The news this week was supposed to be political and have a huge effect on the stock market. Half that thesis played out, it was a week of political news, but the effect on the market was minimal as the major top that has been being built all summer continues to be built, without the downside resolution needed to save imminently in danger September puts. Bottom Line: Fed Week, Crash Window & Election Pending. Gold On the brighter side, the 2023-2024 run-up in Gold continued and as of Friday Gold Futures were at all time highs. So we will focus first on calls that seem best situated to benefit from the ongoing gold rally. First, a longer-term view for perspective: Gold Futures The take-away from this multi-year chart is that Gold is embarking on a third wave advance at multiple degrees of trend. This portends a robust rally over the next few months and our option strategy is straight forward enough, out of the money calls until they are deep in the money, rinse, repeat. Silver Futures Silver needs to take out the May and July highs, but look out below if the Fed doesn't raise 50 basis points next week. GLD Up arrows indicate 2024 call entries, see tables below GLD & GDX Calls - Open The Jun 18 and Jul 16 GLD calls are a tale of two different outcomes, as the former are week away from a huge win, while the latter looking like a loss. The difference was buying at the right price AND the right time. GLD Calls - 2024 Expired Some of our best option wins of the year have been courtesy of luck, timing and skill in navigating this Gold bull market. Two out of three were massive wins, which allows for absorbing without too much harm the occasional -50% loss. GLD Sep 20th Expiration - Rollover Candidates The Fib Extension Target on the GLD chart above is $270 over the next 90 days, suggesting the $250C for a high leverage, lots-of-time option vehicle to hold for that expected move, up 4X if target is hit. STOCK INDICES IWM & QQQ The similarity of IWM and QQQ is best taken in by this side-by-side analysis as both indices are sending the same message: Hard down once 78.6% is hit early next week. Seems improbable after this past week of relentless rally, but that's the purpose and identity of Wave 2 rallies: Set everyone up for new highs and then hit them with a nasty Wave 3 downside surprise. SPY 2-D The appearance of an early warning up arrow works to muddle the picture, as does the textbook double top formation. Trade Management The SPY puts entered on the Early Warning Sell Signal on Sep 5th are all at or beyond their respective 50% trailing stops, as is the Sep 20th QQQ puts. Nonetheless, the stock market remains in an ominous crash window and will be so situated until after the election. A trader true to the safety valve -50% trailing stop is entering next week without much exposure to the short side. A breakdown in the days ahead that confirms the Wave 3 down implications of the IWM and QQQ charts above would suggest a full short position, starting with October expiration, with November and December expirations equally attractive. I will be posting intraday Alerts at the password protected website, but they don't get emailed to subscribers until about an hour before the close (earlier, @ noon MST for PRO Service Alerts). If there is any drama next week, or any week for that matter, always check the websites for the real time posts: Premium Alerts Link; PRO Alerts Link. SPY Daily This SPY Daily Trend Model remains on its Sell Signal from Sep 6th. Between July 16th and August 5th SPY fell from 565 to 510, about 10% in three weeks, with most of that downside captured by a timely Sell Signal. SPY Nov 18th $500P If I had to re-buy any of those SPY puts hit by the 50% trailing stop, this might be at the top of my list. Chart of the Week The FOMC will cut rates on Wednesday, either 25 or 50 basis points. This chart highlights what happened in 2007 after the first rate cut after a series of raises, all in advance of the 2008 financial crisis. See: The Big Short.
