It looks like SPX is poised to rebound to 1095-1100. After that I would expect the continuation of the downtrend. If you are looking for longer term investments, Gold is offering some pretty amazing buying opportunity. My bold prediction would be a rise of 20% in the next 2 months.

My advice would be to accumulate position in the 1245-1255 range with the stop below 1235. First target on this move would be 1300-1310. After that I expect a minor pullback a another sharp rise to 1450-1500. That should result in formation of a climax top and a sharp reversal.

CLF looks like ready to break one way or the other. It is good for at least 15%-20% move from today’s market price. In case of more downside, the target would be 40-45$ in two weeks. Stop at 54$. If we break above 54$, then there is a good chance CLF is going to 60-65$ with the rest of the market. So, in general, no matter which way you chose, metal stocks are offering really good reward.

Best sectors to be invested in right now are financials and energy.

I expect turbulence to continue in the EUR/USD currency pair. To save the truth, I was looking for 1.37 this week. It looks like I was dead wrong – even though we’ve had a nice base in the pair, the jobs report has send it below support lines on Friday and the next likely target is 1.34 – 1.3350. See the clear H&S pattern on the 1H chart?

Oil and Gold are definitely on the roll here. I continue to believe the yellow metal is going to 1160$ short term. As for the Black Gold, I expect it to outperform all the other asset classes. My first target is 90$, looking for 100$ by the beginning of the Summer. The price action from the February to June of last year may serve as a guidance.

Today I have made several trades, according to my game plan. Didn’t trade GOOG though, as it lacks momentum and stayed almost flat through the day.

In fact, I was able to make only two trades (others were not executed, as the price hasn’t reached my target):

ABVT – bough February Calls@60 for 0.60$, sold for 1.60$, nice return for a one day’s work.

ADY – The main thing, I like this company is its finances – strong balance sheet, fast growth.I also liek the huge gap above that needs to be closed, thus my target for this stocks is 32$ by next options expiration. Have been accumulating Calls all day long. Average price 1.55 for March@25 calls.

With the current pullback in the stock market, most of the companies have reached buying levels. Others have breached below their support levels and headed lower and some have already reached their targets.

The most remarkable calls were in CPE and DSPG. Check out the charts:

The DSPG stock has made a pullback right to the entry point at 5.80 and then reversed all the way to 7$. It looks like it has some steam left. My target would be 7.75 before any rebound.

CPE has risen more than 40% since my call.

Here is the list of the remaining stocks to watch this week:

NTRI
TRA
AGU
TSO
VLO
PETD
ALY
OMNI
CFW
NGAS
WNR

Here is another stock similar to CPE:
KAZ - a US registered company ingaged in oil production and exploration in Kazakhstan. BMB Munai operates under its wholly owned subsidiary Emir Oil. The company is engaged in the exploration, development, and production of crude oil and natural gas. The Aksaz, Dolinnoe, and Emir oil and gas fields in western Kazakhstan serve as the primary areas for exploration and development. It transports oil and gas via rail, barge, and pipeline through Russian territory.

Although the stock is losing its steam and there is no follow through in price, it is strong fundamentilly. With the market Cap. of ~60$ mil. it has 250$ mil. of proven oil and gas reserves.

I have gone long at 1.20$ and planning to hold this one forawhile. Next week they will aanounce their 3rd quarter results, that should be interesting.

For those of you who are able to stomach big swings. Here is a list of Micro Cap Stocks with interesting formations.

Micro Cap. Trading at 5$
XTEX – pullback to 6-7 to buy
PETD – buy above 20. targets 23-25
BBEP – buy at 200ema
PKOH – buy at 6.50
FTBK – buy at 4.0-4.5
ALY – buy at 4. Target 6.
WNR – buy at 5. Target 7.
DSPG – buy at 5.80. Target 7$

Micro Caps. Trading Below 5$
KAZ – buy at 1.30.target 2.5
CPE – buy at a pullback to 1.7. stop at 1.5. target 4-5 (huge gap in that area)
CFW – symm. triangle. buy at 0.90. target 2-2.50
NGAS – buy at 1.6. target 3.5
OMNI – buy above 1.75. Traget 2.75

The above chart of SPX indicates, that the rising trend we have witnessed since March, is losing its pace. The only thing that might help this thing to go higher is a violent buying, as one we’ve seen in July. Right now, nothing suggests that this is going to happen, in fact the there are good chances that we might see 1080 by the end of January. Using Wyckoff Schematics, I have 1030 as my second target. This is nothing outrageous, as 9-10% pull back would be healthy for this market. Though there are some things that suggest, that bull is not dead yet.

The first bullish indicator is XLF. Financials have been lagging during the latest rally but the chart below indicates that they have finally found solid support and have a good chance of rising as high as 15.50-15.75. This is actually a pretty save play, as you can buy at 14.40-14.50 and place a stop below 14.20, giving you a nice R/R.

It may sound odd though, but XLF is also the sector that may trigger the reversal of the broader market. In this case we need to watch 14.40-14.00 area losely, as a drop below 14.00 might lead to a sharp selloff.

Other indicators of the reversal are GOLD and EUR/USD.

To support the bear’s case, EUR/USD must stay below 1.4480-1.45. To get more confirmation, I would like to see 1.4070-1.4050 by mid January.

The same thing is about GOLD price action, as long as it is below 1110-1115 price tag.

So, all in all this makes me a cautious bear, as the chances of another run and bump action in SPX are strong. Who knows, maybe the big layers, have dumped EURs, just to accelerate the rise in equities later? I don’t know that, so as a trader the safest option is to trade what I see… But HEY, enough of this, there will be a lot of trading days going forward, as for now:

Finally, after unstoppable rise up the GOLD has retraced to the more reasonable levels. Right now we are trading right at the 50% Fibonacci retracement level and any weakness in USD will spark a huge buying interest in GOLD. My suggestion is to start accumulating GOLD at 1110-1130 levels. Place stop below 1100 (NB! use position management carefully) and a target at 1250.

If you are trading stokcs and ETFs, then buying DGP at 28.00-28.50 is a good bet. 1st Target 30.00-30.50 (I would personally exit 1/2 there and let the rest ride). Stop belwo 27.50.

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Check out the EUR/USD charts, check out the latest spike in GOLD prices. So, as long as the USD is trashed and GOLD is in all time hights, there will not be any reversal soon.

As I have mentioned before, we are going to 1050-1075 at least in GOLD and 1,50 in EUR/USD.

Right now, we are in the market, where every small dip is being bought, a lot of positive news coming out, media starts to talk more and more about the “recovery”. So, all in all, the public’s mind is shifting towards “booming economic times ahead”, while some more sophisticated players are quietly selling their assets.

I believe, we will be stuck in a 70-90 point range till the end of the year. This is a good environment for a Wyckoff Top being formed. But it’s only a speculation at this point. Right now, the best way to trade this market is to ride it sideways, by buying support and selling resistance. There are also different strategies to multiply your earnings with options. Check out MarketWatch to find more about it. Click to get your Free 30 Day Trial of MarketWatch’s Proactive Options Trader Newsletter.