S&P500 futures are nearly .4% lower to start the week, with the headlines putting much of the blame on the Trump immigration ban. I'm certainly not going to share my opinion on it here, but I will say this:
Every named excuse that this market has seen to sell, has really been a great opportunity to buy. At some point that trend will end. But until it does, the odds are high that this morning's .4% pull back, even if it morphs into a 2%+ pull back, will ultimately be another great buying opportunity for the market.
The VIX remains near a 10 year low and poised to break into single digits for the first time since 2007:
The VIX was a mere $.35 from doing so on Friday. Considering all the headlines this market has seen just in the first few weeks of 2017, a VIX near 10 is telling you the market isn't concerned at all about any potential headwinds going forward.
The $SPY broke out last week from a year long consolidation phase, this , morning that breakout is being put to the test. The action today could be a chance to kiss support one last time before the $SPY moves to $230. However a break below support will place us back in the narrow directionless grind we endured prior the breakout from late last week.
$IWM was the leader for this market prior to the election rally. It was the first to reverse course on the Friday before the election. Heading into that session the S&P500 was down some 9 days in a row.
Here in 2017 its worth watching $IWM and the small caps for their leadership again.
If the $SPY support fails today and the market continues to head south, the prospect of new record highs in 2017 is still strong. For the $IWM a move to $132.50 would still keep a bull flag intact with the resulting move later this year of $140+.
...... finally the US Dollar and Gold
We are at a cross roads. The US Dollar rallied to a 14 year high a few weeks ago. Gold has been in decline since peaking in 2011. It is no coincidence that when gold peaked the US Dollar index was near a 20+ year low.
I din't think the US Dollar rally is over by any stretch. I see a lot of articles pointing out how the US Dollar is now setting up for a fall. And if that is the case I think gold will do very well. Even Trump recently called the US Dollar 'too strong'. But his actions are going to be doing the talking in the months and years ahead and those actions are, in my opinion, US Dollar bullish. Which, in my opinion, is Gold bearish.
I'll be trading GLD and GDX puts for the next leg lower for Gold. I continue to watch the US Dollar index support at 100 hold. That is the top side of the 1.5 year bull flag formation.
For the short term I'll be watching the $SPY $228 support level, if that breaks I think $IWM will come down to $132.50. At that point I will be looking for a strong recovery for the market and a move to fresh record highs into the spring.