Markets were down last week – but have been in full rally mode this week. Not sure if this is just a trading bounce or a real break out – time will tell. With valuations bloated so high, I am not sure what to expect short term – but I do know that Trees Don’t Grow to the Sky.
Another CNBC Analyst was chirping about all-time highs in the near term this morning – amazing how their opinions can change so quickly – anyway, let’s take a look at the markets.
The following table is based on the Z Option Market Analysis Tool – which determines if a market is trending by assigning a trending score from -3 to +3. This helps us keep our trading with the trend.
| Symbol | Description | Short Term Trend | Medium Term Trend |
| $DJI | Dow Jones Industrial Average | 2 | 3 |
| SPX | S&P 500 INDEX | 3 | 3 |
| RUT | RUSSELL 2000 INDEX | 3 | 3 |
| NDX | NASDAQ-100 INDEX INDEX | 3 | 2 |
| VIX | CBOE MARKET VOLATILITY INDEX | -3 | -3 |
| /ZB[U6] | 30-Year U.S. Treasury Bond Futures,ETH | -3 | -2 |
| /ZN[U6] | 10-Year U.S. Treasury Note Futures,ETH | -3 | -2 |
| /GC[Q6] | Gold Futures, ETH | -3 | -2 |
| /CL[N6] | Light Sweet Crude Oil Futures,ETH | 3 | 3 |
| /DX[M6] | US Dollar Index Futures | 1 | -1 |
| $DJT | Dow Jones Transportation Average | 2 | 2 |
| XLK | SELECT SECTOR SPDR TRUST TECHNOLOGY SELECT INDEX | 3 | 3 |
| XLI | SELECT SECTOR SPDR TRUST INDUSTRIAL SELECT INDEX | 2 | 3 |
| XLY | SELECT SECTOR SPDR TRUST CONSUMER DIS SELECT INDEX | 2 | 3 |
| XLB | SELECT SECTOR SPDR TRUST MATERIALS SELECT SEC INDEX | 3 | 3 |
| XLE | SELECT SECTOR SPDR TRUST ENERGY SELECT INDEX | 3 | 3 |
| XLP | SELECT SECTOR SPDR TRUST CONSUMER STAPLES INDEX | -1 | 1 |
| XLV | SELECT SECTOR SPDR TRUST HEALTH CARE SELECT INDEX | 3 | 3 |
| XLU | SELECT SECTOR SPDR TRUST UTILITIES SELECT INDEX | -3 | 1 |
| XLF | SELECT SECTOR SPDR TRUST FINANCIAL SELECT SECTOR FUND | 3 | 3 |
Any market showing a 3 or a -3 is trending strongly – and should be factored into any options strategy you are contemplating.
It is interesting that Oil and Gold are no longer trading together – with Oil breaking out to new highs, and Gold just breaking down. I think Gold has become a very crowded trade with Hedge Funds – supposedly the smart money, but as the saying goes “nobody knows nothing”.
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