Tuesday's stock market performance wasn't the New Year's welcome bulls wanted, but did anything change from last week? I don't believe so.
The S&P 500 is still trading within the red box I highlighted in Tuesday's article and the Nasdaq Composite is still finding buyers around 10,300. If you're a range trader, you've got your edges to trade against. But as someone who prefers momentum, I'll stay on the sidelines until a more aggressive buyer appears and pushes prices above the 10-day and 21-day exponential moving averages.
We didn't devote much time to talking about gold miners in 2022, but I believe that will change in 2023. Before you ask, I'm not a tinfoil hat-wearing gold bug. However, while the S&P 500 and Nasdaq Composite performed poorly last month, the SPDR Gold Shares ETF (GLD) held its ground and gained a few bucks. If you measure the move in GLD from its Nov. 3 swing low, the ETF has gained 13.5%. Not too shabby for something most of us refer to as a worthless rock.
In mid-November, I talked about owning miner Newmont Corp. (NEM) as long as it held above $42.75 to $43.50, and I'm still long the position. However, after the consolidation and recent rally to near $50, I wouldn't want to stay long if the shares close under $45.50. Two upside levels to keep in mind are the volume-weighted average price (VWAP) anchored to the April 18, 2022, high near $51 and likely resistance around $54. If you're already long shares and the stock closes in on the mid-$50s, selling calls against your position may be a strategy worth considering.
Let's pivot away from gold and talk about bonds. In early December I spoke of selling calls against my iShares Barclays 20+ Year Treasury Bond ETF (TLT) position as the ETF was running into two areas of resistance I had marked on my chart one area between $105 and $106 and another at $110. Just as I was boarding a plane for vacation on Dec. 16, I received an alert that my $105 short calls, which were sold for about $2, would be exercised since the stock was closing over $107.
I haven't repurchased TLT, but as long as it continues to close above $99.50, I'll keep it on my watchlist. The caveat is that a close under $99.50 likely places a target on the late October low near $92.