Wednesday August 29 2012
I have had my eye on the 126-128 area as a re-tracement level for TLT. Let's take a look.
TLT bounced at the 125 day MA line and now is up against the 50 day MA. At left we show the Fib
re-tracement lines and sure enough, 126.220 to 127.56 would be the expectation. We noted that we are in slow markets, the end of summer, the Labor Day Weekend, Bernanke's speech on Friday.
For now this is the area to watch, and TLT could give us a fake out by moving over the 50 day MA at 126.61 or not.
GDXJ is the mirror image of TLT. The little gap at 21 will probably get filled this week.
Resistance - West Texas Intermediate Crude
This chart says it all, after a nice run from 77.50 to 97.50, it is time for some consolidation. The price is right up against the longer term MAs. Patience....
No doubt it would be more pleasant to pass our time while waiting for this to resolve in Jackson Hole, WY. Notice that the rich and famous tend to flock to great spots like Davos, Switzerland for the CEO meeting or VIenna, Austria for many of the OPEC meetings.
70% of the time the markets don't do anything, this is such a time.
And with a three day Labor Day weekend on tap, we can expect a lot of position squaring, with funds hedging their bets by being both long and short various positions. For example, if one is long stocks looking for 1450, one might purchase puts, options that gain value if the market drops. The effect of such a strategy is to become delta neutral. This means that no matter what happens, your positions are unaffected. of course you can't make any money that way either....