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Seasonally Speaking

6/16/2014 6:02:40 AM

Good morning Traders,

As we establish our positions across our portfolios (QQQ, Oil, Gold, Nat Gas, Stock Options, Covered Calls), here are some other things to consider:

Gold Seasonality Chart

And oil...

USO Seasonality Chart

So while the middle east heats up and has driven oil higher (absent of demand as we measure with inventory data) we are approaching a period where it normally tops and heads lower for the remainder of the year.

Moving on to options activity, we're seeing a balance in index and equity options. This isn't a topping sign, though corrections can initiate at this level - the best ones don't.

Equity to Index Option Volume Ratio Chart

Another extreme on the QQQs:

5-Day QQQ Put/Call Ratio Chart

When traders push an options series to an extreme, the market normally reacts. The question is, are they positioning for downside with hedges (in which case, the market will rally) or are they selling puts, preparing for upside, then the market will head lower - as it's the path of least resistance. Time will tell.

I'll leave you with this long term chart of market breadth, which in the short term is setting up a bearish divergence, but in the longer term is forming a potential bottom pattern.

NASDAQ Cumulative Breadth Chart

Now we've been looking for a significant correction this year. Which didn't come in during first/second quarter, now I would expect it later 3rd/4th quarter as missing a 9 month cycle low, puts the next 20 week cycle low in focus. We'll have more on that later.

Regards,

 

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