Top Advisors CornerStockCharts.comExpert market commentary from StockCharts.comtag:stockcharts.com,2019-04-18:blog-202024-02-01T20:12:40ZWill the Fed Cave In? Homebuilder Struggles are a Sign of the TimesJoe Duartetag:stockcharts.com,2024-02-01:post-271472024-02-01T20:12:39Z2024-02-01T20:12:39Z<p>If you're shocked by the recent volatility in the homebuilder stocks, you're probably not alone. I've certainly been bullish on the sector for some time, although, of late, I've pulled back my horns. But if you take a step back from the daily grind of trading, you can see that the homebuilders are essentially a microcosm of what's happening to the U.S. economy, which is entering a decisive period.</p><h3><strong>The Bond Market Disagrees with the Fed</strong></h3><p>As I've noted many times, it's the reaction to the Fed's actions and post-meeting Powell talkfest that matters most. And the bond market's reaction rules the roost. Here's why it matters and what to watch next.</p><p>The Federal Reserve made it clear on 1/31/2024 that there won't be any rate cuts in March. Stocks stumbled. More importantly, bond yields crashed. If you haven't figured it out yet, bond traders are betting on a recession.</p><h3><strong>Bond Rally May Be a Sign of Trouble for the Economy</strong></h3><p>The U.S. Ten Year Note yield (TNX) responded to the Fed's actions and words by crashing below the 4% level, which had been support since January 11. Prior to that, bond yields climbed, as consumer prices and other inflationary measures reversed their recent decline. But as soon as the Fed made its intentions known, bond traders began to bet on a slowing economy.</p><p><img src="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fcdn.buymeacoffee.com%2fuploads%2fproject_updates%2f2024%2f02%2f56095564e84e4750ad274bc326f0b89d.png&c=E,1,J6NCkHysKu5He3ca_1uDHwORI3ejvghMj8i5O-Hox4qczXGJxqu0hLwehQaxmfF-1DTZ6m4K4sqJ3YhT2ClZF0pwjPML2qhS2wckRusXyyEaEeK4&typo=1"></p><p>As I write, TNX is testing the long-term support of the 3.8% area. A move below 3.8% would be extraordinary, as it would signal that bond traders are expecting a severe slowing in the U.S. economy.</p><p>Falling yields will eventually lead to lower mortgage rates. And while that is a welcome development, whether it spurs potential homebuyers off the sidelines remains to be seen. We'll know more in the next couple of weeks.</p><p><img src="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fcdn.buymeacoffee.com%2fuploads%2fproject_updates%2f2024%2f02%2f3cbbc024f2b3642bf9ae02ed1b54e6b1.png&c=E,1,1qRUqxxAWQYBguiCqpOGq75d4hlBBomvZFCnmvDbLNRX38O46nHl_3jdeZjMhCr1Uqylby9q_FhEJ5CF65UkZdAhWG3QjGcfbMIb7fRAqCR8cPvqDg0KVA,,&typo=1"></p><h3><strong>Why a Recession?</strong></h3><p>There are two emerging trends which may account for the bullish sentiment in bonds. One, as I noted <a href="https://www.buymeacoffee.com/wsdetectivx/lewogemayo" target="_blank">here last week</a><span target="_blank">, is that homebuilders are reporting weaker sales and, in some cases, a rise in inventory. The other is that job losses are mounting.</span></p><p>According to the latest data from layoff tracking firm Challenger, Grey & Christmas, planned layoffs in the month of January totaled 82,307, a jump of 123% from December. So, despite the statistical gyrations and seasonal adjustments featured in the monthly payroll numbers from the U.S. government, the stream of layoffs continues to unfold. Recently, Citigroup (NYSE: C) announced 20,000 layoffs. United Parcel Services (NYSE: UPS) cut 12,000 jobs after its most recent earnings miss. And while these large company workforce reductions grab the headlines, you can view a more granular look at the layoff situation via the real time data offered by <a href="https://www.warntracker.com/" target="_blank">Warntracker.com</a><span target="_blank">. There, you can see that a wide variety of companies are slowly reducing the number of workers quietly. A few hundred here, twenty five there, and so on; it all adds up.</span></p><p>A more global number, confirming Challenger's data, can be found at <a href="https://layoffstracker.com/" target="_blank">Layoffstracker.com</a><span target="_blank">, which reports that, from January 2023 to the present, 1482 companies laid off a total of 496,509 employees. For context, according to this data set, the number of workers laid off in December 2023 and January 2024 combined was 53,205 – roughly 11 percent of all the layoffs in the past twelve months, which suggests the pace is picking up.</span></p><p>In addition, the number of jobless claims, reported this morning, rose by 12,000 in the most recent reporting week, 9,000 claims above expectation. California, New York, and Oregon led the way. Think tech and financial services.</p><h3><strong>Homebuilders: Where it All Comes Together</strong></h3><p>Food and shelter are the practical pillars of society, as they engender family and community formation. Yet, to fund both necessities, a person must have income. For a large majority, that income comes from a job. And with many jobs comes the benefit of a 401(k) plan. Banks and other lenders often factor in the value of a 401(k) plan in the final approval decision for loans, especially mortgages.</p><p>When a person loses a job, the 401(k) plan often becomes a source of income via borrowing or outright withdrawals. The source of funding for 401(k) plans is a combination of individual savings, employer contributions, and the trend of the stock market. A strong stock market, combined with a steady job, usually improves the value of 401(k) plans.</p><p>All of which means that, when a recession develops and job losses mount, the value of 401(k) plans becomes less predictable, and often falls. As a result, an individual's credit worthiness becomes less reliable. In the end, banks don't want to lend large sums of money to individuals with questionable credit.</p><p>What's most interesting is that the market's current bet seems to be that, even though homebuilders are struggling and job losses are mounting, the Fed will have to cave in as the economy stalls, and subsequently lower interest rates. In other words, if there aren't enough houses available, and interest rates fall far enough, somebody, somewhere will buy a house. That sounds plausible, except for the job thing, which, in the wake of the AI craze, is no longer as predictable as it once was.</p><h3><strong>Not All Homebuilders Are the Same</strong></h3><p>The homebuilder sector usually moves in tandem, usually based on the rise and fall of interest rates. Lately, however, there's been a great deal of variability in the price action of individual companies, as earnings and future guidance has made the difference between winners and losers.</p><p><img src="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fcdn.buymeacoffee.com%2fuploads%2fproject_updates%2f2024%2f02%2f6d01941fec2d25493b1d10903a76c881.png&c=E,1,NFd9m8TZnGi2NU31daUHPsa969ijqwk7yoLClQ_joWfZA0pZMm_0RvUqa-nc5I960h_EqI6xVfJ5ibLq7Em9FXOM1ouUL92_1M_dtcO-NMRXZEA,&typo=1"></p><p>This all-or-nothing response by traders is responsible for the sideways action in the SPDR S&P Homebuilder ETF (XHB), as the performance of individual stocks in the sector is reflective of earnings and future guidance. Some are falling, while others are holding up.</p><p><img src="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fcdn.buymeacoffee.com%2fuploads%2fproject_updates%2f2024%2f02%2f7c45370220a2c352b8a8f65583d804bf.png&c=E,1,79wQ_NZPLgYUnG3Wtgf63S9_1mL07UbHUF4kshx1vaTaI2nV6DwK1llB_Yn9BXgvTIBZl07v4EfnZ2o5PegGFVh6-qsNCL903cf22qgN8TuACsDkCzcCrAkclUCq&typo=1"></p><p>Last week, D.R. Horton (DHI) got clobbered after its earnings miss. The stock is showing signs of recovery, as lower bond yields offer long-term investors some comfort. Today's crash was Meritage (MTH), whose earnings were less palatable than Wall Street was hoping for.</p><p><img src="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fcdn.buymeacoffee.com%2fuploads%2fproject_updates%2f2024%2f02%2f642444d5dd5459c3c3b7c1065d726259.png&c=E,1,5WanrDOj_mTaztQvF9x1OkJXq2NCU0d2vfGUro756P8J8fcXlnjDpXwO5TdPphuCmDAQ6qOhfmp4BnxeJ4Nsz5w5-QjLElg9cFN8YJQoVIyiJcO5l3Y,&typo=1"></p><p>On the other hand, other companies in the sector, such as Lennar (LEN), have avoided price volatility and are holding up better, as their guidance for future quarters has been seen by the market as acceptable.</p><p>From a money flow standpoint, note that the Accumulation/Distribution (ADI) and On Balance Volume (OBV) lines for XHB, DHI, LEN, and MTH are moving sideways, albeit with a bit of a downward bent. That's a sign that investors are taking a wait-and-see attitude about the sector as things develop.</p><h3><strong>Bottom Line</strong></h3><p>If you're looking for clues about the economy, look to the homebuilder stocks. Inside their earnings reports, you'll find information about the economy and how individuals' personal finances are faring. The most recent nuggets inside these reports suggest a softening economic environment.</p><p>The volatility in the sector, due to slowing sales and in some cases rising inventory, indicates that financial stress is rising in the pool of potential buyers due to inflation and job losses. Moreover, if job losses continue to climb, the odds are that homebuilders will eventually see even softer sales, especially in their newly targeted sector of starter homes. That's because, no matter how low home prices fall, or how many incentives are offered by homebuilders, if potential homebuyers don't have reliable income and adequate credit worthiness, the odds of a mortgage being approved are low.</p><p>There are increasing signs that the U.S. economy is slowing, which are more evident in the middle to lower income brackets. You can see it reflected in slowing home sales for starter homes. Yet, there is anecdotal evidence that those in higher income brackets are starting to feel the pinch of inflation. See the reference to UPS and Citigroup above, where executives made up a significant portion of the layoffs.</p><p>The Federal Reserve's tough talk about interest rates and the bond market's complete disagreement with the central bank suggests that the smart money is betting that the Fed will cave in and lower rates sooner rather than later.</p><p>I own shares in DHI and LEN.</p><hr><p>Thanks to everyone for your support. I really appreciate it. This weekly report is available on my Buy Me a Coffee Page. If you like this report and want to receive early access this type of content on a regular basis, consider becoming a <a href="https://www.buymeacoffee.com/wsdetectivx/membership" target="_blank">member</a><span target="_blank">. </span>I also appreciate single coffees, which you can buy me <a href="https://www.buymeacoffee.com/wsdetectivx/membership" target="_blank">here</a><span target="_blank">.</span></p><p>To subscribe to my premium service, Joe Duarte in the Money <span target="_blank">Options.com, click </span><a href="https://www.joeduarteinthemoneyoptions.com/secure/order.asp" target="_blank">here</a><span target="_blank">. </span>Please don't forget to hit the Like button on the posts. It helps to spread the word.</p><p>You're the music. 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It has also been recommended as a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9i-deebpub8%2f&c=E,1,w1-DJEgic6bvAgWfDi0nVh6dH88Y6NBH3_JryXcFAzqtMhWK9wORsiYJ4wgHDdW3sHVflE7kdDqFRgymgtTvW6BlwZ1YDUdlNtF7qHOUCQI,&typo=1" target="_blank">Washington Post Color of Money Book of the Month</a><span target="_blank">.</span></p><p>To receive Joe's exclusive stock, option and ETF recommendations, in your mailbox every week visit <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9j-deebpub9%2f&c=E,1,p1clYHa4fNcS_dtuDr5XzkxAX4UoQiB6AUj5iZePLIsoc9I92KP1Vz5lz6UrjGaQq0vRvj2LeFT-DWayApeSCm45YlXfzvT2m2_1GOkwOKLy6pvi3HzpCcja&typo=1" target="_blank">https://joeduarteinthemoneyoptions.com/secure/order_email.asp</a><span target="_blank">.</span></p>If you're shocked by the recent volatility in the homebuilder stocks, you're probably not alone. I've certainly been bullish on the sector for some time, although, of late, I've pulled back my horns. But if you take a step back from the daily grind of trading, you can see that the homebuilders are essentially a microcosm of what's happening to the U.S. economy, which is entering a decisive period.The Bond Market Disagrees with the FedAs I've noted many times, it's the reaction to the Fed's actions and post-meeting Powell talkfest that matters most. And the bond market's reaction...The Ord Oracle January 29, 2024Tim Ordtag:stockcharts.com,2024-01-30:post-271302024-01-30T20:21:44Z2024-01-30T20:21:44Z<p style="margin: 0in;"><strong>SPX Monitoring Purposes:</strong> Long SPX on 1/18/24 at 4780.94.</p><p style="margin: 0in;"><strong>Our Gain 1/1/23 to 12/31/23:</strong> SPX=28.12%; SPX gain 23.38%.</p><p><strong>Monitoring Purposes GOLD: </strong>Long GDX on 10/9/20 at 40.78. </p><p><img src="https://d.stockcharts.com/img/articles/2024/01/30/9630a10f-82ce-4c5d-931e-924a40fb0c2f.jpg" style="display: block; margin: 0px auto;"></p><p><strong>Our gain for 2023 came in at 28.12% and SPX gain for 2023 came in at 23.38. We made 8 SPX trades, with one loss and 7 wins in 2023.</strong></p><p>We have the SPY up six days in a row going into last Thursday, which predicts that the SPY will be higher within five days 93% of the time. The top window is the 10-day average of the TRIN, which stands at 1.27; readings above 1.20 are considered bullish. The window below daily SPY is the 21-day TRIN; reading above 1.20 are bullish (current reading is 1.22). SPY tends to trend when both 10- and 21-day TRIN are in bullish levels (noted in shaded pink). In general, the SPY (SPX) rally should continue.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/30/ef4c72ab-c9ca-485f-99bd-91d145f68681.jpg" style="display: block; margin: 0px auto;"></p><p>We updated this chart from last Thursday. Back then, we said, "SPY (SPX) may be starting to trend (market is consistently up every week). The above is daily SPY going back to 2005. The top window is the RSI for the SPY. It's common for the market to trend when the daily RSI trades to 80. We market those times when the RSI reached 80 with dotted blue lines. The RSI reached 80 on December 18, 2023 (about a month ago). In previous times when the RSI reached 80, the market trended for multiple months." This more evidence that a trending market is likely.</p><p style="margin: 0in 0in 0.0001pt;">Tim Ord,</p><p>Editor</p><p><a href="https://ord-oracle.com/" target="_blank">www.ord-oracle.com</a><span target="_blank">. Book release "The Secret Science of Price and Volume" by Timothy Ord, buy at </span><a href="https://amazon.com/" target="_blank">www.Amazon.com</a><span target="_blank">.</span></p><hr style="width: 923px;"><p><em>Signals are provided as general information only and are not investment recommendations. You are responsible for your own investment decisions. Past performance does not guarantee future performance. Opinions are based on historical research and data believed reliable; there is no guarantee results will be profitable. Not responsible for errors or omissions. I may invest in the vehicles mentioned above.</em></p>SPX Monitoring Purposes: Long SPX on 1/18/24 at 4780.94.Our Gain 1/1/23 to 12/31/23: SPX=28.12%; SPX gain 23.38%.Monitoring Purposes GOLD: Long GDX on 10/9/20 at 40.78. Our gain for 2023 came in at 28.12% and SPX gain for 2023 came in at 23.38. We made 8 SPX trades, with one loss and 7 wins in 2023.We have the SPY up six days in a row going into last Thursday, which predicts that the SPY will be higher within five days 93% of the time. The top window is the 10-day average of the TRIN, which stands at 1.27; readings above 1.20 are considered bullish. The window...New Highs All Around; The Federal Reserve Holds the Key to What Happens NextJoe Duartetag:stockcharts.com,2024-01-28:post-271242024-01-28T22:40:28Z2024-01-28T22:40:28Z<p>There's an old Wall Street adage that says: "What's important is the return of your money, not the return on your money." This is one of those times.</p><p>With the major indexes making new highs and the market's breadth gauges following close behind, it's hard to argue with the current upward momentum in stocks. Yet, the outcome of the Federal Reserve's first meeting of 2024, scheduled for January 30-31, will likely set the stage for what happens in the stock market for the rest of the first quarter.</p><p>While the Fed is expected to keep interest rates unchanged, the market will be hoping for hints that rate cuts may come sooner rather than later. The Fed has been forecasting rate cuts in Q3, while the market has been hoping for rate cuts in March.</p><p>Part of the uncertainty has to do with persistently above-average consumer spending in the wake of the ongoing issues in the Red Sea, the rerouting of cargo ships, and the potential for supply chain disruptions bleeding into consumer prices, which combined would likely restoke inflation.</p><h3><strong>Bonds Remain in Bear Trend</strong></h3><p>The bond market has been in a bearish yield retracement since late December, when the U.S. Ten Year Note yield (TNX) fell to 3.8%. Currently, TNX retains a bearish tone, given its recent move above its 200-day moving average and the 4.1% area. Recent inflation data suggests that the rise in inflationary pressures has slowed, but the threat of higher prices remains.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/28/0a42cab8-579f-4ce1-a98c-176601229b28.jpg" style="display: block; margin: 0px auto;"></p><p>Moreover, its rise has bled into the mortgage market, and the recent drop in mortgage rates has likely bottomed out.</p><p><img src="https://stockcharts.com/img/articles/2024/01/28/4936c496-b2a4-48ea-93ce-fbe6ce199dae.jpg"></p><p target="_blank">As I noted in this <a href="https://www.buymeacoffee.com/wsdetectivx/lewogemayo" target="_blank"><strong>post</strong></a><span target="_blank">, the homebuilder stocks, which had been in a lofty bull market since October 2023, and which recently seemed </span><a href="https://www.buymeacoffee.com/wsdetectivx/is-merger-acquisitions-wave-about-hit-homebuilders" target="_blank"><strong>poised to benefit from a potential increase in mergers and acquisitions</strong></a><span target="_blank">, are suddenly starting to show some wear and tear. This was highlighted in the earnings miss posted by the largest homebuilder in the U.S., D.R. Horton (DHI), whose shares tumbled in response.</span></p><p><img src="https://d.stockcharts.com/img/articles/2024/01/28/ee25bb32-1c78-484c-a6c8-33ca7ce2b720.jpg" style="display: block; margin: 0px auto;"></p><p>I detailed the report in a Flash Alert to subscribers, as well as in the post referenced above. Suffice it to say that it's now day to day with the homebuilders.</p><p>As a result of the confluence of these events, risk management is the prime directive for investors. That means that portfolios should be prepared for both a rise or a fall in stocks. Keep these factors in mind:</p><ul><li>The FOMC meeting could push bond yields higher. Stocks will likely fall in response;</li><li>Sentiment remains too bullish. The CNN Fear/Greed Index closed at 76 on 1/26/24, remaining well in the GREED zone. This type of reading means the market is very vulnerable to bad news;</li><li>The CBOE Put/Call Ratio closed at 0.94 after its recent high of 1.25 – the bears are losing their grip; and</li><li>The CBOE Volatility Index (VIX) failed to rise above 15.