Interesting Developments

It seems that things continue to play out as outlined here over the past few weeks and months. Lets look at the charts.

SPX– watch this number.  SPX needs to bounce soon.

The markets have not had a healthy correction in years. A long term chart shows …

That a healthy correction would likely scare many and you will hear talk of a crash even more than you do now.  A 10% correction on the SPX would be a bit over $200 and would break this channel .

 NASDAQ –  I am watching this area, since in the past it seems to have been where reversals take place.  If you trade the NASDAQ using  TQQQ or another vehicle, you could keep this in mind for a low risk entry ( look for a reversal).   A break of 4888.17 is bearish.

USD –  This looks rather bearish with a day 8 peak and we’re on day 16 heading down  ( L.T.).  STochastics is NOT oversold,  but that mid point can be a reversal zone.

The dollar dropped BIG Monday, over $1.28 at one point.   OIL & Gold didnt respond as one may expect.  There is a disconnect , I am not concerned at this point.

$WTIC –  Not a big drop in oil , resistance at the moving averages.   I expect higher price still, holding positions above the 50sma.

$NATGAS- popped as expected off that trendline.  50sma acts as resistance.

UGAZ –  June 4 was the buy. Its above $2 now.

GOLD – I said in the weekend report that I expect a bounce , not  huge rally.  We are oversold, cycle count is in the DCL zone.  It also has done a stop run at this point recently, extending cycle count to day 30 or so, so It may get tricky and tough to trade.   Only Active traders should trade it if they are in front of their screens.  Others may even want to short it soon  (Watching the 50sma) .

Silver – has held up well all along.  The Dollar was down $1.28,  Silver stayed Red. Oversold.  Hmmmm?

GDX – I look at this chart and see a few possible scenarios, I will just share 2.

GDX 1 – We’ve broken down.  8 or so day ‘bounce’ that cant really recover, short it.

GDX 2 – Very oversold really, but an A-B-C-D down is not complete as I see it.   Futures are up currently, so we  could get a bounce & then stop run and drop a bit further later this week. Then I will reassess.

Other stock set ups mentioned this week could remain valid. They didn’t break down with recent selling.  I just want to point out a few Miners here, going along with the recent idea that some of these Miners have the look of shaping up,  bottoming, and even recovering.    USE STOPS if you invest .

BAA – I have accumulated this one on dips.  It continues to act correctly so I am just showing it as a Miner acting correctly.  It had a Gap, filled it last week, but gapped up on good news yesterday. That gap may fill on a future dip.  RSI remains above 50%

I have mentioned Miners that are acting correctly like TRQ, LSG, RIC, etc .  They haven’t been hurt in the Gold sell offs and seem to have found a bottom a while ago. For example –

RIC- Lows were in 2013 actually.

I have noticed a new contender in the Miners that are showing potential.    You would use stops if you own these, since I expect Gold to sell off into an ICL .  This  seems to be under accumulation like LSG, RIC, etc and may hold up relatively well.  Do NOT buy & hold without a stop however.

PPP-   The weekly is acting correctly

PPP DAILY – It was pinched between the 50sma and the 200sma.  PPP has closed over the 200 sma for the first time in a while and soon could get the 50/200 cross . This was resistance.      If   PPP  continues higher, the 200sma may now  act as support .

Armed with this information you can approach it several ways. 

1.  BUY now above the 200sma and scalp a quick gain this week until it gets overbought.

2. Buy and hold using  the 200sma as your stop when Gold sells off into an ICL.

3. Watch how PPP acts going forward and when Gold sells off, if the 200sma acts as support you can buy it here later

I also liked the looks of SA, SAND, and IAG recently for Gold miners. Not as ones that look to have Bottomed at this point,  just resisting Golds current selling.    I mentioned SA with this chart as GOLD sold down. It has since gone sideways above the 50sma.

So the Equity markets have continued selling off, the above charts show areas to watch for possible reversal or damage to the charts.   The USD is selling off again after looking strong in the reversal. OIL & NATGAS look good.  The  Metals market seem due for at least a bounce, but I expect it to be short lived. Best wishes in your trading and I will keep an eye on how things unfold and see if anything “interesting” develops as we move forward. Thanks for being here.

~ ALEX

MINI-LESSON FOR YOU – I hope you can follow this explanation of a trade that I just did where I locked in small profits and missed a nice run.

I have mentioned that PHARMA and BIOTECH are running strong. 

You may recall that I bought this reversal set up in  MNKD.   Let me walk you through this trade.

CHART 1.   MNKD  was rejected at the 50sma , but on the pullback to the 10sma  ( I used the 8)  volume was drying up.  It was going to reverse & try again, when it reversed I bought it.    I then  sold WAY TOO EARLY.  A nice trade in near $4.50&  selling  near $5.25 area, but …

CHAT 2 . I sold near $5.25 and look at it now.  What happened?

Why did I sell?  In 2003 I took a T/A class from a Trader that was really sharp. He taught me that if a stock sets up like we had in Chart 1 and you bought it,  you should take profits  it if it passes the prior high with less volume,  because at least that candle high will be tested in the future. It also may just fail & drop.

Amazingly, I have seen this happen Millions of times, and when MNKD  passed that peak of $4.94,  I sold near the end of the day because volume was still too light. You want it to match or be better than that swing day.

  Guess what?  That Peak of $4.94 was actually tested intraday 2 days after I sold on light volume  ( That is the new buy since the 50sma resistance was broken & could now act supportive) and off it went.  I missed that re-entry.    I have seen price reverse lower to test that candle and drop fast on heavy volume & break back through the 50sma, that is why you sell and take profit.  This time the test was successful, and off it went with increasing volume.  Sometimes you win, sometimes you scratch your head and say….WHAT??!!!

SO now I am watching GALT.  I have traded this stock in the past and the exact same thing happened to me in the past –  LOL.  I am ready to see if this surges above the 50sma  now ( buy) or drops like MNKD did and then reverses to attempt a break above.   It is just one that I am watching as a trader due to the recent volume buying.

-Basically the lesson is :   When you learn a rule to trading and you see it play out over and over again, you have to stick to your trading plan. Sometimes you win locking in small gains,  but at other times you may miss a great trade ( I just did) , but discipline always wins in the long run.    Thats why we honor our stops and trade according to our plan and not our emotions.