I have to admit – I am more interested in watching the Political News lately than the Financial News. Until the Federal Reserve allows the market price discovery process to work, we will not be trading on fundamentals like supply and demand or cash flow. I don’t know how to trade this type of market, except to be patient, and wait for quality assets to fall below their fair value.
Anyway, the Republican Party seems determined to elect Hillary Clinton – sometimes I can’t believe my eyes:
Fun to watch – but sad at the same time.
Anyway, lets take a look at the markets – the Federal Reserve is clearly in the driver’s seat – pushing up asset prices in Stocks, Bonds, and Commodities and pushing down Volatility and the US Dollar. The notable exception to the asset pump is Health Care Stocks – which are still trending down.
The following chart 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 | 3 | 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[M6] | 30-Year U.S. Treasury Bond Futures,ETH | 2 | 3 |
| /ZN[M6] | 10-Year U.S. Treasury Note Futures,ETH | 2 | 3 |
| /GC[J6] | Gold Futures, ETH | 3 | 3 |
| /CL[K6] | Light Sweet Crude Oil Futures,ETH | 3 | 3 |
| /DX[M6] | US Dollar Index Futures | -3 | -3 |
| $DJT | Dow Jones Transportation Average | 3 | 3 |
| XLK | SELECT SECTOR SPDR TRUST TECHNOLOGY SELECT INDEX | 3 | 3 |
| XLI | SELECT SECTOR SPDR TRUST INDUSTRIAL SELECT INDEX | 3 | 3 |
| XLY | SELECT SECTOR SPDR TRUST CONSUMER DIS SELECT INDEX | 3 | 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 | 3 | 3 |
| XLV | SELECT SECTOR SPDR TRUST HEALTH CARE SELECT INDEX | -2 | -3 |
| XLU | SELECT SECTOR SPDR TRUST UTILITIES SELECT INDEX | 3 | 3 |
| XLF | SELECT SECTOR SPDR TRUST FINANCIAL SELECT SECTOR FUND | 3 | 2 |
Any market showing a 3 or a -3 is trending strongly – and should be factored into any options strategy you are contemplating.
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