Key Tactical Takeaways:
> Although credit spreads and aussie/yen show no worrisome signs, any high-volume intra-day price spike to SPY 375.8/376 would be viewed as the next tactical profit taking opportunity.
> Keep a close eye on the US$ here, after DXY completed a 161.8% extension and possible 5th wave lower from early November on Thursday. THE level that must be surpassed to signal the start of a sustainable $ bounce is DXY ...
> Defensive areas like utilities and staples are improving relative to the S&P, but are still a ways away from becoming leading sectors.
> After rolling over to relinquish several months of leadership vs. value stocks during the Sep through Oct timeframe, growth is gaining enough relative momentum to lead value at least for the next few days. Big picture, this is still a countertrend development.
> Key intermarket correlations, both positive and inverse, have become very strong again (see page 7).
Some Quick Thoughts:
"Do you know who I am? I'm Moe Greene, I made my bones when you were going out with cheerleaders." Is there a better way to start a Friday commentary than with a line from perhaps the greatest movie ever made (The Godfather)? Those of you that have been with me since I began my journey as a sole proprietor in June know that I made my bones in this business, free from any criminal acts of course, as a contrarian strategist tasked with finding large macro turning points before they happen.
The key to survival, both in life and in business, is the ability to adapt. I mention this because as a market purist and deep-rooted contrarian, I simply can't function at my best when the playing field is not level. That's why I am working diligently on two innovative product offerings that will allow me to take the focus off of the broader indices, where price discovery will be stifled even further by the addition of significantly more liquidity in 2021. What’s the plan? Well, since the volatility-based system at the core of trade ideas sheet on page 3 has allowed the 1% risk portfolio to grow by 208% since 06/30/20 alone, with a max drawdown of just -3.9%, I’ll be applying this system to ETF and factor rotation products in early Q1 2021.
The current grind higher in the S&P 500 is a reflection of the manipulative forces at work, but that does not mean that there won't be opportunities for tactical profit taking. As a reminder, those opportunities tend NOT to come during these slow grinding periods, but rather during outsized price spikes. Therefore, should SPY witness a rapid, high-volume rally to ..., it would represent a tactical profit taking opportunity.
Regarding Bitcoin, ... remains the next objective against a trailing stop of .... As the great Tom McClellan pointed out yesterday
(go here: https://www.mcoscillator.com/learning_center/weekly_chart/bitcoin_as_messenger/ ), Bitcoin rallies typically do not witness tactical tops without a spike in open interest. Since open interest remains steady, this supports that idea that the next objective of ... is within reach.
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