September 24th, 2017

Option Queen Letter
By the Option Royals
Jeanette Young, CFP®, CFTe, CMT, M.S. and Jordan Young, CMT
www.OptnQueen.com
optnqueen@aol.com
September 24, 2017

Janet Yellen, chairwoman of the, Board of Governors of the Federal Reserve System, has stated that the actions of the FOMC will be like “watching paint dry.” Sounds a little bit strange doesn’t it? If the FOMC just allows the bonds in its portfolio, to mature, it will indeed be like watching paint dry. If; however, the FOMC goes to the market and sells some of its bond holdings, it will not be like watching paint dry but more like a hurricane. Which is it going to be? That action combined with a ratchet up in interest rates in December, will prevent the Santa Claus rally from appearing and act more like the Grinch, spoiling Christmas.

We can only remind our readership that “the trend is your friend.” Don’t fight the market, just let the market tell you what it is going to do. Remember the market is made up of people and is subject to psychological events. We have some powder kegs hanging around, which could shake the market out of the current doldrums. Let the market tell you what it is the direction of the market is, do not forecast, it is dangerous.

The S&P 500 lost 1.25 handles (points) in the Friday session on lack luster volume. The market looks as though it is rolling over but remains in an uptrend. All the indicators that we follow herein are issuing a sell-signal. The Bollinger Bands are wide but not contracting. The next upside projection is 2574. If the market continues as it has done in the recent past, this could be the next resistance level. First, of course, the market needs to remove the recent high and show some follow-through. The most frequently traded price was 2496.75 and the price with the most volume, 10.%, was 2497. The point and figure chart continues to look very positive. The 10 minute TradeFlow chart shows the usual spurt to the upside at the open, the retreat, a rally a test of the low for the day and another rally into the close….. When looking at the weekly chart, it is very clear that we are still in an uptrend although on decreasing volume.

The NASDAQ 100 declined in the Friday session losing 9 handles (points) on the day. This was the third day in a row down and for the week we saw down days, four out of the five sessions with a reprieve only see in the Tuesday session which was an inside day with a doji-like candlestick. All the indicators that we follow herein continue to issue a sell-signal with plenty of room to the downside. The point and figure chart shows a decline into congestion. Could turn into something negative but at this time is nothing more than backing and filling. The highest volume and the most frequently traded price was 5925.65. The downward trending channel lines are 5973.91 and 5900. The weekly chart continues to show a bullish market. That said, there seems to be a double top at 6018 or so.

The US Dollar Index lost 0.06 handles (points) in the Friday trading session. Both the stochastic indicator and our own indicator are issuing a sell-signal, but the RSI is issuing a buy signal. The dollar looks as though it might try to stage a rally, but right now, the best one can hope for is a market that does not take out the recent low of 90.99. The real proof will come if the US Dollar is able to close above 92.91. This will cause a short-covering rally. The most frequently traded price was 91.80. The intra-day chart shows us that the market rallied for most of the trading day and closed near the high of the day. We can also glean that most of the trades were positive.
The weekly chart shows us that the downtrend is still in tack.

Crude oil gained 0.11 handles (points) in the Friday session. The chart looks as though this market is coiling or forming a pennant. The market has clearly broken above the downtrend line but faces significant resistance at 52.62. All the indicators that we follow herein are issuing a sell-signal. We will take a wait and see view of this product. After all, it is hurricane season.
The Market Profile chart shows a market going nowhere fast.

Gold gained 5.5 handles (points) in the Friday session. The stochastic indicator is issuing a buy-signal from over sold levels. The RSI is also issuing a buy-signal but our own indicator continues to issue a sell-signal. The Bollinger Bands are beginning to contract slightly. Gold fell out of bed and has closed below the support line at 1296.5. That said, it is likely that the market will rally a bit from here insomuch as the decline is too steep to continue at this pace. The most frequently traded price is 1299. The Market Profile chart shows the weakness recently seen in this product.

Risk
Trading futures, options on futures and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.
Past performance is not necessarily indicative of future results.
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