Market Discussion – July

TransStock > Advice > Market Discussion – July

All throughout the year, there are monthly courses about using TransStock and technical analysis. Usually, we also discuss markets and sectors.

INDEX

One of the points of discussion was the future of the S&P500 ‘ES’. We discussed three scenarios in which the big picture was defined.

Our first scenario appears to still hold trueen:

End May:
A possible rise to the 2800-zone in order to make wave D, to subsequently drop to point E for the last time. This could mean the end of correction ‘IV’, and it will be followed by an increase. 

How do we get to point D: blue resistance line between highs 19/01 and 13/03.
How do we get to point E:  blue support line between lows 09/02 and 02/04. 

Early July:
Target D has been executed perfectly, and currently we are in a downward movement, possibly in the direction of E.
In doing so, we will end up with a triangular pattern.
Important: please, do not stick to a profit target. It is possible for your target not to be reached, or the price to drop further. With these scenarios, we try to share our rough ideas on the trend during coming weeks, or two months at most. 

CURRENCY

Our idea to buy USD if there would be a breakthrough of the important resistance line ended up being perfect.
As was our important target price, namely the dotted line. 
Currently, the price is situated around an important zone: are we rising in the direction of 97, or are we testing the breakthrough and will the price fall to 90?

OIL

For this topic, we will use the following long-term graph. This graph has provided the trend investor with many correct opportunities to get into the market or step out:

Every technical analyst knows the basic principle: a breakthrough of a line is our moment of getting in or out. Looking at the short term:

Upward potential remains as long as the oil price does not fall below ±72$.
The target price is ±79$, and the oil price will generally experience a lot of resistance at that point.

GOLD

A rather interesting graph that we have been using for some time: 
the rise of the price of gold, with correction since the top of 2011:

You will see an important resistance zone in green, around 1350-1400$. The gold price has not surpassed this level after 2013.
I have placed a vertical symmetrical line on the graph, with two lines at about the same angle.
Additionally, there are two measuring lines to retrieve the number of days to the left and the right of the vertical line. In doing so, I attempt to determine when the price couldreach a breakthrough. 
On 16 January, I ended up with ±650 ‘left’ days and ±530 ‘right’ days.
For a round bottom (symmetry), the gold price could no longer increase, and a fall to the support line (price ±1250) was a possibility. 

If we look at the same graph on a slightly shorter period with the corrected prices, we get the following:

On 3 July, the gold price went up. Perfect when looking at this line. The number of symmetrical days is equal now.
Allow me, possibly a little prematurely, but TA appears to be capable of surprising a person. 😉 

Most investors do not buy a contract for gold, but one for gold and/or silver mines.
An important factor in this decision is the ratio GDX/GLD:
GDX: etf of gold mines
GLD: etf of the gold price
If the ratio rises, the mines outperform the gold price. You should be able to see this in a bullish market. 
After a sidelong triangular pattern, we see an increase of the ratio:

This sector is almost at a breakthrough and definitely worth following up on.

For information:
In the past, you would buy the GDX and you would have invested in this sector. As of 2018, all ETFs have to come with a Key Information Document (KID). For many US-ETFs (such as GDX), this is not the case, and you can no longer purchase these. 
Sometimes there are European versions, but sadly, these often occur with a lack of volume. 
For us, the alternative for the GDX is the ETF with ticker ‘G2X’.

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