Quick Strike Market

The theme of last evening's full-length video recap for Members centered around the notion that bulls could likely not afford to suffer a gap down in the face of yesterday's bounce combined with some impressive individual earnings rallies in the after hours session, namely GH GWPH MTCH SEDG WW.

Our reasoning behind that thesis was that the many buyers who were cheerleading the bounce yesterday--Especially the drift up into the close--would now be effectively trapped in with a massive gap down like we are seeing this morning. Even though buyers are trying to bounce us a bit as I write this, it seems more likely than not that the S&P 500 Index eventually tests its 200-day moving average below, at roughly 2,800 before Labor Day. 

Hence, with this market displaying all the hallmarks of a volatile, summer correction, including quick strike reversals lower seemingly out of nowhere but during cash hours as well as overnight, the bias here is to remain cash-heavy while picking off opportunities here and there. 

And with gold and Treasuries both getting the safety bid, or perhaps simply a bid in general, we want to look for catch-up precious miner long ideas which have already reported earnings. 

Osisko Gold Royalties (OR) is one such idea, seen below on its updated daily chart. Note the tight bull flag being formed in the context of a solid daily chart uptrend. OR is not extended yet, unlike other leading miners, and thus makes for a logical setup if the gold rally holds.