Fallondpicks.com: Weekend commentary
The weakness which first appeared in the Russell 2000 spread to both the tech indices [NASDAQ and NASDAQ 100] as each lost their respective 20-day MAs. Options expiration will have disguised the importance (if any) of Friday's heavy volume, but going on the QQQQs, this volume was light. All is not lost for the tech markets; the semiconductor index is bumping along resistance but is above its 20-day MA, as the $BPCOMPQ gained. The strength in latter indicator runs contrary to the $NASI and $NAA50 which sit firmly in the bear camp. Intermediate term traders will likely have bailed on Friday's action, but long term holders could wait for confirmation of weakness in the $BPCOMPQ which so far has indicated little. Large caps were more mixed as breakouts from earlier during the week held into Friday, but the Dow has put in a sequence of two gravestone dojis (confirmation will come on a close below the lowest of the two days lows) and the S&P remained bound by 1,275 resistance. Interesting was the drop in volatility which sits very close to a breakdown to new all-time lows. I don't expect such a move (if it was to come) to last long given how oversold the volatility index is already; an increase in volatility is going to hurt the market if it is accompanied by selling. I am holding on to the long signal of November 2nd for now, but market indicators are at levels which no longer favor further upside. Be prepared, something Big looks to be in the works.
Gold and silver had an interesting week; the rapid pullback to $500 for gold and $8.50 silver looks to be an over correction and metal prices are perhaps the best value if looking to put money to work. Investors could find value in stocks like BGO, PAAS, and SIL, or follow sector leaders like KGC, GFI, and AEM.
