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June Commentary

Brought over from our Trend Trading Signals Website.

The S & P 500 made a new intra-day all-time high Friday at 2964 and closed at 2950. Nasdaq closed at 8031, just below it’s all-time high of 8176. Equity markets have been very strong, and while some consolidation could be expected, the primary trend is higher. The key level that I am watching in SPX for my time frame is 2720, which is the March low range. In U.S. markets I remain focused on tech, primarily software, cloud and FANG names. I have no open shorts or hedges currently.

China A-Shares are one of the few core markets that I track that did not break their 200day moving average in the recent pullback and that market, though nowhere near it’s highs, is improving and reclaimed it’s 50 day moving average as well.
U.S. Dollar had consecutive closes below it’s slightly rising 200d sma for the first time since April 2018. There are many macro moves under way here, and this is one that I am watching closely.

10 year U.S. Treasury yields traded through my 2.00 target to 1.97 and closed the week at 2.06. The trend in rates is lower for now, but the 2.00 level could provide a technical bounce or trigger some profit taking being that rates have plummeted from 2.61 to 2.00 in 60 days. The consensus view here seems to be that rates have to go lower, but the consensus is often wrong. I am staying long treasuries based solely on the technicals and want to see 2.25 hold on any counter trend rally.
Gold closed the week at 1403, a break out to a 6 year high on increasing volume, which is bullish for the group. The miners ETF GDX, touched a 21 month high. The entire space is bullish here technically and having established my position from lower in GLD I am tracking this space closely.

Crude oil closed at 57.43 and I closed out the rest of my short position in USO just over the equivalent of $55.

Bitcoin touched over $11,400 over the weekend, and currently at 10,635 is up 33% in the last 30 days. The trend is higher here and over $10,000 is a key technical level.

My current positioning is long equities, with no hedges, long U.S. Treasuries, long gold and long Bitcoin.

GE stock closed at 10.23 on Friday, up 40% YTD, but still 30% below it’s 52 week high. Noteworthy however is that the 10 week moving average has recently crossed over the 40 week moving average in late April, and the 50 day MA crossed over the 200d MA in early June. From a longer term trend following perspective, these crosses indicate that intermediate term price momentum is improving vs longer term momentum, which is bullish.

$11 is the key upside breakout level that I am watching and $9 on the downside is the level that needs to hold.

Gold traded to $1362 on Friday, 6/14, a new 52 week intra-day high and closed at $1344. Gold has tested over $1350 on 6 different occasions since 2014, but has yet to break through the $1400 barrier yet. As has been my view since my blog from April 2018 (please see the link below), a close over $1400 could be significant and could trigger a new leg higher.

Many big macro players such as Stan Druckenmiller, Paul Tudor Jones and Jeffrey Gundlach have all recently made very bullish comments about Gold in the last few weeks and each cited their macro views, but I am focused solely on the charts and technicals.

Along with the 52 week high, the key moving averages that I track, the 20, 50, 100 and 200 day SMA have all turned higher, which indicates an uptrend on multiple timeframes. This could of course be another headfake and failure before the 1400 level. Key levels for my longer term timeframe on any pullbacks are $1300, $1265 – 1275 (the 200 SMA currently sits at $1267) and finally $1250. Technically, a break over $1400 would be very bullish and the upside from there could be swift. On any weakness, $1250 is the key long term support level that I am focused on.

GDX, the Gold Miners ETF, did close at it’s highest weekly close in 16 months this Friday at $23.33. Key upside breakout signals would be at $24 and $25.50 and on any pullback the 200sma is at $20.65 and the key support level that needs to hold is $20.

Palladium has improved here recently and it’s uptrend over the rising 200sma has resumed. Silver is trendless here and Platinum has been weak below it’s 200 day SMA.

As noted in my 6/02/2019 update below, the key 2720 level was tested (2728) and held. Equity markets rallied off their most oversold readings since Dec 2018 with SPX reaching 2910. Shorter term momentum is at the higher end of it’s range here, and some consolidation could be expected, but not necessary. I continue to be positioned defensively, with many open long positions, primarily in U.S. tech with the SPY hedge still open against it. High relative strength names in cloud, enterprise software and IT services are still the strongest on my screen. I have only opened one long single stock position in the last 5 weeks, and am letting the market work through it’s cycle. A close over 2900 in SPX would be constructive, and 2720 needs to hold on any deeper pullback. The bond market and crude oil markets, my two biggest positions, continue to be forecasting a slowdown, and at some point the equity markets and bonds/crude could signal the same message, one side or the other.

10 year UST yields currently stand at 2.12, with a recent low of 2.05, very close to the 2.00 level I highlighted on 5/28. The trend for now is lower yields, and higher bond prices. Below 2.00 could signal a new leg lower and 2.25 and 2.35 are key overhead levels on any rally in yields.

Crude oil continues to be weak, testing 50.72 yesterday, but still over the June low of 50.60. $50 is a key level of support, and I scaled a small piece out of the position yesterday, but the trend is still lower. $55 and $60 are key levels on any rally, and a close below $50 could signal a new leg down, at which point support is at $42 to $44.

Key positioning: Long equities with a hedge, long treasuries, long bitcoin and short crude oil.

SPX 2752, NASDAQ 7453, Shanghai 2898, HSI 26901, 10y UST 2.12, Crude Oil 52.74, Gold 1314, Bitcoin 8685
I continue to be positioned defensively going into June. May was a solid month with open max long positions in TLT and TMF(+21% in May), working well, as well as max short crude oil USO (-9.24%) the last week. Hedged equity positions via SPY and FXI shorts reduced volatility. Bitcoin, GBTC, was a top performer, (+67%) in May.

Treasury yields cratered from 2.50 to 2.12 in May, and the 3month/10year yield curve has inverted, which may indicate the bond market pricing in an economic slowdown. Crude oil has been the next market to follow currently. The China/U.S. trade tariff news seems to have been a catalyst, and while nothing is ever certain in markets, the heightened uncertainty of a new variable is sending markets downward for now.

I continue to be positioned defensively going into June, and SPX is at a key level, under it’s 200 day moving average and a key 2800 level. The next level of interest on any pullback is 2720, the recent March low. I do not see the signals of being technically oversold that were present when I posted the 6 most oversold SPX indicators in December. Markets can reverse at any time, but I am not in the “buy the pullback” mode here from a technical level.

Bonds are statistically very overbought, but that does not necessarily mean a pullback, but some consolidation would be technically constructive. Crude oil is in freefall, and while snapbacks may happen, is vulnerable to the downside for now. I plan to press the TLT, TMF and USO positions further in the next week or two.

Key near term levels for my time frame:
SPX 2780/2800/2850 on the upside, 2720/2680 on the downside
10 year US Treasury Yields 2.35, 2.45, 2.62 on the upside, 2.00, 1.85 on the downside
Crude Oil 60 overhead, 50, 47.50, on the downside

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