Mid & long term bullish but that Put-Call Ratio reflects a Crowded trade
Updated: Dec 24, 2020
On Monday 14 Dec 2020 8.50pm, I emailed Clients my latest post titled 'Mid & long term bullish but that Put-Call Ratio reflects a Crowded trade'.
It's Dec now & hope you & your family are safe & well!
Unlike yesteryears, 2020 has been an incredibly hectic one for me. I need to apologise if I'm not able to get back to your query quickly. In addition, I faced tight constraints usually in the early part of the morning due to clients' orders and other administrative matters. Thus I will greatly appreciate it if the query is specific so that I can quickly respond with the most appropriate answer. Thank you!
Now back to Mr Market!
S&P500 Index (SPX):
In my 10 Nov 2020 post, I mentioned 2 things of significance on the SPX:
1) '..this technical breakout on the Charts to a new all time highs do have BULLISH undertones - it only shows us how much liquidity is there on the side ready to pounce back into the market should conditions be right.'
2) '..be prepared to Buy on Dips.'
(ref 10/11 post - https://www.thom-ng.com/post/what-a-difference-a-night-makes)
As you would have noticed, since then Mr Market has been a miser in giving us any real pullbacks.
When you study the SPX chart, the bullish continuation Cup & Handle OR Pennant pattern will point to a SPX target of at least 3970 to 4021 respectively.
However, I'm quite reluctant to be screaming for a Bull Rally just yet as the SENTIMENT Indicators are on the wild side - *Put-call ratio are at 2020 lows, AAII & the CNN Fear & Greed Index are pointing to widespread bullish speculation and that IMHO, is a Crowded trade.
A reasonable pullback would be greatly welcomed and then as per the same message on 10 Nov 2020 - go buy the dips.. (or in market language BTFD!)
As for what constitutes a reasonable pullback and what if Mr Market continues to surge ahead without that reasonable pullback, drop me a line to pick my brain.
Rest of the World:
As for STI & quite literally the rest of the world who are basically 'price takers', they are still holding up quite well simply because big bro US is still hitting new highs..
A sneeze in the US and the rest of the world is likely to catch a cold (no pun intended in a COVID world)
Gold & Precious Metals:
*Apologies for the lack of clarity as it was a whatsapp broadcast image
On 30 Nov 2020, through my bi-weekly Thomas Ng’s Investment Ideas Broadcast Group, I whatsapps the following message to my followers:
'Since hitting a high above $2000 in Aug, Gold has been correcting since and even broke below $1800. I think it’s about time we start putting Gold back to our watchlist to look out for an entry signal again.
Attached chart is the weekly chart of Gold - I've included 3 set of indicators - ADX+Stoch and the Gold-USD Spread Index.
1) A low ADX marks the start of a new trend. When used together with an oversold Stoch, it often indicates a possible start of mid-term up move.
2) Gold-USD Spread Index measures the strength of Gold relative to USD. Whenever this index drops below 40, it signifies that Gold price is too weak and possibly the next move is up.
3) Last Chart below is the daily chart - Gold touched the lower end of its purple downtrend channel but we see that its Open Interest maintained flat with slight downward bias over the course of the correction (ie it did not spike up). This often indicates a continual bull case for Gold.
SGX-listed GLD US$ ETF tracks the price of Gold.'
Since my 30 Nov broadcast on Gold, spot gold is up 6.22% from low to high in 6 trading days.
I have many more solid calls over the past few months from Lenovo to Thaibev to AMD, to name just a few.
If you wish to be in my Whatsapp Broadcast Group, pls email me with subject heading 'ThomasIIBG / Client or Non-Client / Mobile no / POEMS acc no.'.
Live Long & Trade Well!
Thank you & regards
Thomas Ng, CMT
Principal Trading Representative
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