Jim’s Beliefs About the Markets

What I Am Watching

Friday 12/1 – Sluggish week for stocks. The attempted upside move on was challenged by Fed talk… inflation ain’t over til’ it’s over. There are extended upsides in the mega and large-cap indexes and that will be of interest moving forward. The laggards made some upside moves Friday and attracted some money flow. The goal is to manage the risk relative to the upside near term and watch what opportunities unfold. Plenty of consolidation near the current highs… looking for the next leg higher.

XLE – Energy was struggling as crude struggled on the outlook for demand flattening. Hit stop $91. Now watching how this unfolds looking forward. There is still opportunity here if we are patient and manage the risk. 10/31 – Moved to support at $84.33… bounced… managing the short-side trades in play $85.50 exit (hit and posted nice gain). Crude is equally at support USO. Bounced along with crude… watching how it unfolds.

11/7 breaks support… short side setup… needs to follow through with selling. 11/8 Confirmed the downside… look for a relief bounce and test of the $81.97 support.

The last three days’ relief bounce in play… Need to clear previous support for an opportunity. 11/14 hit entry $84.35. Stop $81.97. Patience for now. 11/17 back above $84.33 needs upside follow-through. Consolidation remains.

SOXX – Failing to provide any leadership and earnings data continues to weigh on the sector. Continues to struggle overall… TXN and WDC earnings didn’t help the cause as selling accelerated. INTC posted positive earnings to help on Friday… a 1% relief bounce… Watching how it unfolds next week. 10/31 Attempting to bounce off the lows… looking for reversal. 11/1 – INTC added to upside move… AMD higher… MU, LRCX, and AVGO solid moves. Bouned on Wednesday offering entry. SOXL entry hit 11/1 $445. Stop $507 (Adjusted). Low-risk entry. Nice upside. Adjusted stop. The upside remains as tests near the $473.20 level. Needs to clear the downtrend line near term. $490 next resistance. Need to hold support at $473. Raised stop

Cleared $490 and tested… uptrend remains in play for now. 11/14 gapped higher on CPI data. Adjusted stop. 11/17 Testing at the August highs and the breaks higher. 11/24 topping on the chart raised stop. Getting interesting. 12/4 doji candle to watch.

Software (IGV) – 11/1 bounced off the test of previous lows followed by three days trading higher. The reversal moved back above the $336 level offering a low-risk entry on the upside trade. Entry $336. Target $355 (Hit). Stop $364 (adjusted). Technical trade on a rebound. Added to the upside. Continued higher clearing the $355 resistance. Tested $355 and needs to hold. Letting this unfold and adjusting the stop.

Cleared $355… tested… followed through upside… gapped higher on CPI data… adjusted stop. 11/20 adds to the uptrend. Consolidating near the highs. 11/29 gapped higher adjust stops

Gold (GLD/UGL) Hit stop on 11/6 and watching for a reversal and continuation of the uptrend. Testing $179.40 support and bounced. 11/14 gapped higher on a weaker dollar… need confirmation of the move… Entry $182.60 on confirmation… Need to follow through on the upside. 11/21 Gapped higher see if it can hold the move. 11/27 Nice break higher. Tested with a strong move in the dollar Thursday. 12/4 Tested.


There are plenty of issues facing stocks currently. Thus, we are focused on the micro trends currently and the opportunities we see. As shown above there are always opportunities we just have to measure the risk, take what fits our objectives and risk tolerance, and manage the risk moving forward as reality unfolds. The simple format of writing down what we believe to be true and tracking it moving forward is the basis of our investment strategy. If our belief is validated by the markets we invest, if they are not we pass. Most importantly we set stops to protect against the downside risk that exists in the markets every day.

* All charts are courtesy of TC2000

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