Oil And More

I wanted to discuss OIL a little later in this report this morning, since it is acting a little weaker than expected. We’ll start with our market review.

We expected a small pull back in the markets, and this chart showed where the Fib #’s would be.  There was also a channel included.

We have reached that lower  channel line and the 20sma.  That could act as support, but the above chart also has the 38% Fib # at 2022 and we also see the 50sma and the purple break out in that area.  That means the selling may not be over yet.  

IWM – As shown in prior reports, the Russell 2000 has been Lagging and not at former highs like the Nasdaq and SPX , but  it still has a bullish set up so far.

The SPX, DJIA, NASDAQ now look bullish in the big picture too,  and I will cover this in the weekend report.  With that thinking, one has to wonder if we are just going to get more of the same for a while? The last few yrs have been strong dollar, Bull market, weak commodities. The recent drop in the markets and base action in commodities looked promising for a change, but we’ll need to keep an eye on all these sectors for clues as time goes on. 

I have been watching the Monthly charts for the Big Picture. This monthly chart of the SPX  is Bullish at this point. That doesn’t mean commodities cant be putting in a bottom and run too, but we’ll  have to monitor things going forward.

USD – The dollar certainly has acted strong lately, but I expected a pull back.

I looked at the chart of the USD ETF  UUP.  Very strange to have such a HUGE volume spike near the top. These can indicate high selling/ distribution at the top, and a deeper correction, but I’m not sure at this point. Occasionally volume spikes are a fluke, but I did see this on several different charting services.

.UUP

As a side point,  you often see volume spikes in DUST and NUGT when nearing a turning point / sideways stall.

Dust Vol Spikes at the lows

NUGT VOL SPIKES – Highest volume ever recorded at recent lows

OIL – Important

OIL –  This gets a little concerning, because Oil was supposed to have started a 2nd daily cycle after day 45.   It should NOT be this weak with a day 5 peak if it did. I posted on NOV 9 the idea that “Maybe” we haven’t started it yet.  Oil daily cycles run 40-50 days give or take, so I posted this Nov 9.  A stop run and start the new daily cycle late?

BUT

The problem with that is that it may be a possibility, but I DO NOT want to get into the habit of making excuses for a bias. I used the above idea on Nov 9th  because the XLE was holding up strong and Energy still did look fine.  Today is Nov 12 and still no upward move , even with the Dollar dropping.  I want to look at OIL more cautiously with this thought in mind…

  IF OIL put in a DCL on day 45, and is currently on 12 with a day 5 peak…it could drop A LOT.  Picture a 40+ 2nd day daily cycle that peaks on day 5 and you have 40 days of finding a new daily cycle low.  We could still make a higher high, so we aren’t there yet, but we need to be alert to that.  (  See a chart of DWTI or ERY  from May to Aug when Oil dropped this yr).   OIL BROKE THAT $42.58 THIS MORNING.

So the XLE is still holding up, possibly heading for the 50sma today.  Then I saw a Gap under the 50sma and thought,  “Gap Fill and stop run?”   Yesterday I sold all but one Energy stock  (Stopped out and exited voluntarily due to the drops).  This chart is not bad, but OIL is concerning.

WKLY XLE – Stepping back, the XLE could not break through this upper resistance.  If OIL was strong on the 2nd daily cycle, it would have. This is  pulling back to the 10 weekly MA so far.  Here is something to note.  In MARCH 2015  OIL broke down to new lows,  XLE broke the 10WMA and made a higher low. This could repeat. 

NATGAS –  More of the same, I pointed out this struggle last week.

GOLD SILVER MINERS

Nothing has changed since yesterdays report.  I’m not buying anything here yet. We made a lower low in Gold & Silver, GDX went sideways.  The timing for a low is here.  Notice on this chart how the low in July came in and the price bottomed for 2 more weeks.  It was better for peoples nerves to just stay out of the trade and wait for confirmation. 

This lack luster week with a lower low is actually good.  On a weekly chart it makes it very easy to put in a swing low next week by surpassing this weeks highs.  I’ll cover that more in the weekend report too. We’d see  a higher low so far with divergence.

  At this point I’m pretty much on the sidelines.  It is back to watching the markets for clarity.   It has been frustrating and OIL has been disappointing so far, especially if this is the 2nd daily cycle.  After the FED MTG, Precious Metals sold off beyond just a normal daily cycle low, but they feel like they sold off into the next ICL. 

  I was watching the Bullish markets of the SPX, DJIA, & NASDAQ, this weekend looking for potential set ups to share here.  Even some of my favorite longer term stocks mentioned here last year are looking a bit weaker now ( Those were NKE, UA, ULTA, etc).

   Some of my shorter term stocks that I was interested in sharing here if the markets continue to recover are also lack luster so far – see TASR  (  I guess that’s a possible double bottom), MU, TWTR,  AMBA  ( Setting up now?), etc, but I am cautious  before earnings.  Some are falling apart and others are blasting off.  It’s quite a mix right now.

 For example : I watched TECH Bases and loved the looks of DGLY, DANG, OCLR, VUZI, VDSI, XRX , etc but you really have to be careful about earnings. It has been a game changer for many nice set ups. 

DGLY broke out yesterday in very strong fashion,  up 30% ahead of earnings.  Earnings after hrs dropped it back down $2.  Ouch.

For some nice set ups and earnings reactions, See KNDI, ANGI, ANFI, RAVE, RNDY, TSEM , NK, HIMX, etc

As I said,  Its back to watching the markets for clarity.  Some trade set ups are working out well, some are falling apart in all sectors.  There are times when markets trend and run higher, and other times they are sideways or pulling back and need to be watched for clues as to what the next move may be.    The CRB, OIL, and Precious Metals unfortunately  seem to be in more of a base building process or range bound, rather than putting in a few nice daily cycle runs higher and holding on to those gains.   When I saw what some stocks like SA, MTDR, etc were doing, things looked very good for the bottoming action to break out.  We’ll see what the last 2 trading days of the week bring our way. 

~ALEX

I’m going to release this without proof reading it for the sake of time.  I will then go back and fix typos, etc. Thanks for ignoring mistakes. 🙂