</li></ul><p style="margin: 0in 0in 8pt;">Here's how to manage the potential risk:</p><ul><li>Stick with what's working; if a position is holding up – keep it (see section on homebuilders below);</li><li>Raise cash by reducing position size while maintaining exposure to strong stocks;</li><li>Consider short-term hedges, such as put options and inverse ETFs. These could soften the blow if the Fed spooks the markets;</li><li>To reduce risk of loss, consider trading options instead of stocks;</li><li>Look for value in out-of-favor areas of the market that are showing signs of life, but build positions slowly; and</li><li>Protect your gains with sell stops and keep raising them as prices of your holdings rise.</li></ul><h3><strong>Value Sector: Energy Stocks Show Signs of Life</strong></h3><p>The energy sector is strengthening and is an example of an area of the market where <a href="https://www.buymeacoffee.com/wsdetectivx/the-sweet-spot-buying-stocks-where-value-momentum-meet" target="_blank"><strong>value is emerging</strong></a><span target="_blank">. The reasons cited for the recent improvement in the sector include better-than-expected U.S. GDP and, of course, the uncertainty surrounding the Red Sea, as potential price boosters for crude oil.</span></p><p><img src="https://d.stockcharts.com/img/articles/2024/01/28/d053b373-8519-421a-a80d-32059a51a2a3.jpg" style="display: block; margin: 0px auto;"></p><p>The Energy Select Sector SPDR ETF (XLE) has crossed back above its 200-day moving average with Accumulation/Distribution (ADI) and On Balance Volume (OBV) both rising. That means that short sellers are moving out (ADI) and buyers are moving back in (OBV).</p><p>Given the potential for daily gyrations in the oil market, this bullish change gives investors an opportunity to consider trading options in the sector, which is what we've been doing in my service over the last few weeks.</p><p style="margin: 0in 0in 8pt;">My latest video offers details on the successful use of put options in real time. Check it out <a href="https://trk.cp20.com/click/96cs-2s6w5n-cz9w6u-deebpub4/" target="_blank"><strong>here</strong></a><span target="_blank">. F</span>or details on my latest option trades and on which areas of the market make sense currently consider a <a href="https://trk.cp20.com/click/96cs-2s6w5n-cz9w6v-deebpub5/" target="_blank"><strong>FREE Trial to Joe Duarte in the Money Options.com.</strong></a></p><h3><strong>QQQ Takes a Break as Shipping Stocks Consolidate</strong></h3><p>The Invesco QQQ Trust (QQQ) finally slowed its recent ascent after its breakout, which was boosted by the earnings beat in Taiwan Semiconductor (TSM), a stock I recommended before the news was released. This action confirmed my expectations for a short squeeze in QQQ, which I described here over the last couple of weeks.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/28/2cb53aa6-d9d2-4ed3-945e-40c9ef4096ce.jpg" style="display: block; margin: 0px auto;"></p><p>Both the price charts for QQQ and TSM continue to suggest that another short squeeze could be brewing. Note that ADI is falling and OBV is rising in both charts. Much may depend on what happens with the Fed.</p><p>Meanwhile, our weekly look at SonicShares Global Shipping ETF (BOAT) suggests that a consolidation is ongoing in the shipping stocks. On the other hand, some shipping stocks remain in uptrends.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/28/9ad28e4b-4a2c-42fe-a434-15db99b4a760.jpg" style="display: block; margin: 0px auto;"></p><p>If you saw this <a href="https://www.buymeacoffee.com/wsdetectivx/panama-canal-weather-woes-bullish-action-shipping-stocks" target="_blank">post</a><span target="_blank">, you would have been prepared for the rally in the shipping stocks. For my latest recommendations on technology, energy, homebuilder and shipping stocks and options grab a FREE two-week trial to my service by clicking </span><a href="https://www.joeduarteinthemoneyoptions.com/secure/order.asp" target="_blank">here</a><span target="_blank">.</span></p><h3><strong>Market Breadth Rallies, NDX Rises Further Above 17,000, SPX Outperforms</strong></h3><p>The NYSE Advance Decline line (NYAD) rallied after finding support at its lower Bollinger Band after breaking below its 20-day moving average in the prior week. It closed just below a new high. This remains a positive for the market.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/28/7ebf002c-2111-4720-881a-4280fda6694d.jpg" style="display: block; margin: 0px auto;"></p><p>The Nasdaq 100 Index (NDX) remained above the 17,000 area, as the short squeeze I <a href="https://stockcharts.com/articles/tac/2024/01/momentum-run-turns-into-market-256.html" target="_blank">predicted here two weeks ago</a><span target="_blank"> developed further. Note the rise in ADI (short sellers covering) was joined by OBV as buyers moved in. </span></p><p>The S&P 500 (SPX) moved ahead of NDX, closing above 4900. 4800 is now support.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/28/917f77f0-16e9-43dd-b2e6-85aeadeb622c.jpg" style="display: block; margin: 0px auto;"></p><h3><strong>VIX Remains Below 15</strong></h3><p>The CBOE Volatility Index (VIX) ran into resistance at 15. This, for now, remains a bullish factor for stocks. If VIX remains subdued, more upside is possible.</p><hr><p>To get the latest information on options trading, check out <a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-2fhghz-d0hczf-7wedrxb5%2f&c=E,1,rnWxui5JQ1PzSCHe6mv4JPh_RjXNQ7EWySLq9PWn2vF_CTVoNPUjHq7eZJcRYej4uXFmI6zuzo2q4c2LDbIGfUJ1wN-_c031ic-iZ5b8crTUVPpe&typo=1" target="_blank"><strong><em><u>Options Trading for Dummies</u></em></strong></a><span target="_blank">, now in its 4th Edition—Get Your Copy Now! Now also available in Audible audiobook format!</span></p><p><a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-2gvrba-nuarvf-7wedrxb3%2f&c=E,1,3IS6rDOEmro6stbXeFW3pI0tIMbpo9P6zGjpDNI8Xr1jDnowpJeKofNfOCNgwmgP-PveAu2ELseA57gR8wTeSdBaaMbhcZDJDCJ-WvieMFKONu3GQFpZmA,,&typo=1" target="_blank"><img src="https://stockcharts.com/img/articles/2023/01/22/144ca2e3-ea1b-41c6-be2d-41c833382a9e.jpg" style="display: block; margin: 0px auto;"><span class="image-caption">#1 New Release on Options Trading!</span></a></p><p>Good news! I've made my NYAD-Complexity - Chaos chart (featured on my <a href="https://youtu.be/cx04LKXErhw" target="_blank"><strong>YD5 videos</strong></a><span target="_blank">) and a few other favorites public. You can find them </span><a href="https://stockcharts.com/public/1215217" target="_blank"><strong>here</strong></a><span target="_blank">.</span></p><p><br></p><p><strong>Joe Duarte</strong></p><p>In The Money Options</p><hr><p>Joe Duarte is a former money manager, an active trader, and a widely recognized independent stock market analyst since 1987. He is author of eight investment books, including the best-selling <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9d-deebpub3%2f&c=E,1,ZX1dsKj4MVxT-7UgaqjXHWxdaWovnLyXuMojxdYl8UyFohQSu0YuyrjByG_kEMZfwLI69BmrJnjFxIyo_xyawzGlomVExT2Z8aBhB1r9ntSBGj04IlFJIA,,&typo=1" target="_blank"><em>Trading Options for Dummies</em></a><span target="_blank">, rated a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9e-deebpub4%2f&c=E,1,5Ap0vcdmm5gS2f9e33SNn7bIaXS3qSOf6p2W7oP658boUCKX3FcbVkcRd5n4i8_Oj19wQIs7z3nwQcPxOtBwzA0HXHQFJYchj4IZNa08b9HFECQq&typo=1" target="_blank">TOP Options Book for 2018 by Benzinga.com</a><span target="_blank"> and now in its third edition, plus </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9f-deebpub5%2f&c=E,1,P0V9AM2KW_OE79KIeXYohzQtM34hKB3aJzum4G0CkvwlpRAUYCaGN-q9LmSpEC8NSy_PLRJvLoSHuixaIq2ak3ZOGWbR7OOzfk3JoxA3Um8,&typo=1" target="_blank"><em>The Everything Investing in Your 20s and 30s Book</em></a><span target="_blank"> and six other trading books.</span></p><p><em>The Everything Investing in Your 20s and 30s Book</em> is available<strong> </strong><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9g-deebpub6%2f&c=E,1,PH18HT-ZPsb4WGmftWjZ2oRP5wDuqucIGLlo1IDJLM-ydJ-j1q445_Ph5R9EUDqahPzghPFlEPOOgHuabciRp0cWoGNNpZ8JJukWBoMwYIXJHBlpnoCVqWF0N-8,&typo=1" target="_blank">at Amazon</a><span target="_blank"> and </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9h-deebpub7%2f&c=E,1,0H2moltb4qkxLb8MXS-_PTkhiPxo7_joI8OEkYpITp2sipvKdbF7psxChbWansm24hzdetcL3sDUAbmGBUSAMcfH66vZr6iLyeIoWet4ZgSvqe-1GPO5RMo,&typo=1" target="_blank">Barnes and Noble</a><span target="_blank">. It has also been recommended as a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9i-deebpub8%2f&c=E,1,w1-DJEgic6bvAgWfDi0nVh6dH88Y6NBH3_JryXcFAzqtMhWK9wORsiYJ4wgHDdW3sHVflE7kdDqFRgymgtTvW6BlwZ1YDUdlNtF7qHOUCQI,&typo=1" target="_blank">Washington Post Color of Money Book of the Month</a><span target="_blank">.</span></p><p>To receive Joe's exclusive stock, option and ETF recommendations, in your mailbox every week visit <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9j-deebpub9%2f&c=E,1,p1clYHa4fNcS_dtuDr5XzkxAX4UoQiB6AUj5iZePLIsoc9I92KP1Vz5lz6UrjGaQq0vRvj2LeFT-DWayApeSCm45YlXfzvT2m2_1GOkwOKLy6pvi3HzpCcja&typo=1" target="_blank">https://joeduarteinthemoneyoptions.com/secure/order_email.asp</a><span target="_blank">.</span></p>There's an old Wall Street adage that says: "What's important is the return of your money, not the return on your money." This is one of those times.With the major indexes making new highs and the market's breadth gauges following close behind, it's hard to argue with the current upward momentum in stocks. Yet, the outcome of the Federal Reserve's first meeting of 2024, scheduled for January 30-31, will likely set the stage for what happens in the stock market for the rest of the first quarter.While the Fed is expected to keep interest rates unchanged, the market will be hoping...Manheim Used Vehicle Index and M2Tom McClellantag:stockcharts.com,2024-01-25:post-271102024-01-25T19:52:29Z2024-01-25T19:52:29Z<p><img src="https://d.stockcharts.com/img/articles/2024/01/25/6acde7ef-e721-4849-9fa4-c5cbc7b0434a.jpg" style="display: block; margin: 0px auto;"></p><p>I like to find interesting comparisons between seemingly unrelated data, as they offer insights that some people might not have thought of. Someone asked me recently how I come up with such comparisons. My answer is that sometimes it stems from asking the data what relationship there might be, while other times I see a chart pattern that is familiar (because I stare at charts all day) and seek to put the two together. That latter method is the case for this week's chart.</p><p>It has been widely reported in the news that used car prices have been falling from their big COVID-related spike. That's good for consumers, and good for the input from those data-into-inflation measures like CPI. What struck me in seeing the chart was how similar it looked to the plot of the ratio of M2 to GDP, something I have addressed here in past articles. Sure enough, that correlation is a genuine one, especially when I shift the plot of M2/GDP forward by 12 months. That is the same lag time I use when comparing M2/GDP to stock price behavior.</p><p>With this understanding of that relationship, it is not a surprise, then, to see that used car prices are falling. They are just doing what they are supposed to do in following this measure of money supply growth or shrinkage. And it helps us to see that the big spike in used car prices during 2020-21 was really just a reflection of how much excess money was sloshing around, looking for something to do, so people used that excess money to buy used cars, and renovate their homes. The relationship implies that we should expect used car prices to continue falling for at least another 12 months, or maybe longer if the M2/GDP ratio keeps on falling.</p><p>Because M2/GDP also serves as a leading indication for stock price movements, I thought it would be natural to compare the Manheim Used Vehicle Value Index to the S&P 500:</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/25/8243f4f5-4e6b-436e-aa54-fdd523c36f8c.jpg" style="display: block; margin: 0px auto;"></p><p>Not surprisingly, there is a very strong positive correlation, or at least that was the case until just recently. A positive correlation makes sense. When the stock market is doing well, people become more confident, and are willing to part with their money more readily to make other investments, like buying a car. When stocks are in a bear market, people pull in and hoard their money, not spending on anything that is not absolutely necessary. Stock prices drive moods, which then drive actions.</p><p>It makes less sense, though, to see the big divergence happening since early 2023, with the S&P 500 pushing up to new all-time highs (barely), but used car prices are falling. This type of divergence happened one other time, back in 2012-13, and it resolved by having the small decline in used car prices give way to a small upturn, to better track with the rise in the S&P 500. That instance is a sample size of 1, and the Manheim data only go back to 1997, so it may be dangerous to draw too many conclusions from that instance for what is happening right now.</p><p>So which price plot is right now, used cars or stocks? That is going to be a fascinating question. The Manheim Index is arguably returning back to its prior trend, getting back to "fair value", which is a term that people try to apply to stocks that does not always work out well. Stock prices, on the other hand, are rising despite the message from a shrinking money supply, and from the Federal Reserve still doing "quantitative tightening", plus applying restrictive interest rate policy with the Fed Funds Target Rate a full point higher than the 2-year T-Note yield.</p><p>I doubt that this divergence can persist forever, given the strength of the positive correlation before 2023. So that means that 2024 is probably a good time to buy a used car, or sell stocks, or perhaps both.</p>I like to find interesting comparisons between seemingly unrelated data, as they offer insights that some people might not have thought of. Someone asked me recently how I come up with such comparisons. My answer is that sometimes it stems from asking the data what relationship there might be, while other times I see a chart pattern that is familiar (because I stare at charts all day) and seek to put the two together. That latter method is the case for this week's chart.It has been widely reported in the news that used car prices have been falling from their big...D.R. Horton's Earnings Spells Trouble for the Homebuilder StocksJoe Duartetag:stockcharts.com,2024-01-25:post-271092024-01-25T19:45:59Z2024-01-25T19:45:59Z<p>Those of us who have been bullish on the homebuilder sector got a reality check on 1/23/24 when, despite beating on revenues, D.R. Horton (DHI) missed earnings expectations and the stock tanked, taking prices for other homebuilders such as Lennar (LEN) down as well.</p><p>Despite the overall positive tone of the report, especially the company's continuing ability to make money, inside there were several reasons to be concerned. In particular, there was the order backlog of homes under contract, which shrunk by 11%, while it looks as if unsold inventory is starting to climb, with 730 completed homes sitting on lots for over six months without being sold. That suggests that Horton may be building fewer houses and that the ones that are ready to go are taking longer to sell.</p><p>But here's what most concerning: the report covered earnings which corresponded to the period extending from October 1 to December 31, 2023. That's when the U.S. Ten Year Note yield (TNX) and mortgage rates topped out, as I <a href="https://www.buymeacoffee.com/wsdetectivx/mortgage-rates-may-have-topped-out" target="_blank">predicted they would</a><span target="_blank">, at 5%, before falling to 3.8%. What we heard from companies reporting and commenting during that period was the drop in mortgage rates was bringing in buyers from the sidelines. </span>We also heard that the incentives offered by builders, such as buying down points to reduce mortgage rates as well as lowering prices and adding amenities to homes at low prices, were also increasing sales.</p><p>At the same time, the latest figures for new home sales (December 2023) beat expectations both month over month and year over year, while existing home sales cratered to new lows. So, if things were turning around, then why is Horton's order backlog falling, and why does it have a bunch of houses sitting on the unsold lot for greater than six months?</p><p>I spoke to a realtor friend who may have the answer. She told me that she had taken some clients to a DHI property during that period and that they were turned down for a DHI-backed mortgage. She took them elsewhere and they got a loan.</p><p>All of which raises the question of whether Horton was managing its risks by enforcing very tight lending standards, or whether the credit worthiness of potential homebuyers has now deteriorated to the point where lower mortgage rates, incentives, and rain dances are not going to help people buy homes.</p><p>In other words, while demand remains strong and supplies remain tight, the personal finances of would-be buyers may not be good enough for lenders to take risks.</p><h3><strong>Has the Fed Killed the Economy?</strong></h3><p>Central to the argument now is the question of whether the Federal Reserve's rate hikes and the consequential rise in bond yields have reached the point where homebuilders are becoming concerned about the credit quality of potential buyers, and thus their inventory is quietly increasing as their sales slow. Moreover, if this is true, then the longer the Fed keeps rates at current rates and bond yields continue to rise, it's worth asking: Is the recession that hasn't come to fruition yet about to become apparent?</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/25/5e43ce3f-cbb7-4ad0-b02a-5168ce256d5b.jpg" style="display: block; margin: 0px auto;"></p><p>The U.S. Ten Year Note yield (TNX) has now crossed above the important 4.1%-yield area and its 200-day moving averages, which are both negative developments. It is also testing the important 50-day moving average resistance area. If this persists, bond yields will likely continue to rise until the Fed finally lowers rates or inflation shows signs that it's cooling off over the long term.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/25/0db11130-0ab9-4cb0-8f35-a1689fbbfd9c.jpg" style="display: block; margin: 0px auto;"></p><p>The rise in yields brought added to the problems caused in the shares of D.R. Horton by its earnings report. The shares are now testing the support of the 50-day moving average. Both Accumulation/Distribution (ADI) and On Balance Volume (OBV) tumbled as short-sellers seized on the opportunity (ADI) and buyers became sellers (OBV). We'll see if the shares can hold up at these levels. The next support level is at 130.