Well, 2022 was quite a year, to say the least. Since writing “Give The Gift Of Financial Security Next Year.”, on Christmas Eve, 2021, I’ve learned a lot, and I hope all of you have as well. My main takeaway from 2022 is the incredible power of compounding returns. I was watching for the markets to fall hard and volatility to blast higher. Instead, fear turned on and off like a light switch for the first 6 months and never had the blast to 80+ VIX, giving a 10x opportunity with UVXY. It did however give a 40x opportunity if you simply traded the swings as per the simple plan. Compounding trades in NG with BOIL/KOLD provided similar stellar returns.
If the markets manage to move up overall this year, then volatility should slide back to 16 or lower, with small spikes. In the final 6 months of 2022, SQQQ was a much better short trade than UVXY and I suspect that will hold true for 2023 as well.
So, will the markets move up in 2023, or will they crash to new lows? History says they will rise, given that it’s the 3rd year of a presidency, and that is what occurred every single time in history. That’s a good ‘ace in the hole’ to remember, but simple trend lines have been remarkably helpful all year, so let’s see what they’re telling us now.
The S&P 500 has a clear uptrend started and Avi’s critical support level is the Thursday, December 22 low of 3764. Friday’s strong reversal gives hope that the uptrend will continue next week and you can put in stops to get out on a reversal. A month later and the uptrend remains in place. … 3 weeks later and it’s back to critical support, erasing most of January’s gains, so I hope you sold. And note the huge difference in perspective when the upper trendline on Feb. 3 is redrawn. Clearly, a good time to take your money off the table.
Fri. March 10 update: I hope you were paying attention with alerts set. Last week, the markets made a sharp move up on Thursday and Friday. With it at support and moving up, you ideally went long on Thursday and you were ideally stopped out on Tuesday. The crash this week could be attributed to the Silicon Valley Bank crash. Will it turn out to be like Lehman Brothers? According to Wikipedia, “The bankruptcy of Lehman Brothers on September 15, 2008, was the climax of the subprime mortgage crisis.” The SVB crash is tied to crypto. There have been several crypto bankruptcies already. Are we still at the beginning or the end of the crisis?
With the FOMC meeting in 2 weeks, markets will remain volatile and fragile. Stay safe! …. Two weeks later and it seems the banking crash was ‘fixed’ the following Monday with the government guaranteeing all deposits. That quickly got the S&P back to an uptrend and it nearly broke the upper downtrend line. The next 2 weeks should provide clarity as to which way it’s going longer term. For now, I’m staying cautious and playing elsewhere.
After a tepid start to the week of March 27-31, the markets roared up the final 3 days. There was no particular news to instigate the move and with the large gap up openings, I was repeatedly watching for a drop. We could hit resistance next week, so watch for that, but overall, the uptrend from Oct. 13, 2022 remains intact.
On a weekly and monthly view, the trend is also to the upside with clear trendlines to guide you.
And a little hindsight might provide useful foresight. Note you can extend the lower trendline back to the 2009 low. Going forward, 2021 may turn out looking like 2001, where it doesn’t make a new high for 12 years. Then again, it could continue higher, so be ready for both and trust the trendline to be your guide.
This chart from Luke Lango is one of many reasons why he’s extremely bullish. Again, follow your own trendlines and run with the bull, but near a fence to quickly jump over.
Update to Fri. June 9: The uptrend remains in place and could move either direction next.
The Dow went on a tear in October-November and finally took a breather in December. It’s now sitting at a fairly critical juncture. A month later it’s been essentially flat but will have to break lower or higher before long. … 3 weeks later and it did break lower and is now at horizontal support. Clearly, next week is critical for both markets.
It made a rally to start March, then broke lower the second week. No reason to be trading it long or short.
Update to Fri. June 9: There’s clearly no point in trading or investing here.
The Nasdaq is the weakest, by far, still sitting on last year’s floor. That could be an opportunity to get in on the ground floor and get a good run up in 2023. Obviously, if the floor breaks, jump off immediately. As suspected, the NDX went on a tear and even broke resistance last week, but that could be a fake. Gains were taken and I’m now looking short with SQQQ but not holding overnight unless I’m already up on the day. … 3 weeks later and it has been the strongest, but may now be set up for the biggest fall. It’s high point was also Feb. 2, but it held up till this past week. Next week is fairly critical for it as well.
