There was a major reversal today, the DOW was up 170 points and then closed down 239 points. The S&P got down to 1935.5 before rallying 7 handles toward the end of the day. If we have a couple more days of declines I will be looking for stocks with an oversold condition. I believe there is a 60% chance the gap in the 15500-15800 will be filled and 75%-80% chance that the low of 15379 will hold for the year. If we do get a pullback and make a higher low, that should hold through the end of the year. I am looking for oil to pull into the 39-43 range. When oil was trading around the 38.81 level SN (Sanchez Energy) got down into the 4.40-4.50 range and VNR (Vanguard Natural Resources) got down to the 6.40 range. I would be looking to buy SN in the 4.50-5 range with a 3.80 stop. If VNR gets down to the 5.80-6.80 range I would be looking to buy with a 5.00 stop. I am bearish oil long term but I do think oil will make a higher low to set up a nice trade in the next couple months. I said I would be looking to get out of gold and gold stocks in the 1150-1160 range. Gold got up to 1147 and then today traded down to 1100. I see gold in a range of 1071-1180. I don’t see anything going on in gold and I think it is dead money for the rest of the year.
Volatility Here to Stay
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