Looking For SIGNS

Janet Yellen will be speaking over the next 2 days and everyone is looking for signs.  Signs that an interest rate hike may be coming and what that may mean for the markets.  So far most things seem to be business as usual.  On FEB 12, with the recent break to new highs in the Nadsdaq (and then the DJIA and SPX) after such a long consolidation, I thought that we could get a melt up higher. A normal  test of the break out also cannot be ruled out. I also called out a target of 5241 over time.

NASDAQ NOW

Lets look at what OIL & NATGAS have been doing…

NATGAS has been bottoming but I thought that the 50sma may stifle the run temporarily, as shown in this chart from the weekend report.

NATGAS Yesterday – It’ll take time to see how this plays out. I expect more upside.

OIL dropped yesterday, it too is struggling to get above the 50sma. Now it closed below the 20sma, I want to see it recover quickly ( over $49.70) .

I looked back at prior OIL sell offs and the bottoming process that followed. Bottoming can definitely be a “process” and for my newer readers, I have tried to repeatedly drill into our heads that not all bottoms look the same, but they often look similar.   One thought that I must present and keep in our minds is that in the past,  OIL has double bottomed.

2008 OIL bottom was a double bottom ( as it struggled to get above the 50sma)

OIL CURRENTLY-  did it do a quick double bottom already in January ? Might it drop to double bottom next?

Looking back at almost all of the oil stocks in 2008, most did not double bottom.  They bottomed and formed bases rising higher like we already see currently taking place.  IF oil has bottomed, the lows may be in in energy stocks.

 One inexpensive  ( Cheap) energy stock that has held up nicely since recovering the $1 area is EOX.  I have been watching it and drew this chart up for myself when it held support.  I was going to just trade it quickly , and actually I expected it to drop below $1 again first …

EOX Yesterday with OIL selling off,  reversed higher nicely.   I missed my entry, but still watching it, because now  I am thinking that it may be holding support here.  Another quick drop to the 50sma would give me a low risk trade.  (Earnings are 2 weeks away).

Some here may own NADL since I mentioned it here originally at $1.50-$1.60 area.  What does it look like, since it has sold off recently?

On to GOLD / MINERS

Frustrated investors / traders ask  “Why is gold up 1 day and then down the next?”  “What is happening with GOLD, why cant it just take off higher?”   “Where is GOLD going short term??”  ” Should I buy Gold here?”  and so on.  Everyone wants to own gold just in case it takes off upside.   It might, but it isnt likely to go very far at this stage of the game.  It likely will just bounce around and I have said repeatedly that 3rd & 4th  daily cycles are harder to trade.  Upside might be only 6-10 days and that isnt straight up, it can be  jumpy.

Since a picture speaks 1000 words, look at what happened when GOLD bottomed at the end of OCT 2008 (Similar time frame since it recently bottomed the first week of November 2014) .  What did GOLD do in the following Feb – April when a 3rd & 4th daily cycle was due?

Was it easy to be long?    Easy to short? Day to day it looked difficult, so GOLD may be difficult and uncooperative for a bit. 

And for miners?

S0me Miners are getting sold off after earnings , and it gives the trader/ investor the idea that  “Miners are getting killed after earnings.”  The same things happened in 2008.  Some stocks are still looking strong too, and thats a good thing when we wonder if   ‘THE lows’ could be in for miners, or will we break down to lower lows?    Lets examine a few miners that are heavily weighted in the GDX ETF.

Remember  Feb 18 I showed that NEM looked strong here ?

NEM – Still strong, it broke out  higher.

GG had earnings and sold off 3 days ago.   Still not dreadful technical analysis wise, and selling dried up at the 50% area.  See if it holds up with time, it may become a buy for traders.

Back on FEB 6 , I tried to show a good friend of mine how the next ICL will be the next best long Gold / Miners. This was just an idea of what could be seen with a 3rd & 4th daily cycle and great buying opportunity in the spring.  One may wish to avoid risk of the 3rd & 4th dcycle and wait for the next ICL.   Gold has actually done exactly what I showed so far, dropping below $1200,  but it took longer than I pictured.   I dont know if we go as high as $1275  for the 3rd dcycle high.   The point for my friend was, get ready to buy the next ICL   ( Likely in the spring) . He is Not a trader, he is inclined to buy & hold for weeks.

Tomorrow I will show some more of what I am looking at with GOLD / MINERS  in this manner, extending into the spring.  For now all I can say is  …  Traders, certainly feel free to trade it if you are experienced and see good set ups.  Please  know your stops when you enter and honor them.   Expect possible scary down days and volatility.  I still trade the various markets in various conditions, but I cant recommend it to everyone reading here.   I expect a bounce in GOLD & Miners, likely a short term bounce with volatility.

I also wanted to just throw some charts up here.  SOLAR Stocks have pulled back and look interesting, but they need to reverse higher soon.

Feb 17,   I posted this BUY of YGE.

It has gone no where, but is back at that buy area, along with SOL.

JASO looks interesting with yesterdays reversal.

CSUN – bull flag & could break higher again , but also is a tad extended.  It could be bought on the 10sma, but use a stop.

SPWR-  I noticed strong volume & no price movement yesterday and this usually leads to an explosive move . I missed the entry.   In pre-mkt this is now up $3.45 since making a deal with FSLR.  : (

FEB 19  I pointed out JRJC on this chart,  it broke from a base $4.50 to $6.50 ,  and a possible buy coming up

JRJC – it is close to support with LIGHT volume selling.  My stop would be below $5.50 area somewhere. I’d LOVE to see this tag the 50sma and reverse for a buy.

SO I am still mainly in ENERGY trades.  GOLD/MINERS have been due for a daily cycle low.  This bounce  may be trade-able for some, but in cycle timing, especially rushing off of the lows, these 3rd & 4th daily cycles in Miners can be volatile and difficult to manage.    SOLAR stocks have such an interesting look and they too could be building bases and bottoming, but they move fast in both directions so they need a little more babysitting until they get off that bottom.  The charts for FSLR and SPWR have nice bases built, so did SCTY and it failed temporarily.   TSL JKS also look good,  but I’m watching to see if they drop to the 50sma first. That would be a lower risk entry.    So there are some interesting set ups out there.

If the equity markets pullback and test their break outs  ( See the Nasdaq chart #1 or 2 of this report) , the stocks may pullback and offer some good trade entries.  I am also trying to watch for those. I own mostly Energy and want to focus on those with NATGAS and OIL still in a bottoming process.  Best wishes and happy trading.

~ALEX