Friday, February 12, 2016

Before The Bell: Biotechnology (XBI), Gold ($GOLD), Volatility (VXX) and Energy (XLE)

It's OPEX next week which means we can expect a bounce in some equities. The first one I'd like people to turn their mind to is Energy (XLE). On the heels of more jawboning from OPEC, they have now indicated they are prepared to enter negotiations to cut out-put, although Hans van Cleef of ABN AMRO has rightly pointed out, "The comments by the UAE oil minister are pushing prices up...but we're still in a long-term downturn." Looking at the charts a beautiful bullish descending wedge has emerged, but a very strong ceiling has been put in at around $58.00.
Biotechnology has admittedly burned me since my recommendation less than a week ago but the momentum is still so enticingly positive I'm still in biotechnology at a loss.
Volatility has come quite strongly against my inverse head-and-shoulders neckline. I'm not doubting that it will continue to go up but all indicators are over-bought at the moment and so a retracement seems appropriate. I'm thinking about a bounce off of the support line at $27.50 or $26.50.
Gold has been everyone's sweetheart so far for 2016 with an 18% increase. I gave a very painful "buy" recommendation in the last week of December (blue arrow) which has since gone on to stratospheric heights, but a pull back now is both needed and healthy. I think that shorting both gold and gold miners are a good idea.

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