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/25/d36884d5-72d3-48d9-b74d-aecf695243ae.jpg" style="display: block; margin: 0px auto;"></p><p>Overall, the homebuilder sector, as in the SPDR S&P Homebuilder ETF (XHB), held up better than DHI. But ADI and OBV for this ETF are also cautionary. A break below $90 for XHB would be very concerning.</p><h3><strong>Bottom Line</strong></h3><p>The earnings miss by D.R. Horton raises red flags, and suggests that the damage to the housing market caused by the Fed's rate increases may go a bit deeper than previously thought.</p><p>It is possible that, even though supply and demand continue to favor the homebuilders, the business itself is starting to plateau. In essence, the housing market may be faced with a new problem; consumers whose personal financial situation is deteriorating may not qualify for purchases in the current environment. This situation is likely to worsen if layoffs increase over the next few months, as the technology and related sectors continue to downsize their workforces.</p><p>If this is how the situation unfolds, then the Fed and the economy may be in worse trouble than most investors realize.</p><p>DHI is the bellwether. Because although the company's profit prospects are well above average, it looks as if growth is about to slow, and perhaps maybe even stall, if interest rates don't ease.</p><hr><p>Thanks to everyone for your support. I really appreciate it. This weekly report is available on my Buy Me a Coffee Page. If you like this report and want to receive early access this type of content on a regular basis, consider becoming a <a href="https://www.buymeacoffee.com/wsdetectivx/membership" target="_blank">member</a><span target="_blank">. </span>I also appreciate single coffees, which you can buy me <a href="https://www.buymeacoffee.com/wsdetectivx/membership" target="_blank">here</a><span target="_blank">.</span></p><p>To subscribe to my premium service, Joe Duarte in the Money <span target="_blank">Options.com, click </span><a href="https://www.joeduarteinthemoneyoptions.com/secure/order.asp" target="_blank">here</a><span target="_blank">. </span>Please don't forget to hit the Like button on the posts. It helps to spread the word.</p><p>You're the music. I'm just the band.</p><hr><p>To get the latest information on options trading, check out <a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-2fhghz-d0hczf-7wedrxb5%2f&c=E,1,rnWxui5JQ1PzSCHe6mv4JPh_RjXNQ7EWySLq9PWn2vF_CTVoNPUjHq7eZJcRYej4uXFmI6zuzo2q4c2LDbIGfUJ1wN-_c031ic-iZ5b8crTUVPpe&typo=1" target="_blank"><strong><em><u>Options Trading for Dummies</u></em></strong></a><span target="_blank">, now in its 4th Edition—Get Your Copy Now! Now also available in Audible audiobook format!</span></p><p><a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-2gvrba-nuarvf-7wedrxb3%2f&c=E,1,3IS6rDOEmro6stbXeFW3pI0tIMbpo9P6zGjpDNI8Xr1jDnowpJeKofNfOCNgwmgP-PveAu2ELseA57gR8wTeSdBaaMbhcZDJDCJ-WvieMFKONu3GQFpZmA,,&typo=1" target="_blank"><img src="https://stockcharts.com/img/articles/2023/01/22/144ca2e3-ea1b-41c6-be2d-41c833382a9e.jpg" style="display: block; margin: 0px auto;"><span class="image-caption">#1 New Release on Options Trading!</span></a></p><p><strong>Joe Duarte</strong></p><p>In The Money Options</p><hr><p>Joe Duarte is a former money manager, an active trader, and a widely recognized independent stock market analyst since 1987. He is author of eight investment books, including the best-selling <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9d-deebpub3%2f&c=E,1,ZX1dsKj4MVxT-7UgaqjXHWxdaWovnLyXuMojxdYl8UyFohQSu0YuyrjByG_kEMZfwLI69BmrJnjFxIyo_xyawzGlomVExT2Z8aBhB1r9ntSBGj04IlFJIA,,&typo=1" target="_blank"><em>Trading Options for Dummies</em></a><span target="_blank">, rated a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9e-deebpub4%2f&c=E,1,5Ap0vcdmm5gS2f9e33SNn7bIaXS3qSOf6p2W7oP658boUCKX3FcbVkcRd5n4i8_Oj19wQIs7z3nwQcPxOtBwzA0HXHQFJYchj4IZNa08b9HFECQq&typo=1" target="_blank">TOP Options Book for 2018 by Benzinga.com</a><span target="_blank"> and now in its third edition, plus </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9f-deebpub5%2f&c=E,1,P0V9AM2KW_OE79KIeXYohzQtM34hKB3aJzum4G0CkvwlpRAUYCaGN-q9LmSpEC8NSy_PLRJvLoSHuixaIq2ak3ZOGWbR7OOzfk3JoxA3Um8,&typo=1" target="_blank"><em>The Everything Investing in Your 20s and 30s Book</em></a><span target="_blank"> and six other trading books.</span></p><p><em>The Everything Investing in Your 20s and 30s Book</em> is available<strong> </strong><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9g-deebpub6%2f&c=E,1,PH18HT-ZPsb4WGmftWjZ2oRP5wDuqucIGLlo1IDJLM-ydJ-j1q445_Ph5R9EUDqahPzghPFlEPOOgHuabciRp0cWoGNNpZ8JJukWBoMwYIXJHBlpnoCVqWF0N-8,&typo=1" target="_blank">at Amazon</a><span target="_blank"> and </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9h-deebpub7%2f&c=E,1,0H2moltb4qkxLb8MXS-_PTkhiPxo7_joI8OEkYpITp2sipvKdbF7psxChbWansm24hzdetcL3sDUAbmGBUSAMcfH66vZr6iLyeIoWet4ZgSvqe-1GPO5RMo,&typo=1" target="_blank">Barnes and Noble</a><span target="_blank">. It has also been recommended as a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9i-deebpub8%2f&c=E,1,w1-DJEgic6bvAgWfDi0nVh6dH88Y6NBH3_JryXcFAzqtMhWK9wORsiYJ4wgHDdW3sHVflE7kdDqFRgymgtTvW6BlwZ1YDUdlNtF7qHOUCQI,&typo=1" target="_blank">Washington Post Color of Money Book of the Month</a><span target="_blank">.</span></p><p>To receive Joe's exclusive stock, option and ETF recommendations, in your mailbox every week visit <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9j-deebpub9%2f&c=E,1,p1clYHa4fNcS_dtuDr5XzkxAX4UoQiB6AUj5iZePLIsoc9I92KP1Vz5lz6UrjGaQq0vRvj2LeFT-DWayApeSCm45YlXfzvT2m2_1GOkwOKLy6pvi3HzpCcja&typo=1" target="_blank">https://joeduarteinthemoneyoptions.com/secure/order_email.asp</a><span target="_blank">.</span></p>Those of us who have been bullish on the homebuilder sector got a reality check on 1/23/24 when, despite beating on revenues, D.R. Horton (DHI) missed earnings expectations and the stock tanked, taking prices for other homebuilders such as Lennar (LEN) down as well.Despite the overall positive tone of the report, especially the company's continuing ability to make money, inside there were several reasons to be concerned. In particular, there was the order backlog of homes under contract, which shrunk by 11%, while it looks as if unsold inventory is starting to climb, with 730 completed...Bond Yields Rise, Stocks Dodge Bullet; QQQ Breaks Out and Possible M&A Frenzy Develops in HomebuildersJoe Duartetag:stockcharts.com,2024-01-23:post-270972024-01-23T21:32:37Z2024-01-23T21:32:37Z<p>A breakout in the major indexes, with a last-minute recovery in the market's breadth and rising bond yields, made for a mixed options expiration week. But, in the end, stocks once again dodged a bullet, as a recovery in the market's breadth saved the day for the bulls, as I discuss below.</p><p>Still, even as the bullish trend remains in place, this remains a tricky trading environment. As a result, savvy investors will need to stay flexible in both their perceptions and trading strategies. Keep these factors in mind:</p><ul><li>The Fed is fine tuning its expected rate cuts to the 3rd quarter of 2024. That's a long time from now;</li><li>Sentiment remains too bullish. The CNN Fear/Greed Index closed at 72 on 1/19/24, remaining well in the GREED zone. The longer these readings remain in place, the bumpier the trading action will remain;</li><li>The CBOE Put/Call Ratio closed at 0.91 after its recent high of 1.25 – the bears are losing their grip; and</li><li>The CBOE Volatility Index (VIX) failed to rise above 15 – as call option buying is increasing.</li></ul><p>It all adds up to bumpy, stock-specific trading. Here's a roadmap:</p><ul><li>Stick with what's working; if a position is holding up, keep it; (see section on homebuilders below);</li><li>Raise cash by reducing position size;</li><li>Consider short-term hedges;</li><li>To reduce risk of loss, consider trading options instead of stocks;</li><li>Look for value in out-of-favor areas of the market that are showing signs of life, but build positions slowly; and</li><li>Protect your gains with sell stops and keep raising them as prices of your holdings rise.</li></ul><h3><strong>Using Options Ahead of Earnings</strong></h3><p>In a market where risk of loss is above-average, especially ahead of scheduled events such as earnings reports, options can be useful risk management vehicles. A good hedge when to guard against negative news, such as a negative earnings surprise, is to buy a protective put.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/23/9ca67eb0-92b9-4080-8e73-a166bfa16938.jpg" style="display: block; margin: 0px auto;"></p><p>Here's a good example of how to make this strategy work. RV manufacturer Winnebago (WGO) shares were rallying into its earnings report in late December 2023. Investors were betting on a beat of the expected results. The stock got well ahead of itself, as evidenced by its closing above its upper Bollinger Band on 12/19/23. That was a sign that the stock was vulnerable and that the earnings report had to be perfect. As it turned out, the shares got clobbered as the company missed its earnings estimates. A protective put was a good idea.</p><p>It's prudent to check the company's record on earnings. Indeed, WGO had beaten expectations for the prior fourth quarter, which meant that selling the shares ahead of the earnings may not have been the best thing to do. But a stock which rises dramatically will usually have inexpensive puts available for purchase, which keeps costs down with the potential for outsized upside potential.</p><p>A close look at the ADI and OBV lines suggested that the gains in the stock ahead of the earnings report were more due to short covering (rising ADI) than actual buying (flat OBV). That was a sign that there wasn't solid interest in the stock, and that some sort of protection was warranted.</p><p>In this case, buying a protective put, such as one with a strike price of $70, made sense. I chose $70 because that was where a VBP bar was located. That meant that if the stock was going to hold a decline, that might be a place where it would happen.</p><p>My latest <em>Your Daily Five</em> video offers details on the successful use of put options in real time. Check it out <a href="https://www.buymeacoffee.com/wsdetectivx/ravejuhefe" target="_blank">here</a><span target="_blank">. </span>For details on my latest option trades and on which areas of the market make sense currently consider a <a href="https://www.joeduarteinthemoneyoptions.com/secure/order.asp" target="_blank">FREE Trial to Joe Duarte in the Money Options.com.</a></p><h3><strong>Bond Yields Creep Higher, but Potential Merger Wave Holds Homebuilders Up</strong></h3><p target="_blank">Even in the face of rising bond yields, homebuilder stocks held up well last week, buoyed by the merger of Japanese homebuilder Sekisui House (SKSHY) with U.S. homebuilder MDC Holdings (MDC), which I reported on in this <a href="https://www.buymeacoffee.com/wsdetectivx/is-merger-acquisitions-wave-about-hit-homebuilders" target="_blank">post</a><span target="_blank">. This may be the first of many mergers in the sector, as cash-rich homebuilders and private equity funds look to expand their exposure to the housing market, especially into the southern U.S., which continues to grow as populations shift from the coasts toward areas of higher economic growth.</span></p><p><img src="https://d.stockcharts.com/img/articles/2024/01/23/8960e405-7a66-4b1c-8560-004ef4c567d5.jpg" style="display: block; margin: 0px auto;"></p><p>The U.S. Ten Year Note yield (TNX) crept higher, ending the week above the 4-4.1% yield range. Lucky for investors, TNX ran into resistance at its 50-day moving average and stopped climbing. On the other hand, if the move above 4.1% continues, it will eventually weigh on stocks.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/23/a083587a-3ee8-4e47-8539-98447a954896.jpg" style="display: block; margin: 0px auto;"></p><p>Homebuilder stocks bucked the trend in TNX as investors weigh the possibility that the buyout of MDC could be signaling a takeover frenzy in the sector. The SPDR S&P Homebuilder ETF (XHB) saw some aggressive short covering on the news (rising ADI line), while OBV looks set to join the rise. A further rise in OBV would signal that the smart money is betting on an acceleration of the merger dynamic. </p><h3><strong>QQQ Breaks Out</strong></h3><p>The Invesco QQQ Trust (QQQ) delivered a breakout last week, as the semiconductor stocks rose after Taiwan Semiconductor (TSM), a stock I recommended before it beat earnings expectations and offered bullish forward guidance, broke out in a big way after the announcement. Under the hood, both ADI and OBV for QQQ kept their upward bias, with short sellers bailing out (rising ADI) and buyers putting their money to work (bottoming OBV). This action confirmed my expectations for a short squeeze, which I described here over the last couple of weeks.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/23/5e509040-213e-43d6-9505-ab954ade633b.jpg" style="display: block; margin: 0px auto;"></p><p>Ahead of the TSM report, there was a quietly bullish rise in On Balance Volume (OVB), which suggested the smart money was expecting good news.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/23/9cede472-6e23-4b15-8a45-58e717d1fafd.jpg" style="display: block; margin: 0px auto;"></p><p>I am keeping my eye on the SonicShares Global Shipping ETF (BOAT). The situation in the Red Sea is still unfolding, with U.S. flagged ships coming under attack. BOAT was in a consolidation pattern last week as traders consider the potential effects of the shipping disruptions and rerouting of boats. Global shipping giant Maersk (AMKBY) recently announced its expectations for the Red Sea situation to remain in place for several months as it reroutes its ships accordingly. Reports of Israeli airstrikes on Damascus surfaced early Saturday morning.</p><p>If you saw this <a href="https://www.buymeacoffee.com/wsdetectivx/panama-canal-weather-woes-bullish-action-shipping-stocks" target="_blank">post</a><span target="_blank">, you would have been prepared for the rally in the shipping stocks. If you missed the TSM trade, I have just added a very undervalued technology stock to my model portfolio. You can check it out, along with my latest homebuilder and shipping stocks, with a FREE two-week trial to my service by clicking </span><a href="https://www.joeduarteinthemoneyoptions.com/secure/order.asp" target="_blank">here</a><span target="_blank">.</span></p><h3><strong>Market Breadth Survives Scare; NDX Cracks 17,000</strong></h3><p>The NYSE Advance Decline line (NYAD) found support at its lower Bollinger Band after breaking below its 20-day moving average. This is an encouraging development, as it depicts what seems to be a functional market.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/23/28e15e38-742a-4ce0-b472-32d550ce6a85.jpg" style="display: block; margin: 0px auto;"></p><p>The Nasdaq 100 Index (NDX) broke through the 17,000 resistance area emphatically, as the short squeeze I <a href="https://stockcharts.com/articles/tac/2024/01/momentum-run-turns-into-market-256.html" target="_blank">predicted here two weeks ago</a><span target="_blank"> continued. Note the rise in ADI (short sellers covering) was joined by OBV as buyers moved in.</span></p><p><img src="https://d.stockcharts.com/img/articles/2024/01/23/486661fe-0b52-4c8f-aedb-e8f6c8b767f4.jpg" style="display: block; margin: 0px auto;"></p><p>The S&P 500 (SPX) confirmed the breakout in NDX, with the 4800 resistance area now becoming support.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/23/b495c79d-76c2-4d26-9bcf-49124ecaef7a.jpg" style="display: block; margin: 0px auto;"></p><h3><strong>VIX Fails at 15</strong></h3><p>The CBOE Volatility Index (VIX) ran into resistance at 15. This, for now, remains a bullish factor for stocks. If VIX remains subdued, more upside is possible.</p><p>A rising VIX means traders are buying large volumes of put options. Rising put option volume leads market makers to sell stock index futures, hedging their risk. A fall in VIX is bullish, and it means less put option buying, eventually leading to call buying. This causes market makers to hedge by buying stock index futures, raising the odds of higher stock prices.</p><hr><p>To get the latest information on options trading, check out <a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-2fhghz-d0hczf-7wedrxb5%2f&c=E,1,rnWxui5JQ1PzSCHe6mv4JPh_RjXNQ7EWySLq9PWn2vF_CTVoNPUjHq7eZJcRYej4uXFmI6zuzo2q4c2LDbIGfUJ1wN-_c031ic-iZ5b8crTUVPpe&typo=1" target="_blank"><strong><em><u>Options Trading for Dummies</u></em></strong></a><span target="_blank">, now in its 4th Edition—Get Your Copy Now! Now also available in Audible audiobook format!</span></p><p><a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-2gvrba-nuarvf-7wedrxb3%2f&c=E,1,3IS6rDOEmro6stbXeFW3pI0tIMbpo9P6zGjpDNI8Xr1jDnowpJeKofNfOCNgwmgP-PveAu2ELseA57gR8wTeSdBaaMbhcZDJDCJ-WvieMFKONu3GQFpZmA,,&typo=1" target="_blank"><img src="https://stockcharts.com/img/articles/2023/01/22/144ca2e3-ea1b-41c6-be2d-41c833382a9e.jpg" style="display: block; margin: 0px auto;"><span class="image-caption">#1 New Release on Options Trading!</span></a></p><p>Good news! I've made my NYAD-Complexity - Chaos chart (featured on my <a href="https://youtu.be/cx04LKXErhw" target="_blank"><strong>YD5 videos</strong></a><span target="_blank">) and a few other favorites public. You can find them </span><a href="https://stockcharts.com/public/1215217" target="_blank"><strong>here</strong></a><span target="_blank">.</span></p><p><br></p><p><strong>Joe Duarte</strong></p><p>In The Money Options</p><hr><p>Joe Duarte is a former money manager, an active trader, and a widely recognized independent stock market analyst since 1987. He is author of eight investment books, including the best-selling <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9d-deebpub3%2f&c=E,1,ZX1dsKj4MVxT-7UgaqjXHWxdaWovnLyXuMojxdYl8UyFohQSu0YuyrjByG_kEMZfwLI69BmrJnjFxIyo_xyawzGlomVExT2Z8aBhB1r9ntSBGj04IlFJIA,,&typo=1" target="_blank"><em>Trading Options for Dummies</em></a><span target="_blank">, rated a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9e-deebpub4%2f&c=E,1,5Ap0vcdmm5gS2f9e33SNn7bIaXS3qSOf6p2W7oP658boUCKX3FcbVkcRd5n4i8_Oj19wQIs7z3nwQcPxOtBwzA0HXHQFJYchj4IZNa08b9HFECQq&typo=1" target="_blank">TOP Options Book for 2018 by Benzinga.com</a><span target="_blank"> and now in its third edition, plus </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9f-deebpub5%2f&c=E,1,P0V9AM2KW_OE79KIeXYohzQtM34hKB3aJzum4G0CkvwlpRAUYCaGN-q9LmSpEC8NSy_PLRJvLoSHuixaIq2ak3ZOGWbR7OOzfk3JoxA3Um8,&typo=1" target="_blank"><em>The Everything Investing in Your 20s and 30s Book</em></a><span target="_blank"> and six other trading books.</span></p><p><em>The Everything Investing in Your 20s and 30s Book</em> is available<strong> </strong><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9g-deebpub6%2f&c=E,1,PH18HT-ZPsb4WGmftWjZ2oRP5wDuqucIGLlo1IDJLM-ydJ-j1q445_Ph5R9EUDqahPzghPFlEPOOgHuabciRp0cWoGNNpZ8JJukWBoMwYIXJHBlpnoCVqWF0N-8,&typo=1" target="_blank">at Amazon</a><span target="_blank"> and </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9h-deebpub7%2f&c=E,1,0H2moltb4qkxLb8MXS-_PTkhiPxo7_joI8OEkYpITp2sipvKdbF7psxChbWansm24hzdetcL3sDUAbmGBUSAMcfH66vZr6iLyeIoWet4ZgSvqe-1GPO5RMo,&typo=1" target="_blank">Barnes and Noble</a><span target="_blank">. It has also been recommended as a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9i-deebpub8%2f&c=E,1,w1-DJEgic6bvAgWfDi0nVh6dH88Y6NBH3_JryXcFAzqtMhWK9wORsiYJ4wgHDdW3sHVflE7kdDqFRgymgtTvW6BlwZ1YDUdlNtF7qHOUCQI,&typo=1" target="_blank">Washington Post Color of Money Book of the Month</a><span target="_blank">.