D&D Note (2.9.2018) ~ Late Day Rally Off 200 Day Moving Average ~

D&D Note (2.9.2018) ~ Late Day Rally Off 200 Day Moving Average ~

Markets started the day in the green before what appeared to margin call pressure in the afternoon when the traders caught in the short VIX trade get liquidated and the markets all fell. We dropped down to the 200 day moving average on the S&P 500 Index when a note came out from Goldman Sachs saying the believe to see almost all the traders having been liquidated. That sparked the buyers to come back into the market coupled with a technical bounce and pushed all the indexes into the green to finish the day.

Keep in mind this was a global deleveraging event with all major markets around the world dropping into correction levels of down -11% to -13%. We need to see stabilization across all markets. Don’t be surprised to see us have a retest of the 200 day moving average on Monday before a sustained rally can resume.

Computers and algorithms speed everything up and exacerbate moves. We fall faster, we fall harder, but we should rise faster, and gain faster. But up to the previous highs before we get a double blow off top and retrace back down. We see now as a buying moment into the next rally up to the previous highs before seeing a heavy profit taking scenario. We think around that time we will be having further interest rate pressure to cause perhaps a correction of 1987 magnitude to come relatively from the high to current lows again within a few trading sessions. The yield curve might invert around this time and then we can begin the final stage of a bull market where you see some of the biggest gains as the market goes parabolic. One would like to buy the low of the big correction that leads into final stage and then sell into the massive rally. Then we see sometime in 2019/2020 the USA going into recession.

What does that mean to an investor? We are going to see extreme volatility where markets go up and down. Know your price targets and have your watch list / shopping list ready. Ignore the day to day talking heads and just buy on the lows. Right now we’ve seen what low prices look like, remember these buy your stocks again when they get here and don’t panic into selling. We’ll know when the market is hitting its final stage of the bull market as their will be extreme exuberance. “Be fearful when others are greedy and greedy when others are fearful” ~ quoting the great Oracle of Omaha Warren Buffet.

What does that mean for a trader? We are going to have a ton of volatility and you can buy low sell high a session to session basis. Even intraday sessions with the computers we are compressing weeks into days now.

For Pot Stocks and Crypto there was a speculative bubble that had to burst and shake out the loose hands. Those that sold will be sad and those that HODL will be happy.

D&D movers:

– NVDA up 6.69%

– TWMJF up 4.24%

– GOOG up 3.62%

– PYPL up 3.36%

– UNLRY down -3.09%

– EMHTF down – 1.33%

– CNTTF down -1.26%

– AMZN down -0.81%

Indexes

– DOW up 1.38%

– NASDAQ up 1.44%

– S&P up 1.49%

Sector Movers:

– Technology up 2.53%

– Real Estate up 2.40%

– Utilities up 2.18%

– Energy down -0.35%

Notes

– US 2-YR 2.073% (down -0.061)

– US 10-YR 2.857 (up 0.008)

– US 30-YR 3.165% (up 0.028)

Volatility

– VIX 29.06 (down -13.15%)

Crypto (1:00 PST)

– BTC $8,548.95

– ETH $854.00

– BCH $1,280.20

– LTC $155.79

Metals

– Gold $1,318.10 (down -0.07%)

– Silver $16.30 (down -0.25%)

– Copper $3.05 (down -1.04%)

Energy

– Oil $659.05 (down -3.43%)

– Brent $62.60 (down -3.41%)

– Nat Gas $2.605 (down -3.66%)