DRAG

Monday saw a  little drag on various sectors  of the market, but I still expect a bounce before another wave of strong selling resumes.  WEDNESDAY is a FED day,  so anything can happen, but Cycle timing is right for  bounce. 

The old saying is that a picture is worth 1000 words, and sometimes I see a chart that’s worth a thousand words too.  The Banking index, for example , says a lot.   

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This is the Banking Index

The above chart is quite oversold, but it is also quite unhealthy looking…

SPX –  We started our bounce and then Monday closed back below the 10sma.  Bears started going short, and I think that that may be a mistake.  It is normal to get a strong bounce for a day or two and then sell off quickly without damaging the promise of a bounce, but we’ll have to keep an eye on things.  We may just be testing the trend line break.

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The NASDAQ selling was not deep.  We could bounce all the way back to the 50sma over time and still drop into a bear market drop.   For now I think that shorts are in trouble and Long is the direction.

WTIC –  Reversed lower, and look where it decided to turn downward.  I think OIL may still try to break above the 20 or crawl around it like past bounces.  If it can break & close above it,  that would be noteworthy.

My OIL chart from NOV 13 shows that Oil did hit a support area with divergence forming.

WTIC –  So while Oil pulled a strong reversal, Many energy stocks dropped too.  Last week energy stocks ran up 30-50% and yesterday some gave back 20% or so.  I did mention in last weeks report that “This area is for  FAST EXPERIENCED TRADERS  that are in front of their screens all day.” Bottoms are a process, and these 20-50% moves in energy stocks can happen in both directions. 

Some stocks got clobbered and others just pulled back, but still look like they may be bottoming.   For example  CRK, REXX ,  and a few others had strong volume selling.  BBEP,SWN , AXAS are not ugly yet.  A little more time is needed to see where we are in the bounce stage.   Like the theme picture,    certain areas of this market are being weighed down.

SWN-  Gap fill, trend line test?

NATGAS –  Natty sold off yesterday, and then recovered.  It is crawling along the 50sma and needs to break and close above it.  It reached oversold and does look like it is setting up bullishly.

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GOLD – Gold remains bullishly set up, as mentioned in prior reports. It made a higher high over night.Everything remains bullish looking,  BUT we do have a FED WED ahead of us. That gets tricky if she discusses  inflation increasing or decreasing.

SILVER – Silver is not making tons of progress, but as mentioned in prior reports,  it usually bursts higher in the second leg higher.  You can see in the Gold chart that Gold based (triangle) and jumped higher.  This is when Silver usually joins the move. 

GDX – Miners continued to move higher out of the shake out lows that I have been pointing out.

Some Miners are still at lows,  others have bottomed already and I pointed many out here on 3 or 5 year charts in the past  (  SA, NG, RIC, LSG, etc ).

African Miners continue to pull back for a day or 2 , and then move higher.  I wanted to look for entries, but it is not easy.     DRD, HMY, SBGL, are great looking, but have not pulled back enough to offer a comfortable entry. Buying at the 10sma was safe, but being this far above the 50sma usually leads to a good pull back.  THAT will probably offer a nice entry. GFI & AU  are African Miners too.  I like the set up on those 2, but they have under-performed so far. 

HMY –  Quadruple?

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CLGRF  is another Miner that is progressing quickly.  When these beaten down stocks begin to recover,  there will be great gains to be made.

CLGRF WKLY –  You can see that this is another one that bottomed out already.

ABX-  This one is finally gaining some traction. Roughly a $6 to $10 Move. 

NG & SA ran very well recently, but both gave up a good % of their most recent gains.

NG –  This is another Miner that seems to have already bottomed, and I posted this chart.  It has now dropped back inside that base.

Now NG has good volume and looks like it may re-gain the 50sma.  It could be bought with a tight-ish stop or buy a break out above the 50sma .

SA –  A lot of people want to buy this stock because of the recent run higher  (  $3 to almost $10 is a great run). This looks too weak and like a bear flag for me to get excited about it yet. I’m just watching it. 

  So in conclusion, Today and Tomorrow are scheduled Fed Meeting days.  The news should pretty much already be baked into the cake.   They are not expected to do anything, and the markets may rally on that,  but we know what happens after Janet Yellen speaks on a Fed Mtg Wednesday. We currently look set up to see the markets bounce , Oil Bounce, and with Gold anything can happen.    I have to at least recommend caution. I am in Miners and the count looks pretty early for Gold, but this is not the 1st daily cycle.   I may cut back on my positions going into Fed Wednesday.  If Janet mentions that inflation increased,  Gold could POP on those words.  If she says that inflation remains more tame than expected?  Gold sells off.  So you must choose how you want to be positioned going into a Fed Wednesday with the current market conditions being quite volatile for now.  

Look for strong stocks in a market sell off.  They can POP when the markets turn higher.

My post that ANFI was holding up despite the market sell off

ANFI Monday

SO For those that Like to trade…

EXTR –  Buy above the 50sma with a tight stop or buy here with a stop below the lows.  It did NOT crash when the markets fell apart, it should move higher if they Bounce / Rally.

~ALEX

TLT DAILY –  It is overbought in the stochastics ,  but  often just drops to below the 50% line. I’d watch the 50sma for support if it drops.  ( $122-ish)