EA Risk Barometer Advises A Reduction In S&P-Correlated Risk - Morning Market Squeeze

Key Tactical Takeaways:

> As the S&P 500 sits at all-time highs, our EA Risk Barometer is advising t....

> After the bull trend from the November lows completely broke down on Friday, GLD is about to test its ... of support (...) before an all-out test of....

> While the 10Y yield is extended at the top of the post-Aug channel (...%), extended conditions can persist after breakouts as big as last week's long-end breakaway gap. Pending a close < ...%, the short-term trend stays higher.

> The dollar index will turn near-term bullish for the 1st time since... if it closes > ....

> We'll be looking to take profits on some of our recent big winners this week. We're also adding ... at today's open.

Some Quick Thoughts:

If you think the market cares about the recent rash of headlines regarding impeachment, think again. This market has moved beyond Trump and will now spend the next few weeks focusing on the moves the next administration may take to fulfill its promise to contain the spread of Covid-19. With lockdowns spreading globally, the likelihood of greater restrictions coming to the US in the coming weeks is strong. Think this concerns retail investors who are so hopped-up on the increased stimulus that is likely to accompany greater restrictions? Probably not. However, as we noted on Friday, the US$ may want to ... as the dollar index (DXY) currently sits above its ... at ... for the first time since ....

The effects of recent dollar stability have already been felt in the gold market, where the yellow metal crashed to 1-month lows on Friday. While a retest of those lows would not surprise us, given that we’ve been highlighting the lack of ..., admittedly we did think gold's January rally could travel a bit further before topping out early last week. The latest read on commercial net interest revealed that these smart money accounts remained very net short as of last Tuesday when the data were gathered. Currently, gold is testing ... ahead of an ....

If you've ever had the pleasure attending one of Ralph Acampora’s technical analysis classes, you've heard him speak of spending Sunday nights with a glass of wine while "thumbing" through his charts to get ready for the week ahead. While my ritual involves a slightly different version that includes computer-based charts and a small batch bourbon, this too was how I spent last evening. What this ritual yielded was the ongoing realization that away from the major indices, there are beautiful charts abound. Countless charts are showing prices coming out of beautiful bases in small-to-midcap stocks. We'll be adding some of these stocks to our trade ideas list this week, starting with ... at today's open.

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