Cashing Out of 2021 & Looking to 2022 | ARKK, Gold
Is Arkk trying to bottom?
Technical Breakdown
NYSE Breadth: 62.6% upside volume
NASDAQ Breadth: 73.2% upside volume
When I started contributing to this newsletter, my No. 1 rule was simple: Write exactly what my personal Game Plan is for the day. Do not force any trades for the sake of publishing them in the newsletter.
That was it.
Forcing trades is where we get ourselves into trouble. Over the years, I have learned that it’s just as important to know the optimal trading periods as it is to know the suboptimal trading periods.
The only thing worse than missing a Grade-A setup is to nail a winner and then cough up the gains after taking some low-grade setups.
In that respect, December was not easy but it was very profitable for us to separate the ideal trading zones from the poor ones. We sat our hands when we needed to and struck when the time was right.
I also want to say thank you — thank you for being a subscriber! Without you here, there would be no one to write to and it’s a serious passion of mine. So thank you very much, have a Happy New Year and cheers to 2022.
Game Plan
For most of this week, we have toned down the quantity, but that has resulted in a big increase in the quality of our setups.
In other words, the market (and many stocks) were too high to buy and too strong to short. It’s the last day of the year and volume should again be low. Let’s see if we get any opportunities in the market.
Otherwise, let’s enjoy the New Year, recharge and have more good fortune in 2022.
S&P 500 — SPY
Above is a four-hour chart of the SPY.
Let’s see if we get a retest of the 10-ema on the 4H chart along with the double-top/breakout area of $473.50. If this is a bounce zone, it should give us a nice cash-flow trade today.
If we need a little more air to come out of the SPY, the larger breakout zone near $470.50 could be on the table, along with the 10-day moving average (overlaid on the chart above, with a multi-timeframe analysis setting).
I would be a nibbler in both scenarios.
Individual Stocks — ARKK, Gold
We have a lot of leading, trending stocks that are starting to rest and reset. That’s great! But we’re not to the point where these stocks are in our buy zone yet.
Two names I want to look at are ARKK and Gold.
ARKK
ARK traded pretty well yesterday — up 3% vs. a 0.28% loss in the SPY — and continues to put in a series of higher lows.
Maybe it’s all BS going into year-end, but perhaps it’s not. Tax-loss selling is out of the way and the group has been beaten down. It keeps ramming into the $97.50 to $100 zone and the short-term moving averages.
The more times an area is tested, the more likely it is to break. If we can get a pop over these levels, we could see a nice move higher. On the downside, I’m cautious below $97.50 and very cautious on a break of this week’s low.
Gold
I’m using the futures for this chart, but gold is trading pretty well today, going weekly up over ~$1816. It’s gold’s fourth straight weekly gain.
Keep an eye on this. For now, the Q3 high is in focus at $1837.50, but as soon as we flip the calendar, the Q4 high will be in focus near $1880.
The gold trade sort of fell apart from November, but we caught a huge hunk of that move and it was quite profitable for us. Can it happen again?
*Don’t forget, there are micro gold contracts, as well as the GLD for non-futures traders.
Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.
Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!