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RoboStreet – April 8, 2021
Gold Looks To Resume Its Glow
Stocks have enjoyed a broad-based rally this past week with big-cap tech making the biggest impact on bullish momentum. Value stocks took a breather after a solid runup preceding April and are still consolidating, whereas the tech sector is pushing higher in front of what should be a banner first quarter reporting season.
From a technical take, the SPY is consolidating before the next move up. As long as the SPY is trading above the $397 level the path of least resistance is to the upside short term. Technology stocks still have more room to the upside to retest February highs.
Value stocks currently overbought and due for a short pullback. April should be a strong month for the equity market and our model projects a $410-$420 level by the end of April. The DXY has started its move to the downside. The TLT continues to trade in the range.
I would consider raising cash at this point as the best part of the recent rally is behind us. If you are trading options consider selling premium with May and June expiration dates. Based on our models, the market (SPY) will trade in the range between $388 and $420 for the next 6 weeks.
And remember we’re not talking about day-trading here. I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.
When rates shot higher this past month, the dollar rose in tandem, raising investor confidence in the currency, which in turn sent gold prices in decline. For most of the year Bitcoin has been the currency hedge of choice, digital gold as it would be.
The dollar index (DXY) briefly traded up through its downward-sloping 200-day moving average, triggering a wave of short-covering being the short-dollar strategy was a very crowded trade. That rally peaked around April 1 and has started to unwind since with the DXY falling back below its 200-day M.A.
Bond yields clearly overshot to the upside, the 10-yr T-Note reaching 1.75%. Shares of iShares 20+ Year Treasury Bond ETF (TLT) that correspond directly to the being long the 10-yr.
When we apply our AI platform to measuring TLT, our Seasonal Chart is giving us a broadly bullish reading where the 20,30,40 and 50-day probability periods are all giving us a “Higher” reading. This is the kind of readout that prompts us to consider adding TLT to our RoboInvestor advisory service.
The six-month chart of TLT shows a nice double-bottom formation working sideways that looks to set up TLT for a move higher.
Bottom line is that long-term bonds appear in the front end of an uptrend that could last a couple of weeks or longer.
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And remember we’re not talking about day-trading here. I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.
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