Lining Up the Next Shot

Some near-term buyer exhaustion in many Nasdaq names this morning appears to be setting in, which cannot be too shocking given the furious push higher we have seen (especially in the futures market) over the last month.

Prominent winners from this cycle, like TDOC ZM, are down sharply as I write this as we head into the true belly of the beast this week with the heaviest slate of major firms reporting, such as Ford, GOOGL, and SBUX this evening. 

As the indices are currently flipping red, my focus this morning was flattening out my trading holdings and essentially heading into tomorrow's FOMC nearly full cash.

Without question, the market has taken out some stubborn bears over the last month in financial body bags, given how lasting this squeeze has been. In addition, the market's strength has brought back in a fresh batch of longs who are convinced The Fed will always be able to save the day and steady markets as needed in times of distress, even when global economies are essentially shut down. 

That last part about The Fed's seeming omnipotence is the subject of great debate and will be for a good while. The most actionable way to play it is to key off outcomes The Fed may not want, such as a spiking U.S Dollar (very deflationary and coincides with times of distress, such as last month) and/or spikes in gold. 

As such, gold still may be one of the first asset classes to push back on The Fed. The rally over the last twenty months or so has been impressive. But the snapback rally off the March selloff was even more significant, especially given how well the space has held up ever since. 

With the FOMC tomorrow, I am looking for fresh entries in the gold miner space, seeing as the GDX ETF is bull-flagging recent gains nicely, seen on the updated daily chart, below. Simply put, we have not seen much motivation from gold sellers, perhaps even less so than equities, since March.