</span></p><p>To receive Joe's exclusive stock, option and ETF recommendations, in your mailbox every week visit <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9j-deebpub9%2f&c=E,1,p1clYHa4fNcS_dtuDr5XzkxAX4UoQiB6AUj5iZePLIsoc9I92KP1Vz5lz6UrjGaQq0vRvj2LeFT-DWayApeSCm45YlXfzvT2m2_1GOkwOKLy6pvi3HzpCcja&typo=1" target="_blank">https://joeduarteinthemoneyoptions.com/secure/order_email.asp</a><span target="_blank">.</span></p>A breakout in the major indexes, with a last-minute recovery in the market's breadth and rising bond yields, made for a mixed options expiration week. But, in the end, stocks once again dodged a bullet, as a recovery in the market's breadth saved the day for the bulls, as I discuss below.Still, even as the bullish trend remains in place, this remains a tricky trading environment. As a result, savvy investors will need to stay flexible in both their perceptions and trading strategies. Keep these factors in mind:The Fed is fine tuning its expected rate cuts to the 3rd quarter...The Ord Oracle January 22, 2024Tim Ordtag:stockcharts.com,2024-01-23:post-270952024-01-30T19:39:31Z2024-01-23T20:36:01Z<p style="margin: 0in;"><strong>SPX Monitoring Purposes:</strong> Long SPX on 1/18/24 at 4780.94.</p><p style="margin: 0in;"><strong>Gain Since 1/1/23 SPX:</strong> 28.12%; SPX gain 23.38%.</p><p><strong>Monitoring purposes GOLD: </strong>Long GDX on 10/9/20 at 40.78.</p><p><strong><img src="https://d.stockcharts.com/img/articles/2024/01/23/1207f770-29d4-4272-b62c-0f8e44552c90.jpg" style="display: block; margin: 0px auto;"></strong></p><p><strong>Our gain for 2023 came in at 28.12% and the SPX gain for 2023 came in at 23.38. We made 8 SPX trades, with one loss and 7 wins in 2023.</strong></p><p>Above is the 5- and 21-day CBOE equity put/call ratio, which is a sentiment indicator. When bearish sentiment gets high (excess of put buying), an impulse wave is usually about to start. On January 10, both the 5- and 10-day Equity Put/Call reached bullish levels (around the 477 SPY), suggesting an impulse wave is about to begin. We marked times with red line and pink-shaded areas when both the 5- and 21-day Equity put/call ratio reached bullish levels, and most occurred when an impulse wave higher was starting. It's possible the current rally could last several weeks, if not several months. We expect this year for the SPX to be up double digits.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/23/e1468127-206e-4c4e-86b2-57d5cc70be93.jpg" style="display: block; margin: 0px auto;"></p><p>We updated this chart form last Thursday, and last Thursday we said, "Panic only forms at bottoms in the market; no panic, no bottom. A TRIN close above 1.20 shows there is panic in the market, and the more days above 1.20 on the close, the more significant the bottom. The longer the duration in panic, the longer the rally phase. The red lines on the chart above are when the 2-day (bottom window), 10-day (top window) and 21-day (middle window) TRINs reach bullish levels. The 21-day TRIN is important here in that it represents a month of panic. TRIN closes that month reached above 1.20 on average, which is a long time, suggesting an intermediate-term low is forming near current levels in the market. The 10-day TRIN stands at 1.35 and the 21-day TRIN stands at 1.26. There can be some back and forth on the SPY, but, in general, an intermediate-term low is forming here." The 10-day TRIN closed today at 1.43 and unusually high, suggesting an impulse wave higher may be starting.</p><p style="margin: 0in 0in 0.0001pt;">Tim Ord,</p><p>Editor</p><p><a href="https://ord-oracle.com/" target="_blank">www.ord-oracle.com</a><span target="_blank">. Book release "The Secret Science of Price and Volume" by Timothy Ord, buy at </span><a href="https://amazon.com/" target="_blank">www.Amazon.com</a><span target="_blank">.</span></p><hr style="width: 923px;"><p><em>Signals are provided as general information only and are not investment recommendations. You are responsible for your own investment decisions. Past performance does not guarantee future performance. Opinions are based on historical research and data believed reliable; there is no guarantee results will be profitable. Not responsible for errors or omissions. I may invest in the vehicles mentioned above.</em></p>SPX Monitoring Purposes: Long SPX on 1/18/24 at 4780.94.Gain Since 1/1/23 SPX: 28.12%; SPX gain 23.38%.Monitoring purposes GOLD: Long GDX on 10/9/20 at 40.78.Our gain for 2023 came in at 28.12% and the SPX gain for 2023 came in at 23.38. We made 8 SPX trades, with one loss and 7 wins in 2023.Above is the 5- and 21-day CBOE equity put/call ratio, which is a sentiment indicator. When bearish sentiment gets high (excess of put buying), an impulse wave is usually about to start. On January 10, both the 5- and 10-day Equity Put/Call reached bullish levels (around the 477...Complex or Simple Structures: A Message About Who Is In ControlTom McClellantag:stockcharts.com,2024-01-19:post-270742024-01-19T02:39:18Z2024-01-19T02:39:18Z<p><img src="https://d.stockcharts.com/img/articles/2024/01/18/bb9d9847-8977-497c-9e66-b02ba64096dd.jpg" style="display: block; margin: 0px auto;"></p><p>Here is a fun magic trick that some technical indicators can do. This week's chart shows the 14-3 stochastic oscillator for T-Bond futures prices -- 14-3 means a 14-trading-day lookback period and a 3-day simple moving average for smoothing. Right now, this indicator is forming a "complex" structure below the 50 neutral level, and that carries a message that the bears are in charge at the moment.</p><p>By "complex", I mean that there has been some chopping up and down without a crossing of the neutral level. This differs from a "simple" structure, which moves across the neutral level and back without developing any complexity. A simple structure implies weakness for the side of neutral on which it is seen.</p><p>The message of control from a complex structure persists until there is a divergence versus prices, such as the two divergences highlighted in the chart above. During November and December 2023, there was a big complex structure above the 50 neutral level, indicating that the bulls were in charge, and it was a good message. But that message changed at the end of December 2023, when there was a bearish divergence versus prices, which signaled that the period of bulls being in control was ending.</p><p>The current structure below the 50 neutral level is a complex one, and, thus far, does not have a divergence versus prices, so the message is that the bears are in control in the bond market until further notice.</p><p>This trick of having complex or simple structures making a statement about which side is in control is also something that the McClellan A-D Oscillator can do.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/18/cc7488c2-2ad4-4196-a6c6-02dfb4c25c4d.jpg" style="display: block; margin: 0px auto;"></p><p>I have labeled some of the structures in this chart as complex or simple to help you get the idea. The most recent structure above the zero neutral level was a complex one, saying that the bulls were in charge of the stock market during November and December 2023. That message changed when the oscillator stopped making higher highs, and there was thus a bearish divergence versus prices. The current structure below the zero neutral level is a complex one, and even though it is down to an oversold level, it has not yet shown us a bullish divergence versus prices. So the message of the bears being in control stands, for now.</p><p>Not every technical indicator will perform this magic trick, so the reader should not assume that it is a universal property of all indicators. But it is a fun one to find in those indicators for which this trick does work.</p>Here is a fun magic trick that some technical indicators can do. This week's chart shows the 14-3 stochastic oscillator for T-Bond futures prices -- 14-3 means a 14-trading-day lookback period and a 3-day simple moving average for smoothing. Right now, this indicator is forming a "complex" structure below the 50 neutral level, and that carries a message that the bears are in charge at the moment.By "complex", I mean that there has been some chopping up and down without a crossing of the neutral level. This differs from a "simple" structure, which moves across the neutral...Is a Merger and Acquisitions Wave About to Hit the Homebuilders?Joe Duartetag:stockcharts.com,2024-01-18:post-270672024-01-18T18:54:20Z2024-01-18T18:54:20Z<p>I've been bullish on the homebuilder stocks for a long time, and I haven't changed my long-term positive view. Lately, the sector has had some ups and downs related to the ebb and flow of interest rates. But the long term fundamentals remain strong, as there aren't enough homes in the market to accommodate the steady demand, especially in the Southern U.S. and parts of the Midwest.</p><p>Subscribers to Joe Duarte in the Money <span target="_blank">Options.com have profited from this bullish stance for some time, especially recently, when I recommended increasing position sizes in our homebuilder holdings in this timely </span><a href="https://www.buymeacoffee.com/wsdetectivx/a-historic-buying-opportunity-homebuilder-stocks-may-near" target="_blank">post</a><span target="_blank">. </span>But as the long-term trend in the homebuilder sector matures, especially in light of no major changes in the supply demand scenario, a new wrinkle is emerging, that being the potential for a rush into company mergers and takeovers.</p><h3><strong>The First Shot Across the Bow</strong></h3><p>In a surprising development, Japanese homebuilder Sekisui House (SKHSY) has bought U.S. homebuilder MDC Holdings (MDC) for an all-cash offer of $4.9 billion ($63 per MDC share), pushing MDC's price 18% from the prior day's close.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/18/42ef81cf-90c1-4d69-a843-d4796245e8bb.jpg" style="display: block; margin: 0px auto;"></p><p>What makes this purchase interesting is that Sekisui is pursuing the goal of building 10,000 homes per year outside of Japan. Moreover, the news put a floor on the homebuilder sector, which has been limping lately as bond yields have been on the rise.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/18/fbc16d91-4411-44f8-a14a-b71932f61c0f.jpg" style="display: block; margin: 0px auto;"></p><p>The U.S. Ten Year Note yield (TNX), the benchmark for the U.S. mortgage market, has been creeping up of late. Most recently, it has crossed above the 4.1% area, which is of concern. Much of the climb has resulted from the recent climb in U.S. CPI, and the walking back of rate cut talk from the Federal Reserve. A move above 4.2% would likely signify an acceleration of the yield rise.</p><p>Meanwhile, the situation in the Red Sea continues to worsen, hinting at higher shipping costs, which may be passed on to consumers and reignite inflation. Regular readers of Joe Duarte in the Money <span target="_blank">Options.com have been aware of this dynamic for some time, as I noted </span><a href="https://www.buymeacoffee.com/wsdetectivx/panama-canal-weather-woes-bullish-action-shipping-stocks" target="_blank">here</a><span target="_blank">.</span></p><h3><strong>No Help for Supply Means Steady Action in Homebuilder Stocks</strong></h3><p>Certainly, higher bond yields are a negative for the housing market, including the homebuilders, realtors, and rental property companies. Still, compared to past cycles, homebuilders are not channeling their recent profits into overbuilding.</p><p>Housing starts for the month of November showed a month-to-month decline, while previous numbers were revised lower. Single family led the way. Meanwhile, building permits also declined.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/18/e58c804a-2bbc-4274-a2f7-1e4caf71db93.jpg" style="display: block; margin: 0px auto;"></p><p>Mortgage rates were lower for the week, but are likely to rise by next week, given the increase in TNX.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/18/1c5e596d-07ea-48d8-b600-4f7cf06cbd00.jpg" style="display: block; margin: 0px auto;"></p><p>In the wake of higher interest rates, the SPDR S&P Homebuilder ETF (XHB) remains in a consolidation pattern. On the positive side, the ADI line is rising, which is a sign that short sellers are not staying in their positions. The opposite is evident in the OBV line, which is sloping downward as buyers take profits.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/18/59bea7d7-f4dd-4c36-94f1-3a262d7ae7b6.jpg" style="display: block; margin: 0px auto;"></p><p>The rental property REITs are proving more sensitive to the rise in TNX, at least to me. The iShares Residential Real Estate Capped ETF (REZ) is in a short term downtrend, having broken below its 20-day moving average. ADI is stable, as short sellers are still holding on to positions, while OBV is moving lower, as buyers seem to be getting bearish in the wake of the rise in TNX.</p><p>For the latest on homebuilders, REITs, and option trades on all sectors, try out a <a href="https://www.joeduarteinthemoneyoptions.com/secure/order.asp" target="_blank">FREE two-week tria</a><span target="_blank">l to Joe Duarte in the Money Options.com.</span></p><h3><strong>Bottom Line</strong></h3><p>The trend in the U.S. Ten Year Note yield (TNX) remains the key driver of the price direction for homebuilders and REITs. As long as the Fed continues to pull back its rate cut rhetoric, we should expect yields to creep up, unless inflation indicators resume their downward course.</p><p>Homebuilders are holding up better than REITs, as supply and demand is in their favor, and now there is the possibility that a wave of mergers may be about to emerge in the sector.</p><hr><p>Thanks to everyone for your support. I really appreciate it. This weekly report is available on my Buy Me a Coffee Page. If you like this report and want to receive early access this type of content on a regular basis, consider becoming a <a href="https://www.buymeacoffee.com/wsdetectivx/membership" target="_blank">member</a><span target="_blank">. </span>I also appreciate single coffees, which you can buy me <a href="https://www.buymeacoffee.com/wsdetectivx/membership" target="_blank">here</a><span target="_blank">.</span></p><p>To subscribe to my premium service, Joe Duarte in the Money <span target="_blank">Options.com, click </span><a href="https://www.joeduarteinthemoneyoptions.com/secure/order.asp" target="_blank">here</a><span target="_blank">. </span>Please don't forget to hit the Like button on the posts. It helps to spread the word.</p><p>You're the music. I'm just the band.</p><hr><p>To get the latest information on options trading, check out <a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-2fhghz-d0hczf-7wedrxb5%2f&c=E,1,rnWxui5JQ1PzSCHe6mv4JPh_RjXNQ7EWySLq9PWn2vF_CTVoNPUjHq7eZJcRYej4uXFmI6zuzo2q4c2LDbIGfUJ1wN-_c031ic-iZ5b8crTUVPpe&typo=1" target="_blank"><strong><em><u>Options Trading for Dummies</u></em></strong></a><span target="_blank">, now in its 4th Edition—Get Your Copy Now! Now also available in Audible audiobook format!</span></p><p><a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-2gvrba-nuarvf-7wedrxb3%2f&c=E,1,3IS6rDOEmro6stbXeFW3pI0tIMbpo9P6zGjpDNI8Xr1jDnowpJeKofNfOCNgwmgP-PveAu2ELseA57gR8wTeSdBaaMbhcZDJDCJ-WvieMFKONu3GQFpZmA,,&typo=1" target="_blank"><img src="https://stockcharts.com/img/articles/2023/01/22/144ca2e3-ea1b-41c6-be2d-41c833382a9e.jpg" style="display: block; margin: 0px auto;"><span class="image-caption">#1 New Release on Options Trading!</span></a></p><p><strong>Joe Duarte</strong></p><p>In The Money Options</p><hr><p>Joe Duarte is a former money manager, an active trader, and a widely recognized independent stock market analyst since 1987. He is author of eight investment books, including the best-selling <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9d-deebpub3%2f&c=E,1,ZX1dsKj4MVxT-7UgaqjXHWxdaWovnLyXuMojxdYl8UyFohQSu0YuyrjByG_kEMZfwLI69BmrJnjFxIyo_xyawzGlomVExT2Z8aBhB1r9ntSBGj04IlFJIA,,&typo=1" target="_blank"><em>Trading Options for Dummies</em></a><span target="_blank">, rated a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9e-deebpub4%2f&c=E,1,5Ap0vcdmm5gS2f9e33SNn7bIaXS3qSOf6p2W7oP658boUCKX3FcbVkcRd5n4i8_Oj19wQIs7z3nwQcPxOtBwzA0HXHQFJYchj4IZNa08b9HFECQq&typo=1" target="_blank">TOP Options Book for 2018 by Benzinga.com</a><span target="_blank"> and now in its third edition, plus </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9f-deebpub5%2f&c=E,1,P0V9AM2KW_OE79KIeXYohzQtM34hKB3aJzum4G0CkvwlpRAUYCaGN-q9LmSpEC8NSy_PLRJvLoSHuixaIq2ak3ZOGWbR7OOzfk3JoxA3Um8,&typo=1" target="_blank"><em>The Everything Investing in Your 20s and 30s Book</em></a><span target="_blank"> and six other trading books.</span></p><p><em>The Everything Investing in Your 20s and 30s Book</em> is available<strong> </strong><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9g-deebpub6%2f&c=E,1,PH18HT-ZPsb4WGmftWjZ2oRP5wDuqucIGLlo1IDJLM-ydJ-j1q445_Ph5R9EUDqahPzghPFlEPOOgHuabciRp0cWoGNNpZ8JJukWBoMwYIXJHBlpnoCVqWF0N-8,&typo=1" target="_blank">at Amazon</a><span target="_blank"> and </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9h-deebpub7%2f&c=E,1,0H2moltb4qkxLb8MXS-_PTkhiPxo7_joI8OEkYpITp2sipvKdbF7psxChbWansm24hzdetcL3sDUAbmGBUSAMcfH66vZr6iLyeIoWet4ZgSvqe-1GPO5RMo,&typo=1" target="_blank">Barnes and Noble</a><span target="_blank">. It has also been recommended as a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9i-deebpub8%2f&c=E,1,w1-DJEgic6bvAgWfDi0nVh6dH88Y6NBH3_JryXcFAzqtMhWK9wORsiYJ4wgHDdW3sHVflE7kdDqFRgymgtTvW6BlwZ1YDUdlNtF7qHOUCQI,&typo=1" target="_blank">Washington Post Color of Money Book of the Month</a><span target="_blank">.</span></p><p>To receive Joe's exclusive stock, option and ETF recommendations, in your mailbox every week visit <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9j-deebpub9%2f&c=E,1,p1clYHa4fNcS_dtuDr5XzkxAX4UoQiB6AUj5iZePLIsoc9I92KP1Vz5lz6UrjGaQq0vRvj2LeFT-DWayApeSCm45YlXfzvT2m2_1GOkwOKLy6pvi3HzpCcja&typo=1" target="_blank">https://joeduarteinthemoneyoptions.com/secure/order_email.asp</a><span target="_blank">.</span></p>I've been bullish on the homebuilder stocks for a long time, and I haven't changed my long-term positive view. Lately, the sector has had some ups and downs related to the ebb and flow of interest rates. But the long term fundamentals remain strong, as there aren't enough homes in the market to accommodate the steady demand, especially in the Southern U.S. and parts of the Midwest.Subscribers to Joe Duarte in the Money Options.com have profited from this bullish stance for some time, especially recently, when I recommended increasing position sizes in our homebuilder...The Ord Oracle January 16, 2024Tim Ordtag:stockcharts.com,2024-01-17:post-270612024-01-17T19:04:34Z2024-01-17T19:04:34Z<p style="margin: 0in;"><strong>SPX Monitoring Purposes:</strong> Neutral.