Option Queen Letter
By the Option Royals
Jeanette Young, CFP®, CFTe, CMT, M.S. and Jordan Young, CMT
www.OptnQueen.com
optnqueen@aol.com
January 1, 2018

Here is a question, if oil prices are rising and inflation is expected to reappear, or not, how doers the average wage earner pay for increased costs on loans (rising interest rates), transportation (rising fuel costs), etc. if wages do not rise? With great difficulty is the answer. It would appear that that discretionary income will disappear and something called stagflation just might appear as a result of this. Just saying that we have to be aware of this.

The question now occurs to us: will we see the January effect? We think that we will as investors search for buys in this market. Another focus this year will be what to do with the crypto currencies. The reason we ask because the currencies successfully avoid any anti-money laundering regulations and now provide freedom of asset transfer for the “mob,” drug dealers, terrorist groups etc. What will the government do to prevent this unregulated transfer of funds4v cdx? Good question. We know that brokers, bankers and even groups providing money transfer such as Western Union are under the watchful eye of the regulators, well maybe not so much Wester Union, they seem to fly below the radar. The point is that there is some regulation on all of these groups. Where is the regulation on crypto currencies?

The S&P 500 ended the 2017 trading session diving 17.50 handles (points). While this wasn’t an enormous drop it was a drop that looked like all selling and not much buying. We have almost closed the gap on the chart from December 18th. There is a horizontal line of support at 2665.25. All the indicators that we follow herein continue to point lower. The Bollinger Bands are steady and the market remains above the uptrend line.
The Market Profile chart shows a very interesting pattern. It shows a long wick and long take. Most of the lower take was at the end of the session there are plenty of double and single prints to be seen there. The highest volume appeared toward the end of the session at 2676 with a volume of 4.8% of the entire session. Not any damage on the point and figure chart. The 10 minute TradeFlow chart clearly shows the rush for the exits at the end of the session. The market closed near the lows for the day on heavy volume. The volume stepped in beginning at 3:30pm.

The NASDAQ 100 lost 61.25 handles (points) in the last session of the year, closing the session very close to the lows of the session. All the indicators that we follow herein continue to issue a sell-signal. The Bollinger Bands look as though they might begin to contract, but that isn’t very clear at this point. Naturally the volume picked up a bit during the last session of the year, but it was still on the light side. The market profile chart was a bi-modal formation with a long tail of two-prints at the end of the session. The volume spike was seen at 6424.20 where 7.9% of the volume traded. The most frequently traded price was 6447.60. The point and figure chart seems to show some determination. The downtrend line is6470.30 and the market needs to close above that line to refresh the uptrend. That said, the weekly chart remains bullish. The 10 minute TradeFlow chart shows a volume bulge at the beginning of the session and again at the end of the session. The market closed near the bottom of the chart as traders closed out their accounts for the end of the year, clearly taking the losses wherever possible.

The US Dollar Index closed down 0.32 handles (points) in the last session of the year. This index gapped down the day after the S&P 500 gapped higher and from that point to date has been moving lower breaking below support zone and now has opened the door to 90.99. Currently there are nine red candlesticks on the chart. Both the RSI and our own indicator continue to point lower but the stochastic indicator has just issued a buy-signal. The most frequently traded price was 92. Interestingly, the 10 minute TradeFlow chart shows constant volume during the session with an up tilt to the volume and price at the close. From 12:30pm, this market inched its way higher.

Crude Oil traded higher adding 0.26 handles (points) in the session. The Bollinger Bands continue to expand. The stochastic indicator and our own indicator have just issued a sell-signal. The RSI continues to issue a buy-signal albeit at overbought levels. We remain inside the channel lines of 57.04 and 61.58. The most frequently traded price was 60.15. The volume in this session was very light. The next resistance area is 62.58. Above that level, we have 80 and then 100!

Gold gained 7.9 handles (points) in the last trading session of the year. There seems to be a connection between gold, crypto currencies and the US Dollar. As the dollar declines, gold or the crypto currencies rise. As the crypto currencies rise gold feels some pressure and acts more as a hedge against re-ignited inflation fears. Really interesting times. The next resistance area for gold is 1312.50. Above that level, the door is open to 1347, and then 1400 and then, the moon! The most frequently traded price was 1298 for all session but the most frequently traded price for the day session was 1305. The stochastic indicator and our own indicator are issuing a sell-signal. The RSI continues to issue a buy-signal albeit at overbought levels. The Bollinger Bands continue to expand.

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.
Copywrite 2018 The Option Royals

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