Talk Of The Town

Lets get right to it,  this was a BIG move Tuesday…

 

$USD

Interestingly, there really was no big change in the DJIA, SPX, or NASDAQ,  so I have added no charts of them. They ended a little down , however….

 

 

The Commodities reacted favorably-

 

$WTIC-  Oil has been bullish and I expected follow through ( though you will get pullbacks along the way).

 

NATGAS –   This triangle trend-line was drawn May 22 as a possible pull back target. Test the break out.

In Mondays chart below  I said that NATGAS often has a couple of  days at the lows. This was a low risk buy

 

NATGAS – June 2, we had our second day reversing higher and this is a bullish chart. Pushing the 50sma (resistance)

 

UGAZ-  This has a bullish engulfing candle / Reversal.  It is a Buy.

 

I mentioned that XCO is a NATGAS / Oil  stock that I watch with NATGAS,  Nice reaction.

This was COPPER on May 22.  I mentioned how quickly it had dropped and I was watching it to see if it was rapidly breaking down.

 

COPPER Tuesday June 2 – the selling slowed down and now it is really oversold. That was a small reversal Tuesday.  Will COPPER recover?

 

FCX –  A Copper / Gold Miner.  Is this leading Copper?  That was a strong reversal and it could re-gain that 50sma

 

STEEL – very nice move in steel

 

STEEL STOCKS like  X, SCHN, AKS, ZEUS acted very well

 

Other commodities also reacted very nicely.

 

 

And then there was GOLD/SILVER /MINERS  –  Lack-Luster and disappointing, but not unexpected. I havent liked the overall look yet and mentioned that I wasnt taking a position yet. The large drop in the dollar lead to a gain of $3.90.  That was quite a Muted  reaction.  🙁

 

Gold June 2

JUNE 2-  GOLD appears to have formed a daily cycle low on day 18 as shown, but after todays minimal reaction the the Dollar drop?  I wouldn’t be surprised if  we are on day 21 and just go sideways , bounce around, then drop giving us the real daily cycle low on day 20-something.

 

I  keep mentioning that various Miners keep forming bases and Bullish patterns.  I wasnt impressed with GDX at all today, but a few miners did look interesting.   RBY, TC, FSM, HL, and many others have long consolidations and what look to be constructive bases.

RBY

 

So at this point I want to again mention what I have discussed at length in prior reports, especially weekend reports. In 2015 , We could be seeing the early stages of trend changes.  Many commodity and even GOLD/SILVER stocks have been forming some really nice set ups and long productive bases,  Weekly wedges, etc .  EVERYONE is waiting for GOLD to drop to $800 to $1000 and yes it can,  but when EVERYONE is saying they cant wait to buy down there? Often they get left behind by design.   OIL, NATGAS, STEEL, ALUMINUM, the CRB, and so on may stealthily be  under accumulation and the $USD may be stuttering at highs.   Time will tell, for now the trades may be buying pullbacks in OIL / NATGAS / STEEL / ALUMINUM (  CENX, AA).

The TECH and BIOTECH stocks are currently popping and traders are trading those.  I have shown several set ups.  The ones from yesterday did well and are still valid. While the markets  (DJIA, SPX , and NASDAQ) have mostly gone sideways this year, trades are being found.  Many China Tech  stocks are running strong after pulling back.  I posted in a list of buy set ups that included   YOKU & YNDX 2 months ago .  YOKU took off like a rocket, lets compare it to YNDX Now  ( I also have a  warning about the Shanghai posted at the end of this report, 🙂   but this set up is for traders)

YOKU –  it broke out from a sell off and tested, then ran.  Huge gains  $12 to $30.

YNDX- similar set up. This already ran from $14 to $21 and has pulled back. Above the 50sma, it is a buy with a stop just below,  target $26 area.

As I write Futures for OIL are down over $1. It is still  a bullish set up and I believe OIL has plenty of upside,  lets see if the XLE & OIH  and some of our energy stocks can resist the selling.    Have a good Trading Day.

 

ALEX

 

LESSON:

I want to show you an explosive wedge pattern that no one wanted to buy.   It was a long base & a wedge pattern on a weekly chart. Rumors  last year were that China was DONE.  I have mentioned here quite a few times that buying after a sell off isnt always easy , but if you are catching a move from a base the %-Gains can be rewarding.  Last Summer I had posted the SHANGHAI chart when it was hated,  but it was forming a constructive base & wedge pattern after selling down.  Here are two versions of what happened after that break .

 

  Some people want to be in the SHANGHAI market now, they feel they are missing the move.    Buying it now is extremely risky, since it is looking like a parabolic top.  There may be more upside, but you can wake up one day and see a slam down, since that is how parabolic moves end.  You may remember the ‘top’ of the parabolic move in SILVER as shown here.  Silver was so breath-taking in its run higher, that many felt they were missing the move. After waiting on the sidelines for weeks, they bought near the top.  lets see how that worked out . 

SILVERS parabolic move.  Looks a bit like SHANGHAI now, doesnt it?   If you saw this would you feel you needed to get in ? Missing the move?

A week later SILVER crashed form $50 to $34.  Parabolic tops are dangerous.

SO I like to look for PROPER BASES as they are forming and Buy Low / Sell High , or trade a stock that is trending higher that has already emerged from a base. My point? You may be seeing bases forming in various commodities now, as smart money accumulates positions low for the ride higher later this year/ next year? Many Miners are great looking bases .

 

LESSON 2

    For my newer readers I have shown this chart several times.   I want to share a different view.     EXXI in the 2008 sell off.   The company was sold off to an extreme and formed a base from Jan 2009 to AUG 2009 as it went up & Down from $1.18 to $3  (like many oil stocks now).  IF you bought $3000 worth and put it away and held on, it would be $100,000 in 2 yrs!  Read on…  

IF you zoom in on that  EXXI chart, it was not straight up in that “BASE” period.  This is a close up of that EXXI chart in 2009, notice the shake out, drop below 50sma, etc like we are seeing now in ENERGY stocks,  then recovery.  Inverse H&S pattern.

This is the same chart with 4 months added on  at the end of  that year

SO for now we are traders looking for set ups, and there will be shake outs and rough rides.   I think in the long run, if you believe in a recovery in Commodities / Gold & Silver and can keep the bigger picture in the back of your mind, you will have some great %-Gains in the future.

 

Now let me show you this.  That above EXXI chart again,  inverse H&S pattern and regained the 50sma.  It went from $1 to $4, back down to $2!  Ouch. Then to $35 .

REXX has done the same now.  Most know that I bought REXX at $2.60 and set that aside in a different account.  I still trade REXX in my main account with separate funds . I hope to  be selling what I bought at $2,60 at $35  🙂   This chart looks just like EXXI in 2009 above.

 

 MDR doesnt look like much of a move longer term, but…

 

I see possible recoveries in the making