The Nasdaq also took a beating last week (Mar. 6-10) and is back to horizontal support. We may have started a downtrend though so best to stay on the sidelines for now.
As noted above for the S&P 500, the ‘banking crisis’ was ‘fixed’ on Monday, March 13 and the Nasdaq roared up and exceeded the Feb. 2 high by a smidgen. I traded SOXL and SQQQ but remained cautious as they’re at horizontal resistance. UVXY did provide some great trades.
Update to Fri. June 9: The uptrend remains in place but is clearly due for a pullback so watch for a trade with SQQQ or PSQ.
Volatility and UVXY, which have been sleepy, took off for an impressive 50% on Thursday - Friday, March 9-10. Remember the 3 day move in June last year, so don’t get caught holding the bag if you decide to trade it this week.
It’s been a good 2 weeks for trading UVXY, but not easy and the party may be over.
Update to Fri. June 9: The UVXY party was indeed over after the bank failure blast.
How about oil, NG and gold? Oil is still in a down trend, but may have found bottom. It could also hold the $70-80 range all year, which is fine if you simply trade the range and let the compounding returns work their magic. Oil started a nice uptrend range, was back to support on Friday, Feb. 3 and moving up so a good chance to buy, but then it suddenly reversed at 10:30 and crashed hard from 78.00 to 73.20 (-6.2%), which is huge for a 4 hour move. It may turn up again next week, but keep stops on all your buys and be willing to go short.
The Fri. Feb. 3 crash in oil was indeed a ‘BS move’ and it recovered the following week. Since then it has continued the trend with an adjusted lower support line and upper resistance still firm. Until it breaks above 83, there’s not much to get excited about.
Oil crashed again mid-March, triggered by the Silicon Valley Bank crisis, which makes no sense and I expected it to be a BS move again. It did rally hard to begin with but then lost traction and fell further. There’s no reason to expect a quick recovery now so remain cautious.
Update to Fri. June 9: Oil has continued flat with the odd spike down. I’m not trading it.
Natural gas was a monster roller coaster ride last year. I think the trend will continue lower, but be ready for a blast higher if there’s another arctic storm across the U.S.. NG has been an avalanche lower with record warm temperatures across the U.S.. There have been good trades both directions, but a lot of pain for those holding long positions. The bottom shouldn’t be far off now, but trading is still the best strategy. … 3 weeks later and the bottom may now finally be in, at 2.17 during trading hours on Tues. Feb. 21 (lower overnight and back up). It was a drastic drop from the potential low of 2.34 on Fri. Feb. 3 with strength showing for over a week. You can follow NG from my other post, “Trading natural gas in 2023.”
Natural gas may have struck bottom on Feb. 22, but after a monster run to 3.02 on Fri. March 3, it has fallen back below its prior floor and could be headed lower. With storage a massive 23.7% above the 5 year average, there’s no reason for NG to trade much higher for a while. It is cheap though and below cost for most producers so it will eventually move higher. Watch for that and don’t be early.
Update to Fri. June 9: NG may have finally bottomed, but it remains a difficult trade. You can read more details at my other post, “Trading natural gas in 2023.”
Gold and silver miners might be the stars of 2023. A clear uptrend is already in place, but they have a history of getting smacked back down for no apparent reason and at unexpected moments. That’s what makes it a miserably frustrating sector to trade. They did indeed do well to start the year and then gold was smacked down last week (Feb. 2-3) after a fake move higher following the FOMC meeting on Wednesday, Feb. 1. Hopefully you took gains while prices were up and perhaps jumped on the short trade. I still like the long potential, but be patient. … 3 weeks later and patience is still needed. Gold and most miners have completely given up their stellar gains from January. Some miners, like AEM and KRR are way below December levels, back to November levels. Clearly a bargain but best to remain patient, waiting on the sidelines till the storm passes. Gold and silver are at potential horizontal support and many ‘experts’ are still predicting a strong year, but there’s no need to go long while they’re still falling.
Feb. 24 turned out to be the low for gold, but silver continued to fall till March 8, hitting 19.83. On March 9, the Silicon Valley Bank failure hit the news triggering the markets and oil to drop and gold and silver to pop. The markets recovered strongly the following week, oil didn’t, while gold and silver continued up like rockets. I have no idea where they are headed next, but new highs are possible after taking a breather.
Update to Fri. June 9: Gold has remained flat over a range, despite hitting a new all time high of 2085 on May 4.
