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| Dear Daily Crux reader, This week, we're back with another important market update from our colleague Jeff Clark, master trader and editor of the S&A Short Report. When we last spoke to Jeff, he alerted us to two extreme situations developing in the stock market, and shared his thoughts on what could happen next. His analysis was excellent… So far, the markets have closely followed the script he laid out. Now, Jeff believes these situations are close to a big resolution… and could be setting up some of the most profitable trades we'll see this year. Read on for all the details… Regards, Justin Brill Managing Editor, The Daily Crux www.thedailycrux.com |
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The Daily Crux: Jeff, the last time we talked in February, you were watching two extreme situations. The first was in the S&P 500. Stocks had run up since the start of the year, and you were starting to see signs of a significant correction. What are your thoughts on stocks today? Are you ready to sound the "all clear"… or should we be prepared for another significant summer selloff like we've seen the past few years? Jeff Clark: What worried me in February is the same thing that worries me today. As I mentioned last time, the action in the market so far this year is identical to the action last year – including the brief pullback in late February/early March, and the subsequent rally back toward the highs I expected. Last year, the rally in March and April occurred with multiple technical indicators flashing "caution" signs. We're seeing the same thing this year. Last year, the market peaked on May 1. Stocks then tumbled 10% in about five weeks and gave up all the gains for the year. Something similar happened in 2011 and in 2010. So with the calendar flipping over to May next week, and with all the cautionary technical indicators, I'm more than just a little cautious at the moment. I expect we'll see a fairly hard decline… one that could force stocks all the way back down to where we started the year. Now… having said that… I do think stocks will end the year higher than they are right now. But in the short term, the market is probably in for several rough weeks. Crux: Are you recommending any trades based on this situation today? Clark: I've been testing the waters with an occasional short trade or two. But with the price action so persistently bullish, I've tried not to get too aggressive on the short side of things just yet. That's likely to change next week, though. Most of the technical indicators I follow are at extreme overbought levels, which usually precede strong declines. And there appear to be several few good-looking risk/reward trade setups from the short side. ----------Advertisement--------- Why one master trader is finally sharing his gold technique after 26 years A unique way to make thousands of dollars a week on gold right now – without touching stocks – no matter WHERE the price goes next… It was developed by a California man who retired two decades early after generating millions of dollars. Click here to learn more. --------------------------------- Crux: The other situation we talked about was in gold stocks. After a significant rally last summer, gold stocks had been crushed again since last fall. You believed they could fall farther – which they have – but you also said conditions were developing that could lead to a significant bottom. Are we any closer to that bottom? What's your take on the sector today? Clark: I think we saw gold stocks hit the bottom last week when the Market Vectors Gold Miners Fund (GDX) closed at about $27.30. The gold sector was in "panic" mode. The metal was selling off hard, and the gold stocks – which were already extremely oversold – collapsed further. It was the kind of panic selling I've only seen once before in the gold sector. That was during the financial crisis selloff in October 2008. Anyone who had the guts to buy gold stocks back then made 100% in two months and 200% in about eight months. Crux: Is it time to get aggressive buying gold stocks? Clark: Gold stocks have bounced over the past week. GDX is up about 12% off the bottom. But I think the real time to get aggressive with the sector will be when this bounce fades and the sector forms a higher low. That would also be similar to what happened in 2008. Back then, GDX rallied about 30% two weeks after it hit bottom. Then it came back down and formed a higher low before really rocketing higher. I own some gold stocks now, and I've recommended some to subscribers, just in case the sector takes off from here and never looks back. But it's more likely that this current bounce will run its course over the next week or so. Then we'll get a decent-sized pullback in the gold sector. That will be the time to get aggressive. Crux: Sounds good. Any parting thoughts for traders? Clark: I think traders are in for a very exciting summer and fall. Wall Street advises investors to "sell in May and go away." I agree with the "sell in May" part of that statement. But, traders ought to stick around. There are a lot of good-looking short trades that are setting up right now. And if we get the sort of decline I'm looking for, there will be a lot of great trades to make from the long side in anticipation of higher stock prices later this year. Crux: Thanks for talking with us again, Jeff. Clark: My pleasure. |
| Editor's Note: Jeff is now doing something he's never done before. For the first time ever, he's sharing the secrets of how he trades his own money. And believe it or not, he's allowing a small group of subscribers to access these strategies for an entire year, absolutely free of charge. Click here to claim your spot. |
Sunday, 28 April 2013
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