Remember: in a healthy bull market, there are often several 5-10% pullbacks. Here are the 3, 5, and 10% points.
I will be looking for chances to buy the dip, but picking my exposure carefully! - Nick
RUSSELL stocks struggle today with the rest of the market, but their losses are far less severe. The highly sensitive interest rate index has currently topped at $226 share price on IWM. If small caps continue to push further to the upside however, we could see IWM touch somewhere in the low $240s.
Data from the A1 EdgeFinder
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DOW remains strong despite big tech stocks tumbling on lesser demand. Yields continue to fall which is bringing more attraction to the dividend stocks which offers some yield on owning these stocks. The sign of a Fed cut in September is not a bullish sign for everything apparently.
Data from the A1 EdgeFinder
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S&P 500
Although not a big drop today, it seems like the rotation could be starting to take a toll on the big name indices. Price struggles to break above a rising trend line on the 1D timeframe and is reading overextended on our custom Bollinger band indicator. The SPX500 may need to drop back a little bit before investors want to get back in. Support lies at $5,500.
-Frank
The DXY is breaking 104 (First time since March) as traders/investors gear up for rate cuts.
Rate cut probabilities are showing a 98% chance of fed easing by the September 18th meeting.
Why? Because the jobs market is showing signs of cooling, and inflation is trending lower again overall. Services PMIs also had a big role to play, showing weaker outlook for the powerhouse component of the US economy.
Does this mean the dollar will fall for months on end? Not necessarily. But - the selloff in USD is likely a repricing of the dollar, now that the US outperformance gap is narrowing a bit.
AUDUSD & USDCHF both looking strong today. Will look for an opportunity to trail stops on each! - Nick
(Both trades were shared in VIP!)
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Gold Daily Chart (VIP Trade Update)
- Gold breaking all time highs, stops trailed just behind previous resistance (now support)
- Nick
The 10 year yield continues to suggest weakness in the market as interest rate forecasts are now expecting 3 rate cuts this year starting in September, then November and December. If the yield can fall under this level of support around 4.16%, we could see bond prices catch more demand to the upside. -Frank
Читать полностью…Yields are really tumbling on looser monetary policy expectations. Current yields have been under the 8 day moving average since July 4th indicating that a stronger trend to the downside could happen in the coming months.
Data from the A1 EdgeFinder
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Retail is now short the NASDAQ and the SPX500 along with the dollar. AUDUSD, GBPUSD and EURUSD are now the top three short USD pairs.
Data from the A1 EdgeFinder
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Markets are very much unfazed by that failed attempt to assassinate the former president on Saturday. All indices are steadily higher this morning which goes to show that the attempt did not have a considerable impact on prices.
The odds of a Trump victory have increased post Saturday's event. The tech index looks to retest the level from Thursday that had led to an eventual 2% decline in one day for the NAS. Analysts are now pricing in three rate cuts for the year, after we had expected maybe one.
Gold, 4H Chart:
Price breaking out - nearing nominal all time highs! Congrats to fellow bulls.
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They say history doesn't repeat itself, but it can rhyme. This time around, the SPY is still green, but the QQQ is turning red on an inverted hammer candle for the month (pretty bearish sign should the candle close in that fashion, but we still have a few weeks left in the month).
IWM, however, looks like it's doing the same thing as that September in 2008. Maybe the small cap index touches new highs, or maybe it pulls back like the big tech market. The reason I'm watching these market with caution is because this "catch-up" trade that everyone is so eager to be in, could be a trap.
I think it's reasonable to finally see the small caps finally moving with the rest of the market, but it could be the last part of this melt-up before some kind of correction. Time will tell as the month wraps up.
Here are three charts, one of SPY, the other QQQ, and the last is IWM. Take a look at each of the candles highlighted in the green boxes. Notice on that month, we saw a harsh decline in all three indices, but IWM behaved differently.
We talk about the catch up trade for small caps and the great rotation out of mega caps into smaller companies. Although there is money flow allocation throughout these indices, how sustainable is it? If we look at 2008's rotation, small caps saw an incredible increase in demand before turning back the other way. IWM hit an all time high before ending the month at a major loss. It seemed that the big names fell initially, but small caps suggested there was a rotation going on. This only took investors by surprise when everything dropped, and the rotation was not within the market, rather, it was just completely out of the market.
Tech stocks can't seem to catch a break on the latest interest rate news. Highly speculative positions are souring to the fact that dividend stocks are becoming more attractive. If you look at a market heat map, you can see that only the mega caps have been struggling the most this past week while the rest of the market is keeping other areas stable.
The question is whether this new trend is sustainable or not. Later on we will look at a similar pattern unfolding right now that is eerily similar to 2008. It looks like NAS100 could come down to test the rising trend line on the 1D timeframe before another directional decision.
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Gold is also overextended, but for a much more bullish reason. The bullish concept behind gold and possibly bitcoin is that regardless, the Fed is going to cut this year or next. The anticipation of a weaker dollar is high upon knowing this. Over time, the precious metal may be able to find more demand. Especially if indices like SPX, NAS and US30 start catching more downside, gold looks increasingly bullish. Don’t expect a perfect run to the upside, however. Gold might be the new trade to look for pullbacks on.
-Frank
RUSSELL
The small caps are making their way back up as they are considered a catch up trade to the rest of the markets. As the tech and big name trade dwindle, the rest of the market (smaller companies) are finally starting to see more demand. This is likely due to the three interest rate cuts that are now forecasted for this year. If this trend continues, price may even end up retesting the highs around $244-45 on the 1M timeframe.
-Frank
Frank also making moves! He bought the breakout on gold yesterday, already nicely in profit.
We're on a roll!
We are getting a counter reading from the EdgeFinder for UJ which is now a -7 even though price is in a strong uptrend. The reason for this is due to mostly fundamental factors suggesting a weaker dollar in the coming months. With three rate cuts forecasted this year, price fell substantially in the past few days. We need to look for another break below this trend line on the 1D timeframe to help confirm a reversal in price.
-Frank
Gold's historical score on the EdgeFinder this year, for those who enjoy backtesting - check this out!
Читать полностью…SPX500 is still testing the highs for the fifth day in a row. Either price will breach the resistance point or reverse lower to a range within this wedge pattern on the 1D timeframe. If it reverses, we could find support around $5,500. A break higher could lead to another run up to the $5,800s where the top of another long term trend line meets price.
-Frank
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COT shows another shift as smart money is selling NAS and SPX which may have prompted the Thursday sell off. Russell is the only US index that shows a positive number for weekly change.
Data from the A1 EdgeFinder
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IWM shares are up over 2.3% today after analyst expectations shift from one to three rate cuts this year. The score is still neutral, however, as the bias slowly creeps into the bullish camp. It's likely that Powell will not say anything new about interest rates, but investors listen anyways for clues.
Small caps are more sensitive to rates than the mega cap indices as borrowing costs tend to affect the smaller companies before larger ones with lots of cash. If Powell says anything dovish, this index will likely rally.
Data from the A1 EdgeFinder
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Gold still sits at a +9 strong bullish signal as we approach Powell's speech this morning. Investors are looking for any indication on when interest rates will fall and will be listening keenly on his wordage towards monetary policy.
Data from the A1 EdgeFinder
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