You may be tempted to take your 100% gain on KRR, which I recommended in July, “KRR - Get Ready to Back Up the Truck”. I sold a bit on Friday at C$5.50, just in case and because it was an exact 100% gain from the Nov. 3 open/low of 2.75. I’m hoping for a push to C$6 or better before it gets into a trading range again.
KRR managed a high of 5.71 on Jan. 13, then it traded a range from 5.20 to 5.50 almost daily. Best to have taken gains versus stubbornly holding for a run higher. It then broke lower on Jan. 30 but roared up the next day from 5.02 to 5.30. Selling on a stop on Thursday at 5.30 as it fell hard from 5.36 off the open would have had you safe on the sidelines. If not, you took a hard sucker punch as it fell to 4.71 on Friday with a massive drop in gold. It’s now at the resistance level in late 2022, so hopefully that will provide support and hopefully gold will push back up. In short, it’s okay to buy now but sell everything on a break lower so you don’t get caught in a repeat of the 2022 crash. (Monday, Feb. 6 opened 4.73, hit 4.75 and fell so no need to buy.)
The company is worth a lot more now, than it was a year ago, so it should move to new highs in 2023. A recent SA article suggests “The fair relative value for KRRGF is almost 2x its current price. A $1 billion market cap wouldn't be a stretch, assuming the company hits its targets.” I’ll be happy to bag another 100% gain before selling out. IAU is another gold miner that I plan to hold for the long run, perhaps longer than KRR. Taylor Dart is the expert on it: “i-80 Gold: Where Growth And Value Intersect”. For those of you that prefer a large, well established and well run miner, AEM is a good choice and it’s also well liked by Taylor. AEM was whacked last week as well with the gold smack down, but I had sold out and will watch to re-buy next week if gold manages to resume an uptrend.
Gold fell all week, Feb.21-24, but many miners moved up on Friday from low open prices. Perhaps that’s a sign for a move up next week, but best to remain patient. KRR made a new low of 4.04, closed 4.09, while AEM and IAU moved up strongly on the day. Perhaps you bought, but the cautious strategy was to remain patient waiting on the sidelines.
Watch them all closely next week for higher lows and bottom to form, remembering what happened to NG when it formed a bottom for over a week then crashed lower and rallied hard.
Fri. Mar. 17 update: Some of the miners finally made a break higher with gold blasting above the highs set in January and February. If gold manages to hold its lofty elevation and continue an upward trend, then the miners will be sure to follow, so hang on for the full ride. I sold some KRR on Friday since I was holding a lot extra, bought around 4.20 and there may be a pullback next week, especially with the FOMC coming. Once it breaks above 5.00 and holds, then it may make a run to its 2022 high of 7.55.
As you can see above, only AGI has returned to its February high. The others are still 10-30% below those levels yet have generally been posting positive drilling results. Gold may get smacked down again, but generally the conditions remain positive for gold miners.
Update to Fri. June 9: KRR has been very unpredictable since the last update, March 17. Some people think gold is overvalued. I’m still hoping Avi’s Jan. 17 prediction of $2,428 Target For Gold comes true.
I’ve been trading SOXL recently as my long play on the markets. It’s the leveraged version of SOXX which also has a clear uptrend established, with a clear channel to trade. So long as it doesn’t break the lower support line, stick with the trade. When it hits the upper trade line, sell out and go short with SOXS (or SQQQ). SOXX hit the upper trendline on Thursday, Feb. 2 after a monster move on Wednesday. Clearly, that was time to cash in your chips and perhaps try a short. With that much momentum to the upside, it could have easily broken higher before stalling, so you may have waited and sold on Friday. There’s still a lot of upside potential based on a weekly and monthly view, but there’s a lot of downside potential on the daily view.
SOXX remains in an uptrend but I took my gains in SOXL off the table on Thursday, Mar. 16 when it made a big run up of 11.78% on the day.
Update to Fri. June 9: SOXX and SOXL were flat to down since the last update, March 17, but came to life mid-May and rocketed up with the Nvidia sparked move. Selling early on May 30 for a fast gain of up to 77% since May 15 was a no brainer. Now that it’s had time to consolidate, it may continue up. Next week will be key. And notice the decay in SOXL since August. You mustn’t hold leveraged ETFs for long periods against a trend, and use the base ETF to set your trendlines.
