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Dusting off My Nasdaq 5000 Hat

8/20/2014 6:28:35 AM

Good Morning Traders,

5132.52 - if you remember the days/weeks and months that led up to the peak in the Nasdaq Comp back in March 2000, then you know what a blow off top looks like. So while we're rapidly advancing, we can go higher, much higher.

But in the short term, given the expiration on Friday, we should be approaching that point where future gains are limited, approaching negative over the next 30 days.

Daily Stock Barometer

On to the sub components of the market, the advance in the dollar is killing oil. But we're not complaining. Our puts are up over 400%. Here are the puts we recommended back in July:

Open Option Trades

Also noting the lack of volatility on oil:

Oil Volatility Chart

So for the most part, this is a dollar adjustment - and the price of oil in the longer term has been trending higher since the August 2012 bottom. If that changes, oil will test 29 and volatility will jump! And people will start to worry about the economy. As we've been noting, oil inventories (as we measure them, not as the government reports them) are climbing to a peak, which isn't an issue for me at the pump!

Where's the next opportunity? We're watching gold set up here. Prices have been consolidating, but they're getting ready to move. We'll likely start recommending a position soon.

Gold Options Open Interest Put/Call Ratio Chart

Because it's Wednesday, here's an updated view on Sentiment. Note that the Bulls are playing along. But the bears are a tough nut to crack. Even during this last brief selloff, the bears didn't get bearish. That's a little concerning. You'd prefer to see them move as well as the bulls.

Investors Intelligence % Bulls minus % Bears Chart

And back to the barometer/QQQ chart. Note the V bottom action. The fear is lifting and that action causes markets to rise. Noting 5 gaps up in the Qs. That's a little excessive ad could be approaching a terminal move, but we're not there yet.

Daily Stock Barometer - QQQ Trader - Primary System Chart



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