Side-lines for now

There is rather a lot of uncertainty in the market at the moment. Uncertainty is obviously something that is synonymous with markets, but given the Fed and inflation narrative circulating at the moment, as well as the key indicators kind of being on a knifes edge and giving mixed signals… it is probably wise to say on the side-lines for now.

S&P 500 (SPY)

Too many mixed signals for me to be willing to place a new trade on SPY at the moment. The daily candles formed last week do not look too terribly bullish to me and it is a concern that the 89 day moving average was so strongly rejected. Paired with a sell signal on the Stochastic Oscillator, it makes a compelling bear case. On the flip side, we saw a strong bounce off the 200 day morning average and have a buy signal on the MACD Oscillator. So call it 2 versus 2 in terms of directional trade signals. Thus, we do nothing.

Side-lines for now
S&P 500 Volatility Index (VIX)

This VIX trade has worked out well and is now closed. The expiry of the contract is Tuesday the 8th of February 2022 anyway, so hanging on another day might not be worth the theta. Volatility is still elevated though, so I am not ruling out downside on the SPY. This specific trade is over though.

Side-lines for now

My little VIX model is not giving a clear signal either. Currently it is very much in the middle of the road in terms of short versus longer-term volatility. If shorter-term volatility can abate over the next week, we might be set up for another decent rally to new highs on the SPY, but as it stands now all terms are basically equally risky and thus (to me at least) there is no clear signal.

Side-lines for now
Gold

Gold still waiting for that break out. I guess there is no real panic in the market until gold shoots the lights out? Honestly, I am getting tired of tracking this same triangle for so many months now. Then again, the big moves come infrequently and often take very long to set up properly. So as always, patience is key.

US Dollar Index (DXY)

A bit of a make or break level here on the DXY. This trend line has to hold, or we are looking at 93.50 as the next support.

USDZAR

The setup here looks a little better to me. It looks like the 15.31 level is a support and we have a buy signal on the MACD. It would be nice to see the 50 day moving average (red) being broken, as well as the Stochastic Oscillator pushing above 80 before we have a confirmed buy signal. So although this is at least closer to a tradeable setup, there is still not a strong enough body of evidence to get involved here. Side-lines for now.

RMB Holdings (RMH)

This RMH chart was pulled before the close on Monday, so the closing price was in fact R1.68, which puts it right on the level it needs to break to be a confirmed buy. RMH has long been on the radar here and a break above this R1.70 level looks like it could lead to a push to R2.00. A bit of a ‘penny stock’ in terms of price, liquidity and volatility, so be careful when trading it. Maybe better to take half size if you are going long here. You will cry and wish you had more on the way up, but it will prevent you from having heart palpitations if RMH tests the bottom of the range.

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