I’m hoping the employment report gives us a better handle on market direction. Going into the week, I thought the easier trading direction would be down if the dollar broke above its 50-day SMA. With that dollar continuing to drop, it now looks to me that the easier path to trade might be up.
DIA looks pretty good technically. We’re retesting the $100 level and the 50-day SMA has caught up squeezing the index over horizontal resistance at $100. If we can get a follow through day today, I think the $100 level (10,000 on the Dow) could be ready to act as nice support for the market.
Alternatively, if we want to get something definitive going to the downside, we need to start seeing 50-day SMAs snapped on the QQQQs, DIA and SPY. I would also want to see an upside breakout on the dollar (UDN breaking through 50-day SMA) as well as with respect to volatility (VXX).
So if today is going to give us a definitive answer on market direction, it seems that less has to happen on the long side.
There are also some nice commodity trends on the long side. It would be easier to let these positions ride. For example, an oil breakout would be easy to trade (USO discussed in prior post). So I suppose even with a hedged portfolio I would prefer a good employment number this morning (it is also nice to cheer for people being employed).
There has been a lot of action this week, but from a directional perspective it turned out to be noise. The weekly price bar is inside last week’s price action.
I was hoping the dollar might tip its hand before the jobs number today. This didn’t happen. UDN is trading between the 50-day SMA ($28) and the top of the broken trendline ($28.50). No help.
Testing the 50-day on VXX but it remains in its downtrend.
The QQQQs were up over 2% yesterday. However, the movement wasn’t meaningful technically. The move was barely above its 10 day average true range and it couldn’t break resistance at the 20-day SMA.
Yesterday, I mentioned that XLE was one of the few ETFs that looked good technically. I added a position before the close.
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chartsandcoffee
