On September 7, our Bayesian timing signals (BTS) for the U.S. indices went back to long. The signals had gone to neutral a week ago when there existed an imminent threat of a downdraft of 3% or more. However, other than the QQQs dropping over 3%, the SPY and IWM only pulled back 1% and the immediate threat seemed to have subsided for now.
This is still a tricky trading zone and the risks discussed over the last week in these daily thoughts still do apply; but the BTS is a probability machine and provides signals when the RR make the most sense. So what are we looking for? A sustained move above SPY 290 starts to align the path to as high as the low 300s; on the downside, staying above 283 is important and above 280 is critical.
With regard to oil, the signal is USO short. The vibration high from early July is still keeping things in check. On a micro level, back below 14.20 should get that 13 handle this time. Assuming a binary in and out based off the signal and over the next 10 trading days, the Bayesian probability (BP) of USO getting below 10.20 is 1%, the BP of getting below 11.75 but above 10.20 is 7%, the BP of staying between 11.75 and 13.30 is 59%, and BP of this staying above 13.30 is 29%.
In metals, the signal is GDX, GLD, SLV Long. The pullback thus far from the 8/28 top does appear corrective. IF a turn happens any time now and GLD gets above 115.35, then the BPs start to shift to a minimum multi-week move up (i.e. a 3rd order price movement). On a micro level, getting back above 113.70 starts to build the foundation for that strike potential on 115.35. For GLD, regarding downside support clusters, there’s 113.50 and 112.75. As for GDX and SLV, they presented as capitulation type of trading on 9/4; and as such BP price clusters are tricky to ascertain. Personally, I’m gauging the action in GLD for trading decisions in GDX and SLV; plus add in the fact that on a micro relative basis, GLD does appear to be leading once again – which has sustainability potential for the metals sector.
Among other ETFs:
UNG: Signal Long. UNG is developing another trading range in the present multi-percentage range; with 23 breaking lower, the 22.50 target area should be watched. All in all still working towards 25 and higher.
EEM: Signal Long. EEM did close below the important goal post of 42.50, which shifts the RRs unfortunately. The BTS is keeping a close eye on price action in EEM for a signal change to neutral.
UUP: Signal Short. On 9/4, UUP re-challenged the important BP cluster at 25.35-ish mentioned in previous daily thoughts and is presently hovering beneath it. Getting back below 25.15 should finally see that 24 handle.
XME: Signal Long. Making an attempt to base; with critical BP resistance at 34.50. On the support side of things, still consider 33.50-ish.
XBI: Signal Long. The BTS really likes the RR at XBI 96-ish. Looking on a daily 3 month chart, it is obvious to see the significance of this price region. On a micro level back above 98.50 targets triple digits. On the downside consider 94.50 as a BP support cluster.