</p><p style="margin: 0in;"><strong>Our Gain since 1/1/23 SPX:</strong> 28.12%; SPX gain 23.38%.</p><p><strong>Monitoring Purposes GOLD:</strong> Long GDX on 10/9/20 at 40.78. </p><p><img src="https://d.stockcharts.com/img/articles/2024/01/17/79661b15-eda6-4a0e-9bea-0ebf214afe5f.jpg" style="display: block; margin: 0px auto;"></p><p><strong>Our gain for 2023 came in at 28.12%, and the SPX gain for 2023 came in at 23.38. We made 8 SPX trades, with one loss and 7 wins in 2023.</strong></p><p>Last Thursday, a high volume day was recorded. Most high volume days are tested (noted on chart) and, if tested on lighter volume, that would be a bullish sign. Last Thursday's low came in near the 472 SPY range. If volume increases at the 472 level, than market may trade back to the early January low near 466. The bottom window is the 10-day TRIN, which stands at 1.23 and bullish. The Equity Put/Call closed last Wednesday at 1.55, which suggests an intermediate-term low is forming (see page two). TRIN closes have been above 1.30 five days in a row, and today may mark six days in a row, which suggests panic is present.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/17/8d2e6680-0a0c-4519-9c2c-ba11b3247b8e.jpg" style="display: block; margin: 0px auto;"></p><p>We updated this chart from last Thursday, when we said, "the middle window above is the daily CBOE equity Put/Call ratio. Yesterday (January 10), this ratio closed at 1.55, and we circled in blue the times that level was reached in the past going back to 2004, which was four times. All four times came in a lower area that led at a minimum of a multi-week rally (most where multi month or longer). This is a rare occurrence, and sending a signal for a bullish rise coming soon. The bottom window is the 5-day average of the equity put/call ratio; readings above .80 are bullish" (current reading is .88). Don't have it shown, but the 10-day TRIN stands at 1.23, showing panic is in the market; panic only forms near lows.</p><p style="margin: 0in 0in 0.0001pt;">Tim Ord,</p><p>Editor</p><p><a href="https://ord-oracle.com/" target="_blank">www.ord-oracle.com</a><span target="_blank">. Book release "The Secret Science of Price and Volume" by Timothy Ord, buy at </span><a href="https://amazon.com/" target="_blank">www.Amazon.com</a><span target="_blank">.</span></p><hr style="width: 923px;"><p><em>Signals are provided as general information only and are not investment recommendations. You are responsible for your own investment decisions. Past performance does not guarantee future performance. Opinions are based on historical research and data believed reliable; there is no guarantee results will be profitable. Not responsible for errors or omissions. I may invest in the vehicles mentioned above.</em></p>SPX Monitoring Purposes: Neutral.Our Gain since 1/1/23 SPX: 28.12%; SPX gain 23.38%.Monitoring Purposes GOLD: Long GDX on 10/9/20 at 40.78. Our gain for 2023 came in at 28.12%, and the SPX gain for 2023 came in at 23.38. We made 8 SPX trades, with one loss and 7 wins in 2023.Last Thursday, a high volume day was recorded. Most high volume days are tested (noted on chart) and, if tested on lighter volume, that would be a bullish sign. Last Thursday's low came in near the 472 SPY range. If volume increases at the 472 level, than market may trade back to the early January...Stocks Exhibit Surprisingly Bullish Tone; Why Options Make Sense in this MarketJoe Duartetag:stockcharts.com,2024-01-14:post-270502024-01-14T23:05:49Z2024-01-14T23:05:48Z<p>The bounce in the stock market, boosted by the short squeeze in the Magnificent Seven stocks housed in the QQQ ETF (which <a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-2s17xz-cy7q8o-iougvf21%2f&c=E,1,zwDWEj7yPU6BAPaejbz0_rXBU0B7Xr1L1DQZgLJ2MvyrDAkXpbmjnZzDzqamBQJTH2SumTYMGWW9zX6Wh7Q_V80ogCSBQIyrBmmk846O1F9ZXcyPAK-Q7w,,&typo=1" target="_blank">I predicted here last week</a><span target="_blank">), may have some staying power, as the Nasdaq 100 Index (NDX) remains resilient. This bullish undertone was evident as stocks recovered following the CPI miss and the better-than-expected results from PPI. That this happened in the face of persistently bullish sentiment readings in the CNN Fear/Greed index and hawkish talk from the Fed is well worth noting.</span></p><p>Thus, while acknowledging that things could rapidly devolve, the action in stocks still resembles a sector rotation more than a full blown correction. Still, risk remains higher than normal, as markets must wrangle with what could be an escalation of the situation in the Red Sea and the Middle East.</p><p>So, keep these factors in mind:</p><ul><li>The Fed is talking tough, but is not very likely to raise interest rates unless inflation truly ramps up. Flat CPI and falling PPI numbers bought the market some time;</li><li>Sentiment is still too bullish, as the CNN Fear/Greed Index closed at 71 – well in the GREED zone. This may keep a lid on gains, but currently does not seem to be taming the bulls;</li><li>The CBOE Put/Call Ratio closed at 0.88 after topping out near 1.25 during the week, suggesting the bears are losing their grip on the pullback; and</li><li>The CBOE Volatility Index (VIX) remained well below 15 – thus, put option volume remains stable, proving that the rise in the P/C ratio was being influenced by a decrease in call option buying, not a rise in the volume of put options.</li></ul><p>These factors reflect the current uncertainty and suggest the market will remain in a bumpy consolidation pattern, albeit with a bullish, sector-specific bent. Thus, a combination strategy is required, involving taking profits where warranted, buying dips as they materialize, and deploying money into new areas that are exhibiting relative strength, while keeping a wary eye on the external factors which affect daily trading and how the markets respond.</p><p>Here's a roadmap:</p><ul><li>Stick with what's working; if a position is holding up, keep it;</li><li>Take profits in overextended sectors;</li><li>Consider short-term hedges;</li><li>Increase exposure to options;</li><li>Look for value in out-of-favor areas of the market that are showing signs of life; and</li><li>Protect your gains with sell stops and keep raising them as prices of your holdings rise.</li></ul><h3><strong>Why Options Make Sense in this Market</strong></h3><p>The current market offers bearish profit opportunities due to event risk, as well as profitable trading on the long side. Yet, after many years of gains in stocks, the prices for many individual company shares has reached a point where many investors are shunning opportunities to trade.</p><p>That's why I've increased the number of option recommendations in my service, <a href="https://www.joeduarteinthemoneyoptions.com/secure/order.asp" target="_blank">Joe Duarte in the Money Options.com</a><span target="_blank">, and will likely continue the practice for the foreseeable future. So far, so good; I recently recommended a put option trade based on Apple (AAPL), which yielded over 140% in profits in five days ($421 per contract), over which the stock lost 14% of its value ($1400 per 100 shares). Of course, not every option trade works out perfectly. But my point is that, when managed correctly, the addition of option trades to any portfolio is worthwhile.</span></p><p>Here's a great example of the logic behind a potential future trade. A 100-share block of semiconductor juggernaut Nvidia (NVDA) recently cost around $55,000. A ten percent move, which is not uncommon in 24-48 hours, would yield a $5,500 gain or loss for this stock, depending on the direction. In contrast, an NVDA option, such as the February 16, 2023 $560 Call Option, recently traded for $25.20. One contract would cost $2520. Thus, if NVDA moved toward the strike price of $560, the option had the potential to gain close to $600, a nearly 24% move.</p><p>Moreover, a move above $560 would put the option in the money, which means it would trade on par with the stock (a $1 gain in the stock would equal a $1 in the option), offering the potential for extraordinary gains. In addition, you can apply similar logic to a downside strategy via the purchase of put options.</p><p>Remember that options are best during periods in which markets exhibit higher-than-normal intraday volatility. These periods shake up the market's sentiment, eventually setting up the next market rally.</p><p>Options also offer the opportunity to generate income during uncertain periods in the market. Here's a <a href="https://www.buymeacoffee.com/wsdetectivx/how-use-price-charts-sell-covered-calls" target="_blank">primer on how to go about it.</a></p><p>For details on my latest option trades and on which areas of the market make sense currently consider a <a href="https://www.joeduarteinthemoneyoptions.com/secure/order.asp" target="_blank">FREE Trial to Joe Duarte in the Money Options.com.</a></p><h3><strong>Bond Yields Remain Remarkably Stable</strong></h3><p>The December CPI number came in hotter than expected, but the PPI number was cooler. Thus, the inflation hawks pulled back their claws, and the U.S. Ten Year Note yield (TNX) fell back below 4%. The subsequent decline in bond yields kept a floor under the shaky stock market.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/14/97f60892-cfdc-4730-ac6f-96a95b775be6.jpg" style="display: block; margin: 0px auto;"></p><p>With TNX below the 4-4.1% yield range stocks are more likely to remain stable, despite the worsening geopolitical background. A break above 4.1%, or a fall below 3.8%, will likely trip algo programs in both stocks and bonds. Rangebound trading, if TNX, will reflect in choppy trading in stocks.</p><h3><strong>QQQ Gets Squeezed as EV Stocks Collapse Restaurants Get Nibbles</strong></h3><p>The Invesco QQQ Trust (QQQ) weathered the storm caused by the implosion of EV kingpin Tesla (NSDQ: TSLA), closing within reach of its recent high and above its 20- and 50-day moving averages. The ADI and OBV are now in sync, with short sellers bailing out (rising ADI) and buyers openly moving back in (bottoming OBV). This action confirmed my expectations for a short squeeze, which I described last week in this space.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/14/895754d3-67a2-4181-9fc1-ec51182dbf0f.jpg" style="display: block; margin: 0px auto;"></p><p>On the downside, it's hard to ignore the breakdown in the EV stocks, as Tesla closed a factory in Germany because of Red Sea-related supply chain problems, and car rental company Hertz (HTZ) announced it will be selling 20,000 EVs, to be replaced by gasoline-powered cars.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/14/969f943a-689b-415b-a39d-18585d1b62a9.jpg" style="display: block; margin: 0px auto;"></p><p>The Global X Autonomous and Electric Vehicle ETF (DRIV) tumbled below is 200-day moving average and is now testing the support of its 50-day line. Compare the bearish ADI and OBV trends in DRIV to the bullish ones for QQQ.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/14/7398b80c-c755-48ea-9f4f-27dc1a1e2165.jpg" style="display: block; margin: 0px auto;"></p><p>On the other hand, the Invesco Dynamic Food and Beverage ETF (PBJ) chugged along in its bullish consolidation pattern, where a potential breach of the $46 area could send it significantly higher.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/14/ede528e8-7606-4a9b-a4e8-d0bc3bb01f27.jpg" style="display: block; margin: 0px auto;"></p><p>Meanwhile, the SonicShares Global Shipping ETF (BOAT) rebounded on the expansion of hostilities in the Middle East. BOAT found support at its 20-day moving average recently.</p><p>If you saw this <a href="https://www.buymeacoffee.com/wsdetectivx/panama-canal-weather-woes-bullish-action-shipping-stocks" target="_blank">post</a><span target="_blank">, you would have been prepared for the rally in the shipping stocks. For detailed, current Buy and Sell recommendations on shipping and other important stocks, click </span><a href="https://www.joeduarteinthemoneyoptions.com/secure/order.asp" target="_blank">here</a><span target="_blank">.</span></p><h3><strong>Market Breadth Remains Stable; NDX Preps for Move to 17,000</strong></h3><p>The NYSE Advance Decline line (NYAD) found support at its 20-day moving average – a bullish development which supports the idea that we are in a sector rotation until proven otherwise.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/14/98a06af4-3b6a-4505-9ba0-7114ee70f77b.jpg" style="display: block; margin: 0px auto;"></p><p>The Nasdaq 100 Index (NDX) looks set to test the 17,000 resistance area after holding above 16250, which is the top end of a three bar VBP cluster (horizontal bars at left of chart). The 50-day moving average continues to provide intermediate term support.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/14/cf9c219a-09b5-41ba-83ed-32e1c5858155.jpg" style="display: block; margin: 0px auto;"></p><p>The S&P 500 (SPX) is in a similar technical posture to NDX, with the 4800 resistance area looming as a key test.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/14/4a85ad7f-2e9a-41fc-b11e-3db665c635be.jpg" style="display: block; margin: 0px auto;"></p><h3><strong>VIX Remains Below 20</strong></h3><p>The CBOE Volatility Index (VIX) remains stubbornly below 20, as it has for the past few weeks. This remains a bullish factor for stocks. If VIX remains subdued, more upside is possible.</p><p>A rising VIX means traders are buying large volumes of put options. Rising put option volume from leads market makers to sell stock index futures, hedging their risk. A fall in VIX is bullish, and it means less put option buying, eventually leading to call buying. This causes market makers to hedge by buying stock index futures, raising the odds of higher stock prices.</p><hr><p>To get the latest information on options trading, check out <a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-2fhghz-d0hczf-7wedrxb5%2f&c=E,1,rnWxui5JQ1PzSCHe6mv4JPh_RjXNQ7EWySLq9PWn2vF_CTVoNPUjHq7eZJcRYej4uXFmI6zuzo2q4c2LDbIGfUJ1wN-_c031ic-iZ5b8crTUVPpe&typo=1" target="_blank"><strong><em><u>Options Trading for Dummies</u></em></strong></a><span target="_blank">, now in its 4th Edition—Get Your Copy Now! Now also available in Audible audiobook format!</span></p><p><a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-2gvrba-nuarvf-7wedrxb3%2f&c=E,1,3IS6rDOEmro6stbXeFW3pI0tIMbpo9P6zGjpDNI8Xr1jDnowpJeKofNfOCNgwmgP-PveAu2ELseA57gR8wTeSdBaaMbhcZDJDCJ-WvieMFKONu3GQFpZmA,,&typo=1" target="_blank"><img src="https://stockcharts.com/img/articles/2023/01/22/144ca2e3-ea1b-41c6-be2d-41c833382a9e.jpg" style="display: block; margin: 0px auto;"><span class="image-caption">#1 New Release on Options Trading!</span></a></p><p>Good news! I've made my NYAD-Complexity - Chaos chart (featured on my <a href="https://youtu.be/cx04LKXErhw" target="_blank"><strong>YD5 videos</strong></a><span target="_blank">) and a few other favorites public. You can find them </span><a href="https://stockcharts.com/public/1215217" target="_blank"><strong>here</strong></a><span target="_blank">.</span></p><p><br></p><p><strong>Joe Duarte</strong></p><p>In The Money Options</p><hr><p>Joe Duarte is a former money manager, an active trader, and a widely recognized independent stock market analyst since 1987. He is author of eight investment books, including the best-selling <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9d-deebpub3%2f&c=E,1,ZX1dsKj4MVxT-7UgaqjXHWxdaWovnLyXuMojxdYl8UyFohQSu0YuyrjByG_kEMZfwLI69BmrJnjFxIyo_xyawzGlomVExT2Z8aBhB1r9ntSBGj04IlFJIA,,&typo=1" target="_blank"><em>Trading Options for Dummies</em></a><span target="_blank">, rated a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9e-deebpub4%2f&c=E,1,5Ap0vcdmm5gS2f9e33SNn7bIaXS3qSOf6p2W7oP658boUCKX3FcbVkcRd5n4i8_Oj19wQIs7z3nwQcPxOtBwzA0HXHQFJYchj4IZNa08b9HFECQq&typo=1" target="_blank">TOP Options Book for 2018 by Benzinga.com</a><span target="_blank"> and now in its third edition, plus </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9f-deebpub5%2f&c=E,1,P0V9AM2KW_OE79KIeXYohzQtM34hKB3aJzum4G0CkvwlpRAUYCaGN-q9LmSpEC8NSy_PLRJvLoSHuixaIq2ak3ZOGWbR7OOzfk3JoxA3Um8,&typo=1" target="_blank"><em>The Everything Investing in Your 20s and 30s Book</em></a><span target="_blank"> and six other trading books.</span></p><p><em>The Everything Investing in Your 20s and 30s Book</em> is available<strong> </strong><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9g-deebpub6%2f&c=E,1,PH18HT-ZPsb4WGmftWjZ2oRP5wDuqucIGLlo1IDJLM-ydJ-j1q445_Ph5R9EUDqahPzghPFlEPOOgHuabciRp0cWoGNNpZ8JJukWBoMwYIXJHBlpnoCVqWF0N-8,&typo=1" target="_blank">at Amazon</a><span target="_blank"> and </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9h-deebpub7%2f&c=E,1,0H2moltb4qkxLb8MXS-_PTkhiPxo7_joI8OEkYpITp2sipvKdbF7psxChbWansm24hzdetcL3sDUAbmGBUSAMcfH66vZr6iLyeIoWet4ZgSvqe-1GPO5RMo,&typo=1" target="_blank">Barnes and Noble</a><span target="_blank">. It has also been recommended as a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9i-deebpub8%2f&c=E,1,w1-DJEgic6bvAgWfDi0nVh6dH88Y6NBH3_JryXcFAzqtMhWK9wORsiYJ4wgHDdW3sHVflE7kdDqFRgymgtTvW6BlwZ1YDUdlNtF7qHOUCQI,&typo=1" target="_blank">Washington Post Color of Money Book of the Month</a><span target="_blank">.</span></p><p>To receive Joe's exclusive stock, option and ETF recommendations, in your mailbox every week visit <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9j-deebpub9%2f&c=E,1,p1clYHa4fNcS_dtuDr5XzkxAX4UoQiB6AUj5iZePLIsoc9I92KP1Vz5lz6UrjGaQq0vRvj2LeFT-DWayApeSCm45YlXfzvT2m2_1GOkwOKLy6pvi3HzpCcja&typo=1" target="_blank">https://joeduarteinthemoneyoptions.com/secure/order_email.asp</a><span target="_blank">.</span></p>The bounce in the stock market, boosted by the short squeeze in the Magnificent Seven stocks housed in the QQQ ETF (which I predicted here last week), may have some staying power, as the Nasdaq 100 Index (NDX) remains resilient. This bullish undertone was evident as stocks recovered following the CPI miss and the better-than-expected results from PPI. That this happened in the face of persistently bullish sentiment readings in the CNN Fear/Greed index and hawkish talk from the Fed is well worth noting.Thus, while acknowledging that things could rapidly devolve, the action in...Bitcoin ETF Approvals Likely Mark Important Price TopTom McClellantag:stockcharts.com,2024-01-12:post-270332024-01-12T13:00:00Z2024-01-12T13:00:00Z<p><img src="https://d.stockcharts.com/img/articles/2024/01/11/38617967-a3a7-4fba-a24a-4627da195b24.jpg" style="display: block; margin: 0px auto;"></p><p>The SEC finally gave approval to trade for eleven different spot Bitcoin ETFs, a long-anticipated action that many analysts and traders are expecting will increase demand for Bitcoins, now that ordinary investors can "own" Bitcoin in their brokerage accounts. But what the crowd believes will happen is often the opposite of what turns out.</p><p>I noted <a href="https://stockcharts.com/articles/tac/2023/11/bitcoin-futures-open-interest-330.html" target="_blank">here back on Nov. 4, 2023</a><span target="_blank"> that total open interest was spiking upward in Bitcoin futures, in anticipation of that supposed increase in demand. In that article, I featured the chart above, noting that big spikes in total open interest of Bitcoin futures usually serve as markers of important turning points. More often they are tops, but some have been bottoms.