don’t predict.
The Weekly Trend Report will be posted early Sunday evening.
Have a great weekend.
BLUE CHIP DAILY TREND REPORT
THURSDAY, DECEMBER 26, 2019
TUESDAY’S CLOSING PRICES:
S&P 500, -.63, 3223.38
10-year US Treasury Yields, -.25, 1.91
Gold, +16.10, 1504.80
WTI Crude Oil, +.59, 61.11
NYSE New 52-week Highs: 200
Blue Chip Daily core names on the list (by volume): BAC, HL, BABA, VIPS, XBI, and CAT
Nasdaq New 52-week Highs: 100
Blue Chip Daily core names on the list(by volume): AMD, AAPL, ADBE
Top 5 Core ETFs (ranked by daily RSI): XLV, QQQ, SPY, XBI, XLK
Top 5 ETF performers for the day, all markets that I track: GDXJ, GDX, SLV, MJ, PPLT
PRECIOUS METALS BREAKOUT
Tuesday’s ETF Chart of the Day, GDX, closed +3.20% and broke out to a 90-day high, which is a bullish signal. There were 9 new highs in Gold/Silver miners, over $1B market, cap for the day (listed by market cap):
NEM, FNV, SBGL, GFI, NG, SSRM, CDE, HL, SAND
The close in Gold over 1500 is also a bullish signal, and moves my Gold outlook from neutral/improving to technically bullish. Following are a few key charts in the group:
Gold reclaimed 1500 and is above all key moving averages for now. 1525 is the next key level that I would want to see a close above to confirm the breakout. 1450 is still key support on any pullback.
GOLD DAILY ($GOLD)
$1504.80
GOLD MINERS ETF (GDX)
$28.66
90-day closing high and back over all key moving averages.
THURSDAY’S “CHART OF THE DAY”
NEWMONT GOLDCORP CORP. (NEM)
$42.18
The Blue Chip of the industry, with the largest market cap, currently at $34.54B. Closed at a new 3-year high, which is a bullish signal. New highs are the most bullish price signal there is. Key support on any pullback is 40 and then 38.50. NEM also had a successful test of the rising 200-day moving average in November.
FRANCO-NEVADA CORP. (FNV)
$101.36
One of only four large caps in the group, at a $19.11B market cap, broke out to a new all-time high, a very bullish signal. 95 and 90 are key support levels on any pullback.
HECLA MINING (HL)
$3.38
HL is a small cap at only $1.70B, and is a current long position that I have held since November. HL closed at a new
18-month high, and while some consolidation would be healthy, the primary trend is firmly higher.
I will monitor this group, among others, to see if Tuesday’s strength follows through.
Have a great day.