In the past 3 months, LABU is a great example of compounded returns over a flat range, as it remained essentially flat since the drop in September from $10 to $6, which has proven to be a solid floor with multiple rallies to $8 (+33.3%) and then a lower ceiling of $7.30 (+21.7%). The compounded returns of all those trades would have been superb. LABU has continued its erratic behavior but in an uptrend, hitting 9.40 on Thursday. The decay since the August high of 13.19 has been significant, as XBI is nearly back to its August high. I recommend letting this one go and focusing on SOXL and SQQQ.
Forgetting about this one was definitely good and timely advice. Going short with LABD also would have done well, but it’s a difficult trade with the erratic moves.
Fri. Mar. 17 update: LABU has continued to be a stinker, falling from its floor of 6.20s to a low of 4.57 on Fri. Feb. 10. That’s a big drop of 11.8% and it may be ready for a long move up, but I would remain cautious and trade SOXL instead long and SQQQ and UVXY short.
Update to Fri. June 9: LABU/XBI hit bottom on March 24 and made a fairly steady move up, but nothing compared to SOXL so stick with it.
Meanwhile ASAN started with a solid floor of $16 and traded a horizontal range, then started an uptrend, broke the uptrend and started a possible downtrend. The old floor held for a while before breaking suddenly. Keep this clearly in mind if you continue to trade LABU. The good news is that it will likely establish a new floor, then a new uptrend. Set your alerts and watch for it. I’ll likely buy some next week. Monday Jan. 9 was indeed the day to buy and Tuesday was a second chance. Since then it has been in a nice uptrend. Thursday, Feb. 2 was a clear day to take gains as it blasted higher with just about everything.
Feb. 2 was indeed a gift to exit high and sit on the sidelines. It has now established a firm floor of 14.30, but I would wait for an uptrend to begin in it and the markets overall.
Fri. Mar. 17 update: On Mar. 9, shares popped over 20% to a high of 22.96 on news that CEO, Dustin Moskovitz was planning to purchase 30M shares of the company. He said ''I'm doing this because I personally believe Asana shares are undervalued, given the scale of the opportunity I see in front of us." Given its history of running higher for a few days after a pop, I only sold a few shares, planning to sell more in a few days near 28. I sold this past week around 22 deciding there was a lot of room to fall from where it’s sitting now.
Update to Fri. June 9: ASAN dropped 31.7% from the March 16 high, then rallied 64.5% to a new high on June 2. I suspect it will pullback from here, but there’s a lot of potential upside still if you take a weekly view, so while avoiding a drop, be ready to get back in on a push higher.
Hopefully that gives you a clear view for what to expect as we start 2023, with clear lines to guide you. Do not hold on any break to the downside, and lock in gains whenever it’s reaching upside resistance. Good luck! And remember, luck won’t provide financial success. Discipline and sticking to your strategy and rules will. Nothing to add here. Just review your actions in January, take note of any ‘mistakes’ made and try to avoid repeating them in the future. Good luck!
February was a miserable month if you didn’t sell and lock in stellar gains from January. Now you simply need to take stock and execute your plan going forward. Doing nothing, got you nothing, as the gains from January were wiped out in February. For me, until an uptrend resumes in the markets and gold, I will focus on trading NG both directions with BOIL and KOLD.
Fri. June 2 update: As per expectations to start the year, the markets have trended higher and have held support since the October 13 low. Many bears are still calling for the bear market to resume and they’ve missed out on nearly 8 months of market gains. After the big move up last week, triggered by Nvidia earning’s report, it’s likely best to be taking gains off the table and preparing to take a short trade.
The markets may simply trend sideways for a while, but we’re also approaching Avi’s target level of 4300 SPX that he first predicted way back on Monday, Dec. 5, 2022. “The market is hitting its head on resistance. My next upside target is 4300SPX. How the market reacts in the coming week will outline the path taking us to 4300SPX.”
His prediction of the pullbacks en route have also been spot on so he’s back in form after missing the mark in 2022, not expecting such a large and drawn out pullback. He also nailed the low on Oct. 13, 2022, so he basically missed one shot and has been scoring again ever since.
ASAN gapped higher on Friday, shot up and plunged within minutes. Tough to catch if you weren’t watching or were busy watching something else. I’d already sold some but would have like to sold out on the pop and drop.
It could move higher, but it has pulled back in the past, so best to pocket your 40% gains and look elsewhere for a bargain. I’m watching PSQ, SQQQ and UVXY for a pullback in the markets.