</span></p><p>Perhaps the most dramatic spike was when trading was approved for BITO, an ETF that owns Bitcoin futures. That debut helped to mark the all-time high (so far) for Bitcoin prices. BITO was great for investors who wanted to have Bitcoin exposure, but it had problems because of the pricing inefficiency of the futures contracts it owns. Because the Fed has short-term interest rates up above 5%, the farther-out expiring contracts of Bitcoin futures are priced higher than the near-month contracts. So, as those contracts expire every month, the fund sponsors of BITO have to "roll" into further out contracts at a higher price, which serves as a drag on BITO's performance. Spot Bitcoin ETFs will reportedly own actual Bitcoins, thus sidestepping that performance hit, although most of them will still have management fees.</p><p>This episode of BITO's debut marking an important price top is not unique. We have seen this story many times before. Back in November 2004, trading was approved in GLD, the first gold bullion ETF.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/11/b177eb0b-6808-4441-ac50-265114e17da4.jpg" style="display: block; margin: 0px auto;"></p><p>That moment of GLD's debut did not mark an exact top for gold prices, but an important top did arrive in gold prices two weeks later, and that price top was not exceeded for the next ten months.</p><p>It was a similar story for the debut of the silver bullion ETF, SLV, back in April 2006.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/11/0fad95a6-927b-4989-9586-67c4b0f96284.jpg" style="display: block; margin: 0px auto;"></p><p>Once again, the day of SLV's approval did not mark the exact top, but it was part of a topping structure which endured as the high for several months afterward.</p><p>And both of these were echoes of a similar event that most modern investors won't remember. Back in 1975, Americans were finally allowed to own gold bullion again. President Franklin Roosevelt, back in 1933, had made it illegal for Americans to own gold bullion, and everyone had to sell their gold to the government as a way to push more dollars out into the economy and get everyone spending and investing again during the Great Depression. Roosevelt was kind enough to up the price from the $20.67 fix where it had stood for years to $32, so gold bullion holders at least made money on those investments (which of course got taxed as capital gains).</p><p>President Nixon finally took the U.S. off of the gold standard in 1971, mostly because it became indefensible. Running trade and budget deficits meant that the U.S. could no longer afford to exchange its gold for dollars, and Germany departed the Bretton Woods agreement in May 1971, refusing to exchange DMarks for dollars at the specified 4:1 exchange rate. By August 1971, economic pressures were so great that Nixon closed the gold exchange window, implemented wage and price controls, and imposed a 10% tariff on imported goods. Nixon's move on gold also set the stage for eventual restoration of Americans' rights to own gold, but not right away. That restoration was set to go into effect on Jan. 1, 1975.</p><p>The rest of the world knew about that, and figured that all of this latent demand from Americans who would suddenly be able to own gold had to be a bullish factor. So they tried to front-run that demand, bidding up gold prices in a big way all during 1974. By December 1974, gold on a monthly closing basis was up to $185, a gain of 330% over where gold was trading when Nixon ended its convertibility.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/11/1111ec97-ce56-4b4c-8238-2e372a4d6930.jpg" style="display: block; margin: 0px auto;"></p><p>But unfortunately for those front runners, the anticipated surge in demand for gold from American investors did not materialize as the rest of the world was hoping, and gold went into a big decline. It eventually lost 41% by the time of the August 1976 low, which led to one of the greatest bubbles of all time in gold prices during the late 1970s.</p><p>The point of all of these prior examples is that front-running a regulatory change, expecting a lot of demand to materialize, does not always work out very well for the front runners. This does not mean it has to work that way for the approval of these eleven new Bitcoin ETFs, but it is worth keeping in mind. And those prior examples in gold and silver prices did not bring permanent tops when trading was approved, but they were noteworthy tops. </p>The SEC finally gave approval to trade for eleven different spot Bitcoin ETFs, a long-anticipated action that many analysts and traders are expecting will increase demand for Bitcoins, now that ordinary investors can "own" Bitcoin in their brokerage accounts. But what the crowd believes will happen is often the opposite of what turns out.I noted here back on Nov. 4, 2023 that total open interest was spiking upward in Bitcoin futures, in anticipation of that supposed increase in demand. In that article, I featured the chart above, noting that big spikes in total open interest of...CPI Jolts Markets; Homebuilders, REITs Remain Resilient. What's Really Going On?Joe Duartetag:stockcharts.com,2024-01-11:post-270282024-01-11T20:22:54Z2024-01-11T20:22:54Z<p>The December CPI numbers, released this morning, showed that, at the very least, the recent downward path in inflation has slowed. The stock market's knee-jerk reaction was to sell off amid fears that the Federal Reserve won't start to lower interest rates as early as March of 2024, as many Wall Street "experts" have predicted.</p><p>At the center of the rise in CPI were increases in food, shelter, and used car prices. On the surface, this is bad news. On the other hand, we are looking at year-over-year numbers, which may have peaked.</p><p>For example, the rise in shelter costs may already be slowing down, as apartment building has increased and landlords increase incentives in order to lure new renters. Moreover, recent homebuilder earnings reports, such as that for KB Homes (KBH), which delivered better-than-expected earnings, have showed that the average home selling price has decreased. These trends, if they persist, could lead to a tempering in the shelter component of CPI.</p><p>Still, tight supplies of existing homes for purchase, as well as higher prices than a year ago, are likely to remain in place for some time, which is bullish for homebuilders.</p><h3><strong>The Fly in the Ointment</strong></h3><p>If there is a fly in the ointment, it is that things could change in a hurry. So while it is possible that inflation is stabilizing at a higher level, as I pointed out in this <a href="https://www.buymeacoffee.com/wsdetectivx/panama-canal-weather-woes-bullish-action-shipping-stocks" target="_blank">post,</a><span target="_blank"> the situation in the Red Sea, and the unresolved drought in the Panama Canal, are boosting shipping costs. So even though the inflation in other areas of the economy may have stabilized, or be in the process of falling, the effects of the worsening situation and the rising costs in shipping are yet unknown and have not been fully reflected in the data.</span></p><p>This morning, reports surfaced that armed soldiers boarded an oil tanker bound for Turkey in the Gulf of Oman and that the ship was re-routed to Iran. This, of course, led to a rally in oil prices, which had been subdued until recently and whose recent decline has kept inflation at bay.</p><p>The big worry here is that the Red Sea hostilities could expand to include the Strait of Hormuz, through which 20% of the world's crude oil passes on a daily basis.</p><h3><strong>The Market Reaction</strong></h3><p>The response to CPI from the bond market is crucial to what happens next in the stock market, which is why the tame response to the rise in CPI seen in the U.S. Ten Year Note yield (TNX) is of some comfort.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/11/b63a1b3a-c263-4e9b-86dd-570f41ba3341.jpg" style="display: block; margin: 0px auto;"></p><p>As the price chart shows, TNX is still trading below its 200-day moving average as it straddles the 4% zone. A move above this key trading range would be a negative influence on stocks. Note the close inverse correlation between TNX and the S&P 500 Index (SPX) (middle panel on chart). Also note that the RSI for TNX (lower panel) is testing the 50 area. A move above 50 would be a sign that upward momentum on yields is picking up. A reversal in RSI would be bullish, as it would suggest that bond sellers are losing their enthusiasm and that yields are likely to head lower.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/11/749ff72d-8d46-4274-a928-672adb5025d4.jpg" style="display: block; margin: 0px auto;"></p><p>The highly interest-sensitive SPDR S&P Homebuilders ETF (XHB) is showing signs of short-term weakness, with the 20-day moving average proving to be an important decision point. What happens to TNX will be a major influence on this ETF. Note that XHB is no longer overbought, as its RSI is now headed to the 50 area.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/11/220ab045-d409-41b3-8607-400446b7e3d7.jpg" style="display: block; margin: 0px auto;"></p><p>A similar technical picture is evident in the iShares Residential Real Estate Capped ETF (REZ), which is also testing its 20-day moving average as TNX tests its 200-day moving average.</p><h3><strong>Bottom Line</strong></h3><p>The December CPI was worse than expected and may be signaling either a stabilization of inflation at current levels, which are above the Fed's 2% target, or an acceleration, which will become evident in the next few weeks to months. The bond and stock markets are now fearful that this development may stall the Fed's interest rate-cutting cycle in 2024.</p><p>The 4% yield for the U.S. Ten Year Note (TNX) is a key chart point to observer, as a rise or a fall in yields above or below this important level will influence the general trend in the stock market. Homebuilders and residential REITs are testing key support levels as traders wait for the bond market's next move.</p><hr><p>Thanks to everyone for your support. I really appreciate it. This weekly report is available on my Buy Me a Coffee Page. If you like this report and want to receive this type of content on a regular basis, consider becoming a <a href="https://www.buymeacoffee.com/wsdetectivx/membership" target="_blank">member</a><span target="_blank">. </span>I also appreciate single coffees, which you can buy me <a href="https://www.buymeacoffee.com/wsdetectivx/membership" target="_blank">here</a><span target="_blank">.</span></p><p>To subscribe to my premium service, Joe Duarte in the Money <span target="_blank">Options.com, click </span><a href="https://www.joeduarteinthemoneyoptions.com/secure/order.asp" target="_blank">here</a><span target="_blank">. </span>Please don't forget to hit the Like button on the posts. It helps to spread the word.</p><p>You're the music. I'm just the band.</p><hr><p><strong>Joe Duarte</strong></p><p>In The Money Options</p><hr><p>Joe Duarte is a former money manager, an active trader, and a widely recognized independent stock market analyst since 1987. He is author of eight investment books, including the best-selling <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9d-deebpub3%2f&c=E,1,ZX1dsKj4MVxT-7UgaqjXHWxdaWovnLyXuMojxdYl8UyFohQSu0YuyrjByG_kEMZfwLI69BmrJnjFxIyo_xyawzGlomVExT2Z8aBhB1r9ntSBGj04IlFJIA,,&typo=1" target="_blank"><em>Trading Options for Dummies</em></a><span target="_blank">, rated a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9e-deebpub4%2f&c=E,1,5Ap0vcdmm5gS2f9e33SNn7bIaXS3qSOf6p2W7oP658boUCKX3FcbVkcRd5n4i8_Oj19wQIs7z3nwQcPxOtBwzA0HXHQFJYchj4IZNa08b9HFECQq&typo=1" target="_blank">TOP Options Book for 2018 by Benzinga.com</a><span target="_blank"> and now in its third edition, plus </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9f-deebpub5%2f&c=E,1,P0V9AM2KW_OE79KIeXYohzQtM34hKB3aJzum4G0CkvwlpRAUYCaGN-q9LmSpEC8NSy_PLRJvLoSHuixaIq2ak3ZOGWbR7OOzfk3JoxA3Um8,&typo=1" target="_blank"><em>The Everything Investing in Your 20s and 30s Book</em></a><span target="_blank"> and six other trading books.</span></p><p><em>The Everything Investing in Your 20s and 30s Book</em> is available<strong> </strong><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9g-deebpub6%2f&c=E,1,PH18HT-ZPsb4WGmftWjZ2oRP5wDuqucIGLlo1IDJLM-ydJ-j1q445_Ph5R9EUDqahPzghPFlEPOOgHuabciRp0cWoGNNpZ8JJukWBoMwYIXJHBlpnoCVqWF0N-8,&typo=1" target="_blank">at Amazon</a><span target="_blank"> and </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9h-deebpub7%2f&c=E,1,0H2moltb4qkxLb8MXS-_PTkhiPxo7_joI8OEkYpITp2sipvKdbF7psxChbWansm24hzdetcL3sDUAbmGBUSAMcfH66vZr6iLyeIoWet4ZgSvqe-1GPO5RMo,&typo=1" target="_blank">Barnes and Noble</a><span target="_blank">. It has also been recommended as a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9i-deebpub8%2f&c=E,1,w1-DJEgic6bvAgWfDi0nVh6dH88Y6NBH3_JryXcFAzqtMhWK9wORsiYJ4wgHDdW3sHVflE7kdDqFRgymgtTvW6BlwZ1YDUdlNtF7qHOUCQI,&typo=1" target="_blank">Washington Post Color of Money Book of the Month</a><span target="_blank">.</span></p><p>To receive Joe's exclusive stock, option and ETF recommendations, in your mailbox every week visit <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9j-deebpub9%2f&c=E,1,p1clYHa4fNcS_dtuDr5XzkxAX4UoQiB6AUj5iZePLIsoc9I92KP1Vz5lz6UrjGaQq0vRvj2LeFT-DWayApeSCm45YlXfzvT2m2_1GOkwOKLy6pvi3HzpCcja&typo=1" target="_blank">https://joeduarteinthemoneyoptions.com/secure/order_email.asp</a><span target="_blank">.</span></p>The December CPI numbers, released this morning, showed that, at the very least, the recent downward path in inflation has slowed. The stock market's knee-jerk reaction was to sell off amid fears that the Federal Reserve won't start to lower interest rates as early as March of 2024, as many Wall Street "experts" have predicted.At the center of the rise in CPI were increases in food, shelter, and used car prices. On the surface, this is bad news. On the other hand, we are looking at year-over-year numbers, which may have peaked.For example, the rise in shelter costs may already be...Momentum Run Turns into Market Rotation; Is a QQQ Short Squeeze Brewing?Joe Duartetag:stockcharts.com,2024-01-07:post-270052024-01-07T20:59:15Z2024-01-07T20:59:15Z<p>The stock market stumbled into 2024. But under the hood, until proven otherwise, the action resembles a sector rotation more than a full-blown correction. Because of the magnitude of the Q4 rally, this consolidation/rotation could last a while. As a result, it makes sense to focus on where the money is flowing, as we wait for the setup for the next rally.</p><p>Here's a summary of key factors as of 1/5/24:</p><ul><li>The Fed is not very likely to raise interest rates; but</li><li>Sentiment is still too bullish, as the CNN Fear/Greed Index closed at 74, well within the GREED zone;</li><li>The CBOE Put/Call Ratio closed at 1.15, an acceleration of the bearish tone (bears are watching); and</li><li>The CBOE Volatility Index (VIX) remained below 15 – a sign that put option volume remains stable and that the rise in the P/C ratio is being influenced by a decrease in call option buying, not a rise in the volume of put options.</li></ul><p>Together, these indicators suggest that the market is likely to remain in a bumpy consolidation pattern. What that means is that a combination strategy is required, involving taking profits where warranted, buying dips as they materialize, and deploying money into new areas that are exhibiting relative strength, while keeping a wary eye on the external factors which affect daily trading and how the markets respond.</p><p>Indeed, it's always best to be prepared, which is why these basic tenets are worth repeating:</p><ul><li>Stick with what's working; if a position is holding up – keep it;</li><li>Take profits in overextended sectors;</li><li>Consider some short term hedges;</li><li>Look for value in out of favor areas of the market that are showing signs of life; and</li><li>Protect your gains with sell stops and keep raising them as prices of your holdings rise.</li></ul><p>Remember also that market declines eventually lead to market rallies. And as I described in my <a href="https://www.buymeacoffee.com/wsdetectivx/the-sweet-spot-buying-stocks-where-value-momentum-meet" target="_blank">latest <em>Your Daily Five</em> video</a><span target="_blank">, it's best to focus on value during a market decline. Specifically, pay attention to those areas of the market which hold up better than others. For a detailed plan on which areas of the market make sense currently, consider a </span><a href="https://www.joeduarteinthemoneyoptions.com/secure/order.asp" target="_blank">FREE Trial to Joe Duarte in the Money Options.com.</a></p><h3><strong>Bond Yields Bend, But Don't Break</strong></h3><p>Stock investors who ignore the bond market are missing a crucial intermarket relationship. As the price chart below shows, since stocks bottomed in October 2023, the yield decline in the U.S. Ten Year Note yield (TNX) and the rally in the S&P 500 Index (SPX) have been highly correlated, which is why what happens to bond yields over the next few days to weeks will be a big influence on stocks.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/07/69a712d3-3de6-4f3f-8ffb-06f4e7b714d6.jpg" style="display: block; margin: 0px auto;"></p><p>Specifically, investors should focus on the 4-4.1% yield range for TNX, which, as I've <a href="https://www.buymeacoffee.com/wsdetectivx/reits-show-relative-strength-homebuilders-consolidate" target="_blank">repeatedly highlighted,</a><span target="_blank"> will set the tone for what happens next. That's because the action above and below this point is used to trigger algo trading programs. Moreover, a break above 4.1%, or a fall below 3.8% will likely trip mechanical trading programs, which will in turn trigger related programs in stocks. Otherwise, expect choppy trading if TNX remains in this range.</span></p><h3><strong>What's Working in Early 2024? QQQ Short Squeeze is Possible</strong></h3><p>Algos who trade based on what happens in TNX often use the Invesco QQQ Trust (QQQ) as the vehicle for the stock portion of their strategies. Note that a rise in TNX has been followed by a fall in QQQ lately. Currently, QQQ is trading below its 20-day moving average and looks headed for a test of the 50-day line. The ADI and OBV indicators are diverging, with short sellers betting on lower prices (falling ADI) and buyers creeping back in (bottoming OBV). With the RSI at 50, there is the potential for a snap back rally in QQQ as the shorts get squeezed. Stay tuned.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/07/ab8e2b48-66b1-41d6-9ad0-a2e51fbbcedb.jpg" style="display: block; margin: 0px auto;"></p><p>The big money magnet in the early days of 2024 is the large pharmaceuticals sector. The VanEck Vectors Pharmaceutical ETF (PPH) has quietly ramped above its August 2023 heights on heavy short-covering, as illustrated by the sharp rise in ADI, while buyers are slowly coming back as OBV perks up. PPH is overbought, but its action is indicative of where the market's action may be headed in 2024.