This Weeks Market Forecasts, Great Reads + Highlights

I have a lot to write about this week, so if you are pressed for time,  here is the bullet point breakdown. Simply click on what you want to read and go right there.

However, shouldn’t you maybe just a take a few minutes and soak it all in? Slow is faster in this day and age in my opinion.

A Look Ahead

Good afternoon traders.

Our June GDX 22/25 Call Spread has kicked into gear today after a protracted phase of sideways chop.

As the chart below shows, I was confident that prices would break higher, but would they break higher before the Call Spread expired?

Thankfully….yes. The Call Spread is now up +40%

  • Oil continues to be weak to the downside, more on that below. If correct, look for continued weakness in NOK and CAD via longs in USD/NOK, USD/CAD or EUR/NOK and EUR/CAD.

The following comments/forecast on oil is from my friend/colleague, Raghee Horner.

Crude oil was a fun play in the chat room this morning. When the market is testing support in front of the release, it’s a low risk entry with call options. Taking advantage of an intraday rip is best with options on USO or CL futures. But the overall direction is still down. As long as OIH is in a downtrend, I’ll favor the short side of crude. When OIH makes a new low despite a major API drawdown in inventories, you don’t want to bet to the upside longer-term.

Intraday momentum into a longer-term trend follow is one of my favorite price action moves.

Note: Raghee will be presenting at The Trader’s Round Table

  • How ya feeling about shorting that bad-ass financial stock…..Goldman Sachs (GS)?

I think it is a reasonable shorter-term technical set-up:

  • Short from current levels (last $213.75)
  • Stops at $216-$217
  • Targeting $207.25
  • Lastly, there are some great trades setting up in the S&P 500 Healthcare Sector (XLV) and Restaurant Brands International (QSR). I will issuing a trades on these Tuesday or Wednesday in the Stock/Options Alerts Service.

Trade Re-Cap

Meanwhile, our GLD Call Spread has been a star performer notching an unrealized gain of +182%

GLD Trade Details: Post on May 25th

Good morning traders.

Gold (GLD) looks poised to break higher from a triangle pattern.

Here are two ways to play it:

  • Go long the stock outright at current level ($119.44 last)
  • Stops at $118.50
  • Targeting $122-$123

Or use a Bull Call Spread as follows. Graphic shows 10 contracts – use however many contracts suit your risk profile.

  • Long the June 16 119.50/123.50 Call Spread
  • Max Risk: $1090
  • Max Reward: $2910

Based on this trade, I received this great email from a client down in Atlanta – this is really awesome.

Dave,

Nice call on the GLD Call Spread! I plan to use the proceeds to pay for my trip to The Trader’s Round Table in October. I have already saved my spot and am looking forward to meeting you and the others in person. Have a great weekend!

Jim L.

Atlanta, GA

Reserve Your Seat for The Trader’s Round Table

Only $250

Click Here To View Event Details & Secure Your Seat

My morning cup….wait, who am I kidding, CUPS of coffee this AM were more satisfying than usual given that I closed ½ of my SBUX long established on May 19th at $61.44.

There might be some more upside still but here are the main reasons I booked partial profits and raised stops to $63.80

  • Overbought stochastic (daily and 4-hour time frames)
  • DeMark ‘13’ Exhaustion Signal (sell)
  • Elliott Wave Count suggests a near-term top is nearing

Must Reads, Listens and Watches

Wow – where to begin this week. Lot’s to highlight.

  • Podcast: Eric Cinnamond On The Value of Absolute Return Investing
  • Financial Times: The age of unenlightenment – An inflated sense of our own wisdom is making us dumber and less civil.
  • If you are not listening to S-Town….you should. John despises his Alabama town and decides to do something about it. He asks a reporter to investigate the son of a wealthy family who’s allegedly been bragging that he got away with murder. But then someone else ends up dead, sparking a nasty feud, a hunt for hidden treasure, and an unearthing of the mysteries of one man’s life.
  • Almost Daily Grant’s – a great afternoon email with some solid insights from a fundamental perspective that spans all asset classes.
  • Why does the world need RealVision TV? Do you really even need to ask such a question!  Seriously though, a great video with the co-founders Raoul Pal and Grant Williams
  • Want to build your personal brand without the hype and failed strategies? Read or get the audiobook version of Known. I blew through it in no time – lot’s of great nuggets and actionable steps.

Ask Dave

Don’t forget to check out the latest addition to the Aspen website: Ask Dave.

If you have a trading/investing question, don’t be shy. Ask your question now and/or read the archived Q&A’s.

 

 

 

Until next week, good trading.

 

Dave

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