Even though it may not feel like it, the market has been on a solid climb since March. But that run is showing signs of exhaustion and creating some interesting potential trades.
The first red light we see flashing is the spike in the VIX. When volatility jumps it typically means the market will drop. After hitting multiyear lows, the CBOEs volatility indicator jumped late last week.
In addition we are seeing early signs the S&P is starting to lose steam. The MACD attempted a crossover to the downside and is looking to take another shot at it this week. Considering is has been a bit elevated this looks like a possible move.
With these warning signs lighting up, we want to look to see where money might be heading as folks hunker down. A common safe haven when things get wild is gold. Sure enough, there is a nice setup taking shape there.
We can see the bullish MACD crossover setting up and the 50 day moving average becoming a juicy target. Aug 182 calls are under $2 and look like a great way to exploit this coming storm.
We’ll keep and eye on it and let you know if it is the raincoat we are looking for.
Keep learning and trade wisely,
Market Wealth Daily