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/07/6247e884-cced-4a51-a3c0-4b4bce7755ba.jpg" style="display: block; margin: 0px auto;"></p><p>On the other hand, as I noted in my last few posts for 2023, the shipping stocks are likely to remain near the top of the leaderboard as long as the situations in the Red Sea and the Panama Canal are not resolved. The SonicShares Global Shipping ETF (BOAT) is overextended currently, but is not showing any signs that selling pressure is increasing.</p><p>If you saw this <a href="https://www.buymeacoffee.com/wsdetectivx/panama-canal-weather-woes-bullish-action-shipping-stocks" target="_blank">post</a><span target="_blank"> , you would have been prepared for the rally in the shipping stocks. For detailed Buy and Sell recommendations on shipping and pharmaceutical stocks, click </span><a href="https://www.joeduarteinthemoneyoptions.com/secure/order.asp" target="_blank">here</a><span target="_blank">.</span></p><h3><strong>Market Breadth Recovers</strong></h3><p>The NYSE Advance Decline line (NYAD) broke out in late December and has pulled back to its prior resistance point which now becomes key support – roughly at the 20-day moving average. If this area holds, it will be a very bullish development for the market.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/07/3bce1a80-8ba4-43ae-ba09-c1134e941c23.jpg" style="display: block; margin: 0px auto;"></p><p>The Nasdaq 100 Index (NDX) rolled over at the start of the year, but has held above 16250, which is the top end of a three-bar VBP cluster (horizontal bars at left of chart). The VPB cluster extends as far down as the 50-day moving average, and chighlights an important support range which may be tested before the market decides on its next move. NDX is no longer overbought, with ADI falling and OBV rising, which means a short squeeze may materialize.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/07/efed5098-bb4f-4954-922e-1a79244bdddf.jpg" style="display: block; margin: 0px auto;"></p><p>The S&P 500 (SPX) is in a similar technical posture to NDX, and is currently testing support at its 20-day moving average.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/07/7ba015c9-d851-444b-b2fa-aa8c1a9848ef.jpg" style="display: block; margin: 0px auto;"></p><h3><strong>VIX Remains Below 20</strong></h3><p>The CBOE Volatility Index (VIX) remains stubbornly below 20, which remains a bullish posture for stocks. If VIX remains subdued, more upside is possible.</p><p>A rising VIX means traders are buying large volumes of put options. Rising put option volume from leads market makers to sell stock index futures, hedging their risk. A fall in VIX is bullish, as it means less put option buying, and it eventually leads to call buying. This causes market makers to hedge by buying stock index futures, raising the odds of higher stock prices.</p><hr><p>To get the latest information on options trading, check out <a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-2fhghz-d0hczf-7wedrxb5%2f&c=E,1,rnWxui5JQ1PzSCHe6mv4JPh_RjXNQ7EWySLq9PWn2vF_CTVoNPUjHq7eZJcRYej4uXFmI6zuzo2q4c2LDbIGfUJ1wN-_c031ic-iZ5b8crTUVPpe&typo=1" target="_blank"><strong><em><u>Options Trading for Dummies</u></em></strong></a><span target="_blank">, now in its 4th Edition—Get Your Copy Now! Now also available in Audible audiobook format!</span></p><p><a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-2gvrba-nuarvf-7wedrxb3%2f&c=E,1,3IS6rDOEmro6stbXeFW3pI0tIMbpo9P6zGjpDNI8Xr1jDnowpJeKofNfOCNgwmgP-PveAu2ELseA57gR8wTeSdBaaMbhcZDJDCJ-WvieMFKONu3GQFpZmA,,&typo=1" target="_blank"><img src="https://stockcharts.com/img/articles/2023/01/22/144ca2e3-ea1b-41c6-be2d-41c833382a9e.jpg" style="display: block; margin: 0px auto;"><span class="image-caption">#1 New Release on Options Trading!</span></a></p><p>Good news! I've made my NYAD-Complexity - Chaos chart (featured on my <a href="https://youtu.be/cx04LKXErhw" target="_blank"><strong>YD5 videos</strong></a><span target="_blank">) and a few other favorites public. You can find them </span><a href="https://stockcharts.com/public/1215217" target="_blank"><strong>here</strong></a><span target="_blank">.</span></p><p><br></p><p><strong>Joe Duarte</strong></p><p>In The Money Options</p><hr><p>Joe Duarte is a former money manager, an active trader, and a widely recognized independent stock market analyst since 1987. He is author of eight investment books, including the best-selling <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9d-deebpub3%2f&c=E,1,ZX1dsKj4MVxT-7UgaqjXHWxdaWovnLyXuMojxdYl8UyFohQSu0YuyrjByG_kEMZfwLI69BmrJnjFxIyo_xyawzGlomVExT2Z8aBhB1r9ntSBGj04IlFJIA,,&typo=1" target="_blank"><em>Trading Options for Dummies</em></a><span target="_blank">, rated a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9e-deebpub4%2f&c=E,1,5Ap0vcdmm5gS2f9e33SNn7bIaXS3qSOf6p2W7oP658boUCKX3FcbVkcRd5n4i8_Oj19wQIs7z3nwQcPxOtBwzA0HXHQFJYchj4IZNa08b9HFECQq&typo=1" target="_blank">TOP Options Book for 2018 by Benzinga.com</a><span target="_blank"> and now in its third edition, plus </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9f-deebpub5%2f&c=E,1,P0V9AM2KW_OE79KIeXYohzQtM34hKB3aJzum4G0CkvwlpRAUYCaGN-q9LmSpEC8NSy_PLRJvLoSHuixaIq2ak3ZOGWbR7OOzfk3JoxA3Um8,&typo=1" target="_blank"><em>The Everything Investing in Your 20s and 30s Book</em></a><span target="_blank"> and six other trading books.</span></p><p><em>The Everything Investing in Your 20s and 30s Book</em> is available<strong> </strong><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9g-deebpub6%2f&c=E,1,PH18HT-ZPsb4WGmftWjZ2oRP5wDuqucIGLlo1IDJLM-ydJ-j1q445_Ph5R9EUDqahPzghPFlEPOOgHuabciRp0cWoGNNpZ8JJukWBoMwYIXJHBlpnoCVqWF0N-8,&typo=1" target="_blank">at Amazon</a><span target="_blank"> and </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9h-deebpub7%2f&c=E,1,0H2moltb4qkxLb8MXS-_PTkhiPxo7_joI8OEkYpITp2sipvKdbF7psxChbWansm24hzdetcL3sDUAbmGBUSAMcfH66vZr6iLyeIoWet4ZgSvqe-1GPO5RMo,&typo=1" target="_blank">Barnes and Noble</a><span target="_blank">. It has also been recommended as a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9i-deebpub8%2f&c=E,1,w1-DJEgic6bvAgWfDi0nVh6dH88Y6NBH3_JryXcFAzqtMhWK9wORsiYJ4wgHDdW3sHVflE7kdDqFRgymgtTvW6BlwZ1YDUdlNtF7qHOUCQI,&typo=1" target="_blank">Washington Post Color of Money Book of the Month</a><span target="_blank">.</span></p><p>To receive Joe's exclusive stock, option and ETF recommendations, in your mailbox every week visit <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9j-deebpub9%2f&c=E,1,p1clYHa4fNcS_dtuDr5XzkxAX4UoQiB6AUj5iZePLIsoc9I92KP1Vz5lz6UrjGaQq0vRvj2LeFT-DWayApeSCm45YlXfzvT2m2_1GOkwOKLy6pvi3HzpCcja&typo=1" target="_blank">https://joeduarteinthemoneyoptions.com/secure/order_email.asp</a><span target="_blank">.</span></p>The stock market stumbled into 2024. But under the hood, until proven otherwise, the action resembles a sector rotation more than a full-blown correction. Because of the magnitude of the Q4 rally, this consolidation/rotation could last a while. As a result, it makes sense to focus on where the money is flowing, as we wait for the setup for the next rally.Here's a summary of key factors as of 1/5/24:The Fed is not very likely to raise interest rates; butSentiment is still too bullish, as the CNN Fear/Greed Index closed at 74, well within the GREED zone;The CBOE Put/Call Ratio...Seasonality Shows a January DipTom McClellantag:stockcharts.com,2024-01-05:post-269932024-01-05T17:58:26Z2024-01-05T17:58:26Z<p><img src="https://d.stockcharts.com/img/articles/2024/01/05/51298c49-fb45-4f80-aba0-d59505b9312d.jpg" style="display: block; margin: 0px auto;"></p><p>January has long been considered one of the stronger months for the stock market from a seasonal perspective. But this is only true if you average together price data going back many decades. More recent years have shown us a different story.</p><p>This week's chart shows an Annual Seasonal Pattern for the DJIA using data only since 1997. I have excluded 2020 from the computation of this average pattern, because that was such an unusual year, what with the COVID Crash and the Fed's QE4 response, that it does not really represent what an "average" year looks like. We similarly would not want to depict the "average" sea level on a tidal gauge by including data from a day when an asteroid falls into the ocean.</p><p>This version of the DJIA's Annual Seasonal Pattern (ASP) shows a meaningful January dip, lasting until about January 24. This is different from how the market used to behave. For comparison, here is that same Annual Seasonal Pattern versus one calculated on data from 1976 to 1996.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/05/a5cc67c2-9d8f-46d8-aafb-e99947390eb3.jpg" style="display: block; margin: 0px auto;"></p><p>Similar to the way I excluded 2020 from the more recent ASP, I also excluded 1987 from that earlier one, because the crash that year bends the curve so much that it creates a misleading representation. I view this as similar to how Olympic judges in diving and figure skating competitions throw out the top and bottom marks.</p><p>The earlier version of the ASP shows that January used to be a strongly up month for the stock market. Now, not so much. Similarly, the month of March used to be rather sideways, but more recently it has been a strong up month. There are also big differences in how the months of August and September have been weaker lately, and how the big seasonal bottom has shifted to earlier in October than it used to arrive.</p><p>In other words, anyone using seasonal tendencies in analysis should be aware that not only do individual years vary from "average", but we also see that "average" itself can change over time.</p>January has long been considered one of the stronger months for the stock market from a seasonal perspective. But this is only true if you average together price data going back many decades. More recent years have shown us a different story.This week's chart shows an Annual Seasonal Pattern for the DJIA using data only since 1997. I have excluded 2020 from the computation of this average pattern, because that was such an unusual year, what with the COVID Crash and the Fed's QE4 response, that it does not really represent what an "average" year looks like. We similarly...The Ord Oracle January 2, 2024Tim Ordtag:stockcharts.com,2024-01-03:post-269762024-01-03T19:22:12Z2024-01-03T19:22:12Z<p><strong>SPX Monitoring Purposes: </strong>Long SPX 1/2/24 at 4742.83.
<strong>Gain Since 1/1/23 SPX:</strong> 28.12%; SPX gain 23.38%.
<strong>Monitoring Purposes GOLD: </strong>Long GDX on 10/9/20 at 40.78.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/03/3e91dfde-5aec-4aa5-bb53-0a05ff7cf522.jpg" style="display: block; margin: 0px auto;"></p><p><strong>Our gain for 2023 came in at 28.12%, and the SPX gain for 2023 came in at 23.38. We made 8 SPX trades with one loss and 7 wins in 2023.</strong></p><p>Above is the daily SPY. The SPY was up 5 days in a row going into the 12/28/23 high. Five up days in a row predict the market will be higher within five days 83% of the time. The bottom window is the 10-day TRIN, which stands at 1.20 as of Friday's close. Ten days TRINs of 1.20 and higher shows there is panic in the market, and panic forms at lows; it appears the market is near a short-term low. Long SPX on 1/2/24 at 4742.83.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/03/279356b4-d7c0-4223-9f0e-eabfc237764f.jpg" style="display: block; margin: 0px auto;"></p><p>The middle window is the weekly VIX/VVIX ratio. This chart goes back to mid-2016. We noted with blue arrows the times when the weekly SPY was making higher highs and the weekly VIX/VVIX ratio was making higher lows, which is a bearish divergence. This divergence was suggesting the SPY was nearing an intermediate term high (which it was). Currently, the weekly SPY is making higher highs, and the weekly VIX/VVIX ratio is making lower lows, which suggests a positive divergence for the SPY in the coming months.
</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/03/83b3ac86-5f54-41de-9fd4-e67461fd46f0.jpg" style="display: block; margin: 0px auto;"></p><p>The bottom window is the daily GDX and next higher window is the Sprott Physical Gold Trust (premium/discount price). The premium/discount price measures the price of purchasing of the Sprott Gold Trust. Right now, one can buy the Sprott Gold Trust at a 2.13% discount. At previous times when the discount as been 2% or less, GDX has been near a low (marked with dotted red lines). Seasonality is bullish starting in mid-December and running to mid-January. Evidence suggests there is more room to the upside for GDX over the next couple of weeks.
</p>SPX Monitoring Purposes: Long SPX 1/2/24 at 4742.83. Gain Since 1/1/23 SPX: 28.12%; SPX gain 23.38%. Monitoring Purposes GOLD: Long GDX on 10/9/20 at 40.78.Our gain for 2023 came in at 28.12%, and the SPX gain for 2023 came in at 23.38. We made 8 SPX trades with one loss and 7 wins in 2023.Above is the daily SPY. The SPY was up 5 days in a row going into the 12/28/23 high. Five up days in a row predict the market will be higher within five days 83% of the time. The bottom window is the 10-day TRIN, which stands at 1.20 as of Friday's close. Ten days TRINs of 1.20...IWM Shares Outstanding Rises With Small-Cap InterestTom McClellantag:stockcharts.com,2023-12-29:post-269562023-12-29T20:19:22Z2023-12-29T20:19:22Z<p><img src="https://d.stockcharts.com/img/articles/2023/12/29/c674d9b1-d0f8-4985-bb28-572583e8c576.jpg" style="display: block; margin: 0px auto;"></p><p>The Russell 2000 Index has been performing quite well lately, rising 26% since the Oct. 27 low. This has resulted in a lot of performance chasing, with traders piling into IWM, the iShares Russell 2000 Index ETF. Part of that performance chasing has meant a big surge in the number of shares outstanding of IWM.</p><p>An ETF is different from a closed end fund (CEF), in that an ETF can expand or contract the number of shares in existence as needed to meet demand and keep the net asset value (NAV) close to the share price. More shares outstanding means more traders want to own it.</p><p>A lot of the time, a big surge in IWM shares outstanding like this is a great marker of a price top. But there are quite a few instances when a big surge in shares outstanding occurs without a big price move to help explain it, which I have noted with the pink-dashed vertical lines. Those instances are harder to explain. There have even been spikes in shares outstanding occurring as prices fall, as with the one at the bottom of the 2020 COVID Crash. </p><p>It does appear that when a big surge in shares outstanding occurs simultaneous with a price surge, that more accurately marks a topping condition. But remember that a condition is not a signal, and there is no telling just from this observation of a spike in shares outstanding when this condition is going to decide to matter.</p><p>One question which comes up when noticing the rise in the number of IWM shares outstanding is whether this inflow into that ETF (and thus into the stocks it holds) is driving the up move in the Russell 2000 Index. But the total value of all of those shares outstanding in IWM is only about 1% of the market capitalization of all the Russell 2000 stocks, so it is not much of a factor.</p><p>Any indication of trader sentiment can offer us a useful message about sentiment swinging too far, if read correctly. In the case of IWM and its number of shares outstanding, there are traders who can be induced to buy when they see positive performance. But at some point, all who can be convinced to buy will have done so, and so there are no more marginal buyers left to fuel further gains. But how much of a move into IWM is exhaustive?</p><p>A sentiment survey such as AAII, NAAIM, or Investors Intelligence bulls vs. bears has bounded values. In other words, there can never be more than 100% bulls or 100% bears, and sentiment can only swing just so far. An indication like the number of shares outstanding in an ETF is not bounded in this way, and thus it can be difficult for us to declare when it has gone far enough to provide a compelling indication. And even if all the hot money has bought, so that there is none left, a trend can still continue until that hot money (and other money) gets a hint that the music is about to stop playing, and they start pulling money back out again.</p>The Russell 2000 Index has been performing quite well lately, rising 26% since the Oct. 27 low. This has resulted in a lot of performance chasing, with traders piling into IWM, the iShares Russell 2000 Index ETF. Part of that performance chasing has meant a big surge in the number of shares outstanding of IWM.An ETF is different from a closed end fund (CEF), in that an ETF can expand or contract the number of shares in existence as needed to meet demand and keep the net asset value (NAV) close to the share price. More shares outstanding means more traders want to own it.A...Momentum Run Unfolds; Here's How to Prepare for When the Momentum ReversesJoe Duartetag:stockcharts.com,2023-12-29:post-269552023-12-29T19:56:20Z2023-12-29T19:56:20Z<p><strong><em>Editor's note:</em></strong><em> This week's issue of Joe Duarte's Smart Money Trading Strategy Weekly is being produced early due to the New Year's holiday. Happy New Year to everyone.</em></p><hr><p>The stock market is in a classic momentum run where daily gains become commonplace and it feels as if the market can never fall again. This leads to rising levels of bullish sentiment and eventually leads to a correction. </p><p>I don't want to rain on anyone's parade, and would not be surprised if a strong end to the year carries well into January. But, as I look around, I see a market that needs a rest, which is why it's a good time to review how market declines develop and unfold. Suffice to say that, when the decline eventually comes, the action in the bond market will likely play an important role.</p><h3><strong>How Market Declines Unfold</strong></h3><p>The year 2023 was volatile, but ended on a high note. Unfortunately, the uncertainty surrounding global geopolitics – wars, elections, deglobalization, and population migrations – combined with over-the-top optimism, could make for a disappointing start to 2024, once the upward momentum thrust runs its course.</p><p>As I noted in my <a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-2ruivq-cx8tg1-iougvf25%2f&c=E,1,GWwQl88ccgkJfEWqetRE5Sl-ReIUfXh58ET8Wl8ViLTdYOR_H5R-V0RWGuU78RpyrfxxRaG_HyOhvKX3gI_Cm5Vk3gzUwvnGBhmR3fH09tEsEZhznH70czNDXTM,&typo=1" target="_blank">previous post</a><span target="_blank">, one of my favorite sentiment indicators, the CNN Greed-Fear index, recently hit a reading of of 80 (12/20/2023). Over the ensuing few days, it barely budged, moving slightly lower into the high 70s, but remaining well entrenched in the Extreme Greed side of its range. At the very least, these types of readings reflect an investor sentiment environment which will eventually limit the market's upside.</span></p><p>Other sentiment measures, such as the CBOE Volatility Index (VIX, see below) and the CBOE Put/Call Ratio (CPC) have kept their cool, which is why the rally has moved higher. Any type of meaningful decline will likely be preceded by a rise in these two instruments. That's because they both reflect a rise in pessimism.</p><p>Here's how it works. There is always an event, inside or outside the markets which raises investor fear. If you're looking for one in this market, think about something that leads to higher interest rates.</p><h3><strong>Fear is Central to Market Declines</strong></h3><p>When investors become fearful, they buy put options. Inside the market, this means that market makers are selling puts to put buyers. This buying and selling of puts, in turn, causes a rise in put option volume, which raises the Put/Call ratio and simultaneously causes VIX to move up.</p><p>Where it gets interesting is in the fact that market makers must hedge their put sales, which are bullish bets, albeit unintended ones on the part of the market makers. The problem for the market makers is that bullish bets when the market is turning bearish are a recipe for disaster. But because market makers, who are privy to the order flow before anyone else, know beforehand that the bullish trend is turning bearish, they can prepare.</p><p>Thus, even though they are obligated to sell the puts to the public, because they know that the order flow is no longer bullish, they hedge their required put sales to put buyers via the short sale of stock index futures. It is that stock index future short-selling by market makers that causes the market to fall when VIX and the CPC to rise.</p><p>Moreover, when stock index futures decline, because of the market makers' short sales, they trigger short sales from algo traders (CTAs, and hedge funds), especially when key support levels are breached. Combined, these mechanical moves by big money algo-guided investors result in a market decline. And the decline picks up speed when everyone else figures out what's happening and runs for the exit.</p><h3><strong>Stick With the Plan</strong></h3><p>When the impressive rise in stocks, which started in October, runs its course, it will be obvious, as the scenario I described above will unfold.</p><p>Of course, forecasting is a fool's game. And any investor who knows a few things will tell you there is no way to know what the future holds beyond an understanding of the mechanics of any market trend. Yet it's always best to be prepared, which is why these basic tenets are worth repeating:</p><ul><li>Stick with what's working, and if a position is holding up, keep it;</li><li>Take profits in overextended sectors;</li><li>Consider some short term hedges;</li><li>Look for value in out-of-favor areas of the market that are showing signs of life; and</li><li>Protect your gains with sell stops and keep raising them as prices of your holdings rise.</li></ul><p>In addition, it's also helpful to remember that market declines will eventually lead to market rallies. And as I described in my <a href="https://www.buymeacoffee.com/wsdetectivx/the-sweet-spot-buying-stocks-where-value-momentum-meet" target="_blank">latest <em>Your Daily Five</em> video</a><span target="_blank">, during a market decline, it's best to focus on value. Specifically, those areas of the market which hold up better than others.</span></p><p>For a detailed plan on portfolio preservation consider a <a href="https://www.joeduarteinthemoneyoptions.com/secure/order.asp" target="_blank">FREE Trial to Joe Duarte in the Money Options.com.</a></p><h3><strong>Last Look at 2023 Bellwethers and What the Algos are Waiting For</strong></h3><p>With the trading year winding down, it's a good time to see how things may shape up for 2024.</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/29/2a50a10e-6d3e-4810-8c61-922a9d1fcfb0.jpg" style="display: block; margin: 0px auto;"></p><p>As usual, the bond market is a great analytical anchor. The U.S. Ten Year Note yield (TNX) ended 2023 below the key 4% level, which, as I've <a href="https://www.buymeacoffee.com/wsdetectivx/as-they-near-4-bond-yields-close-big-test" target="_blank">noted</a><span target="_blank">, is an important level. Not only is it a psychologically important yield point, it's also a place where algos are likely to set up "if this happens, do this" triggered trading programs. On the down side, the floor for TNX is 3.8%. A break above 4%, or a fall below 3.8% will likely trip mechanical trading programs, which are likely to trigger related programs in stocks.</span></p><p><img src="https://d.stockcharts.com/img/articles/2023/12/29/447dea71-8e9f-4392-9e65-52416b316c13.jpg" style="display: block; margin: 0px auto;"></p><p>One of the algos' favorite trading vehicles is the Invesco QQQ Trust (QQQ), whose general trend is often closely tied to the action in TNX via related programs. QQQ is in a steadily rising upward momentum thrust, which looks sustainable in the short term.</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/29/6ea5684d-8409-4719-a2cc-e8f877007f0d.jpg" style="display: block; margin: 0px auto;"></p><p>The other algo trading favorite, the SPDR S&P 500 ETF (SPY), is in a similar trading pattern. Both are very overbought, as RSI has been above 70 for several weeks. On the other hand, both ADI and OBV remain in uptrends, suggesting this trading pattern can go on for some time.</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/29/adf5b775-5d71-46fc-a40c-e9ffa9c2faaf.jpg" style="display: block; margin: 0px auto;"></p><p>The story sector for the year, the homebuilders (as in the SPDR S&P Homebuilders ETF, XHB), is also in a positive posture, albeit in a slightly less robust posture than QQQ and SPY. As with the other two, ADI and OBV remain constructive.</p><p>For the big picture on homebuilder and real estate stocks, click <a href="https://www.buymeacoffee.com/wsdetectivx/posts/9599" target="_blank">here.</a><span target="_blank"> For detailed Buy and Sell recommendations on homebuilders, click </span><a href="https://www.joeduarteinthemoneyoptions.com/secure/order.asp" target="_blank">here</a><span target="_blank">.</span></p><h3><strong>Market Breadth Breaks Out</strong></h3><p>As I wrote last week, the NYSE Advance Decline line (NYAD), although overbought, was poised for a breakout, which is unfolding and could extend into January.</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/29/d929ec7e-ac2e-4028-ab6e-1add8bd54e72.jpg" style="display: block; margin: 0px auto;"></p><p>The Nasdaq 100 Index (NDX) remains in an unfettered momentum-driven uptrend, as the Fed's bullishness continues to squeeze short sellers. NDX is overbought, but ADI and OBV are rising, which means the overbought condition could increase before any consolidation.</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/29/06c1336f-f016-4156-becc-773235c9c2f5.jpg" style="display: block; margin: 0px auto;"></p><p>The S&P 500 (SPX) is in a similar posture, overbought but showing no signs of slowing down.</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/29/947f5f9e-fde1-4f86-a1ef-4c1ff1ff82a4.jpg" style="display: block; margin: 0px auto;"></p><h3><strong>VIX Remains Below 20</strong></h3><p>The CBOE Volatility Index (VIX) remains below 20, a bullish posture for stocks. If VIX remains subdued, more upside is possible.</p><p>A rising VIX means traders are buying large volumes of put options. Rising put option volume from leads market makers to sell stock index futures, hedging their risk. A fall in VIX is bullish, as it means less put option buying, and it eventually leads to call buying. This causes market makers to hedge by buying stock index futures, raising the odds of higher stock prices.</p><hr><p>To get the latest information on options trading, check out <a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-2fhghz-d0hczf-7wedrxb5%2f&c=E,1,rnWxui5JQ1PzSCHe6mv4JPh_RjXNQ7EWySLq9PWn2vF_CTVoNPUjHq7eZJcRYej4uXFmI6zuzo2q4c2LDbIGfUJ1wN-_c031ic-iZ5b8crTUVPpe&typo=1" target="_blank"><strong><em><u>Options Trading for Dummies</u></em></strong></a><span target="_blank">, now in its 4th Edition—Get Your Copy Now! Now also available in Audible audiobook format!</span></p><p><a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-2gvrba-nuarvf-7wedrxb3%2f&c=E,1,3IS6rDOEmro6stbXeFW3pI0tIMbpo9P6zGjpDNI8Xr1jDnowpJeKofNfOCNgwmgP-PveAu2ELseA57gR8wTeSdBaaMbhcZDJDCJ-WvieMFKONu3GQFpZmA,,&typo=1" target="_blank"><img src="https://stockcharts.com/img/articles/2023/01/22/144ca2e3-ea1b-41c6-be2d-41c833382a9e.jpg" style="display: block; margin: 0px auto;"><span class="image-caption">#1 New Release on Options Trading!</span></a></p><p>Good news! I've made my NYAD-Complexity - Chaos chart (featured on my <a href="https://youtu.be/cx04LKXErhw" target="_blank"><strong>YD5 videos</strong></a><span target="_blank">) and a few other favorites public. You can find them </span><a href="https://stockcharts.com/public/1215217" target="_blank"><strong>here</strong></a><span target="_blank">.</span></p><p><br></p><p><strong>Joe Duarte</strong></p><p>In The Money Options</p><hr><p>Joe Duarte is a former money manager, an active trader, and a widely recognized independent stock market analyst since 1987. He is author of eight investment books, including the best-selling <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9d-deebpub3%2f&c=E,1,ZX1dsKj4MVxT-7UgaqjXHWxdaWovnLyXuMojxdYl8UyFohQSu0YuyrjByG_kEMZfwLI69BmrJnjFxIyo_xyawzGlomVExT2Z8aBhB1r9ntSBGj04IlFJIA,,&typo=1" target="_blank"><em>Trading Options for Dummies</em></a><span target="_blank">, rated a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9e-deebpub4%2f&c=E,1,5Ap0vcdmm5gS2f9e33SNn7bIaXS3qSOf6p2W7oP658boUCKX3FcbVkcRd5n4i8_Oj19wQIs7z3nwQcPxOtBwzA0HXHQFJYchj4IZNa08b9HFECQq&typo=1" target="_blank">TOP Options Book for 2018 by Benzinga.com</a><span target="_blank"> and now in its third edition, plus </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9f-deebpub5%2f&c=E,1,P0V9AM2KW_OE79KIeXYohzQtM34hKB3aJzum4G0CkvwlpRAUYCaGN-q9LmSpEC8NSy_PLRJvLoSHuixaIq2ak3ZOGWbR7OOzfk3JoxA3Um8,&typo=1" target="_blank"><em>The Everything Investing in Your 20s and 30s Book</em></a><span target="_blank"> and six other trading books.</span></p><p><em>The Everything Investing in Your 20s and 30s Book</em> is available<strong> </strong><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9g-deebpub6%2f&c=E,1,PH18HT-ZPsb4WGmftWjZ2oRP5wDuqucIGLlo1IDJLM-ydJ-j1q445_Ph5R9EUDqahPzghPFlEPOOgHuabciRp0cWoGNNpZ8JJukWBoMwYIXJHBlpnoCVqWF0N-8,&typo=1" target="_blank">at Amazon</a><span target="_blank"> and </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9h-deebpub7%2f&c=E,1,0H2moltb4qkxLb8MXS-_PTkhiPxo7_joI8OEkYpITp2sipvKdbF7psxChbWansm24hzdetcL3sDUAbmGBUSAMcfH66vZr6iLyeIoWet4ZgSvqe-1GPO5RMo,&typo=1" target="_blank">Barnes and Noble</a><span target="_blank">. It has also been recommended as a </span><a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9i-deebpub8%2f&c=E,1,w1-DJEgic6bvAgWfDi0nVh6dH88Y6NBH3_JryXcFAzqtMhWK9wORsiYJ4wgHDdW3sHVflE7kdDqFRgymgtTvW6BlwZ1YDUdlNtF7qHOUCQI,&typo=1" target="_blank">Washington Post Color of Money Book of the Month</a><span target="_blank">.</span></p><p>To receive Joe's exclusive stock, option and ETF recommendations, in your mailbox every week visit <a href="https://linkprotect.cudasvc.com/url?a=http%3a%2f%2ftrk.cp20.com%2fclick%2f96cs-1ue8na-mads9j-deebpub9%2f&c=E,1,p1clYHa4fNcS_dtuDr5XzkxAX4UoQiB6AUj5iZePLIsoc9I92KP1Vz5lz6UrjGaQq0vRvj2LeFT-DWayApeSCm45YlXfzvT2m2_1GOkwOKLy6pvi3HzpCcja&typo=1" target="_blank">https://joeduarteinthemoneyoptions.com/secure/order_email.asp</a><span target="_blank">.</span></p>Editor's note: This week's issue of Joe Duarte's Smart Money Trading Strategy Weekly is being produced early due to the New Year's holiday. Happy New Year to everyone.The stock market is in a classic momentum run where daily gains become commonplace and it feels as if the market can never fall again. This leads to rising levels of bullish sentiment and eventually leads to a correction. I don't want to rain on anyone's parade, and would not be surprised if a strong end to the year carries well into January. But, as I look around, I see a market that needs a...The Ord Oracle December 27, 2023Tim Ordtag:stockcharts.com,2023-12-27:post-269412023-12-27T15:49:12Z2023-12-27T15:49:12Z<p style="margin: 0in;"><strong>SPX Monitoring purposes: </strong>Long SPX December 15, 2023 at 4719.19.</p><p style="margin: 0in;"><strong>Gain since December 20, 2022: </strong>26.8%.</p><p style="margin: 0in;"><strong>Monitoring purposes GOLD: </strong>Long GDX on October 9, 2020 at 40.78.</p><p style="margin: 0in;"><br></p><p style="margin: 0in;"><img src="https://d.stockcharts.com/img/articles/2023/12/27/60229f4d-d4d1-43af-afbd-71892e6929b6.jpg" style="display: block; margin: 0px auto;"></p><p style="margin: 0in;"><br></p><p style="margin: 0in;">We updated the above chart from last Thursday. Panic in the market is present when the 10-day average of the <a href="https://school.stockcharts.com/doku.php?id=market_indicators:arms_index" target="_blank">TRIN</a> closes 1.20 and higher; 5-day average of the TRIN closes 1.40 and higher. </p><p style="margin: 0in;"><br></p><p style="margin: 0in;">The bottom window is the 5-day TRIN, which closed at 1.48 last Wednesday and has backed off to 1.25, which still leans bullish. The next higher window is the 10-day TRIN, which closed at 1.19 last Wednesday and now trades at 1.17, which also leans bullish (noted on above chart in shaded pink). In summary, the 10 and 5-day TRIN reached panic levels which suggests a bottom is forming near current levels. </p><p style="margin: 0in;"><br></p><p style="margin: 0in;">The trend in the market is still up. Long SPX December 15, 2023 at 4719.19. Join me on TFNN.com Tuesday 3:30 Eastern; Thursday 3:20 Eastern, Tune in.</p><p style="margin: 0in;"><img src="https://d.stockcharts.com/img/articles/2023/12/27/54782c67-3b89-41e9-8f1d-b469022f2049.jpg" style="display: block; margin: 0px auto;"></p><p><br></p><p>In the above chart, the top window is the NYSE <a href="https://school.stockcharts.com/doku.php?id=market_indicators:mcclellan_summation" target="_blank">McClellan Summation Index</a>. Bullish intermediate-term signals are triggered when the Summation index falls below -700 (hit -813 on October 27) and rallies to +1000 around two months (current reading is +921, Friday's close, up from +839 last Thursday). The two-month period would end around December 27. It appears the Christmas rally is starting and could rally into year-end, and if that turns out to be the case, then the Summation Index most likely will reach +1000. A +1000 on the Summation Index in late December would bode well for a bull market in 2024. </p><p>The bigger trend appears bullish. We keep updating this chart because it has importance to the bigger trend of the market. On December 27, the Summation index will be updated later in the evening and appear on the December 28 chart. Our view at this time is that the parameters will most likely be met, which in turn predicts a bullish 2024. </p><p style="margin: 0in 0in 0.0001pt;">Tim Ord,</p><p>Editor</p><p><a href="https://ord-oracle.com/" target="_blank">www.ord-oracle.com</a><span target="_blank">. Book release "The Secret Science of Price and Volume" by Timothy Ord, buy at </span><a href="https://amazon.com/" target="_blank">www.Amazon.com</a><span target="_blank">.</span></p><hr style="width: 923px;"><p><em>Signals are provided as general information only and are not investment recommendations. You are responsible for your own investment decisions. Past performance does not guarantee future performance. Opinions are based on historical research and data believed reliable; there is no guarantee results will be profitable. Not responsible for errors or omissions. I may invest in the vehicles mentioned above.</em></p>SPX Monitoring purposes: Long SPX December 15, 2023 at 4719.19.Gain since December 20, 2022: 26.8%.Monitoring purposes GOLD: Long GDX on October 9, 2020 at 40.78.We updated the above chart from last Thursday. Panic in the market is present when the 10-day average of the TRIN closes 1.20 and higher; 5-day average of the TRIN closes 1.40 and higher. The bottom window is the 5-day TRIN, which closed at 1.48 last Wednesday and has backed off to 1.25, which still leans bullish. The next higher window is the 10-day TRIN, which closed at 1.19 last Wednesday and now trades at...Plenty of Strength in HY Bond A-D LineTom McClellantag:stockcharts.com,2023-12-22:post-269252023-12-22T00:39:39Z2023-12-22T00:39:39Z<p><img src="https://d.stockcharts.com/img/articles/2023/12/21/6d2c583e-91e2-463b-950e-a0e60d483c4e.jpg" style="display: block; margin: 0px auto;"></p><p>High-yield bonds tend to trade more like the stock market than like treasury bonds, and what's more is that these high yield or "junk" bonds are terribly sensitive to liquidity conditions. That sensitivity works both ways. When money is so plentiful that even the most marginal quality investments can get some, that is a sign that liquidity is going to be plentiful for a while for all types of stocks. And when liquidity starts to dry up, these high-yield bonds tend to be the first victims.</p><p>Back in 2021, I highlighted the big bearish divergence evident between the higher price highs in the S&P 500 and the lower tops in the High Yield Bond A-D Line. That was a correct omen of the liquidity troubles to come in 2022. Things started looking better coming out of the October 2022 bottom, when we saw strength in this HY Bond A-D Line, but that strength eventually gave way to another bearish divergence versus the S&P 500 in the summer of 2023.</p><p>Now we are once again seeing great strength in this A-D Line, as it is going up at a very steep angle, and matching the price gains of the S&P 500 step for step. The message is that liquidity is plentiful, and should remain so for a while. There is no sign of a divergence yet, and I would expect that we shall see a divergence with prices before any real trouble gets started. That has been the track record for these data, which FINRA publishes going back as far as 2005.</p><p>One note about these data: <a href="https://www.finra.org/finra-data/fixed-income/market-activity" target="_blank">You can access them daily at this link</a><span target="_blank">. FINRA does not post the data until very late at night for the preceding trading day, because evidently it takes a while to compile all of those statistics. FINRA also rejiggered that web site, changing the format so that it is easier for those who are adept at programming to be able to scrape the data automatically. It takes a while to learn to read through the multiple lines of data, but what you want is to fetch the "CORP" data series if you wish to replicate this chart yourself. Or you can sign up at our web site for our twice monthly McClellan Market Report or our Daily Edition, where we feature it periodically.</span></p>High-yield bonds tend to trade more like the stock market than like treasury bonds, and what's more is that these high yield or "junk" bonds are terribly sensitive to liquidity conditions. That sensitivity works both ways. When money is so plentiful that even the most marginal quality investments can get some, that is a sign that liquidity is going to be plentiful for a while for all types of stocks. And when liquidity starts to dry up, these high-yield bonds tend to be the first victims.Back in 2021, I highlighted the big bearish divergence evident between the higher price...