Fast Trades

Just a Quick market review and then I want to discuss some fast trades for those that like to trade, but aren’t ready to buy & hold quite yet.

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SPX –  I discussed the reversal and likelihood of that low to be in place for a bounce / rally.  Thursday did put a swing low in place and the timing is right for a low.  We do not have a break above the 10sma as confirmation yet , so the safer trade lies ahead, but  some may have wanted to buy the swing based on timing, and place a stop below the Wed lows.

SSO, TQQQ, etc can be traded coming out of the lows, with a stop just below recent lows.

For quite some time I have discussed that I expected a double top in the dollar on a weekly ,  and this pattern to play out on a daily.  My Dec chart below showed the similarities of the March Peak and the current one, with a final break higher before possibly rolling over.

The pattern is playing out as expected so far,  with a lower high Thursday & reversal.   The USD today looks a lot like the double top at the March highs. A drop in the dollar should help Gold / Miners.

My NATGAS chart from Yesterdays report.   No change yet, but we dont want to see a bear flag form here,  we want upside movement soon.

WTIC –   I think that this is a swing low with capitulation volume.   I have pointed out that these daily cycles run up to the 20sma and find resistance until we get the ICL (LOW) .  We have a swing low in place and MANY MANY Energy stocks took off.  Is this an ICL or DCL?  Timing would say 1 more daily cycle could occur before a final low closer to Early Feb,  so we’ll watch how this plays out.   Watch that 20sma  and we’ll discuss it as we go.   I will discuss trading energy stocks at the end of the report.

GOLD & SILVER have not changed,  see yesterdays report.

GDX-   We do have a swing low, but no break out above the 10sma. I still expect higher prices with Gold & Silver,  so why is GDX lingering at the lows?    I just want to point out that it has behaved this way in the past before moving higher.    It has lingered at prior lows, so we will watch for an upside burst.  

I took positions ( I dont ever recommend NUGT , but I took a trade in NUGT Yesterday) with the additional ‘Gap Fill’ Thursday – I pointed out a gap fill  in Thursday report.  It seems so low risk with lows right below,  so  I will keep a stop below the 19th.  Many are getting bearish on Miners with this pause ,   and that is what we want to see at lows.

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I wrote about “reversals” in my report too.  I mentioned that the safer trade is buying the follow through above the 10sma, because many reversals fail on the way down until you get to the real lows  of an ICL  or even a DCL. We are seeing deep sell offs,  but I believe we are at least at short term  lows for OIL.   ICL  or DCL remains to be seen, but even DCL’s have made it up to the 20sma, and energy stocks have made rather  huge gains for FAST TRADERS.

Lets discuss those trades for experienced ,  fast traders. These may be  only 1 or 2 day trades for some.

WLL –  Yesterdays report I was showing  fast the 1 or 2 day gains can be ( $8 – $11 in 2 days), but they still lack follow through above the 10sma until lows are in.  On the reversal in this chart,  it could still POP to the 10sma and gain 20+%,  notice the positive divergence in the MACD & RSI.  That is a big 1 day gain.

WLL –  And it did gain another 20% Thursday,  yet remains very oversold. If Oil continues higher,  these trades could run even further, so I wanted to discuss these trades –  BUT – know yourself and your trading ability.   This isnt buy & hold yet, in my opinion.

These types of trades may not be for those who are not in front of a screen all day.  These trades can be fast and may need your attention if they turn against you.  Its a trade where you jmp in and try to scalp a part of the pop higher that may be only short covering.      I just need to put this warning here so that everyone doesn’t feel comfortable that Alex said I can make 20% a day on each trade.  NO.  These are risky trades until OIL really shows proof that even temporary lows are in.  Even then, some of these companies could go bankrupt or have other issues, but for those watching trades,  you can often enter near the lows and grab a quick short covering burst higher. 

  lets review a few things that I look for.  

1. For example : The WLL chart above shows the Bullish divergence that I prefer to see. 

2. I also want to see the whole sector moving together,  not just 1 or 2 stocks popping.

3. I like to see a deep sell off  to oversold and a reversal that takes back at least 1/2 of the candle at the lows. I usually  buy that reversal for a trade – often if the divergence is there and the sector is due for lows like Energy.

Lets look at charts.

AXAS,  Look at that Divergence and the reversal candle Wednesday,   and  OIL was deep in its count.  I missed the reversal candle as a buy, but I bought it when it went green Thursday a.m. for a follow through trade.  There are others…

UPL  –  Same divergence, lower lows and the MACD higher.  This was 1  reversal day off of the lows and then a pop, so this might have a  more upside if OIL keeps moving higher. 

SWN–  This had Amazing divergence and a higher low, and now has strong follow through

ECR –  Divergence & Capitulation volume lows. Little reversal candle and then a Big Pop.  These could be short covering,  so this gives you an idea of what to look for. The reversal candle before the pop.

EXXI –  That capitulation selling into a reversal candle at the lows produces a good short covering pop when the sector turns.   This has no divergence,  so I’d be cautious here.  These often tun down at the Moving Averages & base out.

LPI –  This had a reversal candle with High volume & a bit of divergence. If OILS lows are in and it moves higher for a few days,  this could continue higher .

AREX –   Recently Arex moves higher for 5 or so days at a time in the past.  This was just day 1.  This is a buy candidate for that type of trade.

SGY –   I’d still buy this with a stop at the lows.  This could be just starting to move too.  It doesn’t look like much, but went up 12%. The blue arrows are showing that the 1st day of the run pops up and doesn’t close at the highs  (Sells off into the close).  That was fine,  it still ran higher for a couple of days.

ARP –  This tiny move looks like nothing , right?   Up 18% !  Under $1 and some do not like that,   but this looks set up to move. Double bottom lows with strong bullish divergence  and still oversold.  I would buy this with a stop under the lows. Just a trade,  and yes these are all risky with fundamentals being weak after this sell off.

QEP –  Nice pop, Strong volume off of the lows.   Problem is that  this one in the past Popped and went sideways,   and popped and stalled etc.  Tricky.  In Dec when Oil bounced, it did move from $11 to $14. Good volume.

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LGCY –  A WARNING NOTE:   This one has a perfect set up,  strong divergence!   I think I would have bought this one,  but….They had news in after hours and it gave up the whole 25% days gains.  It is back at $1.   It’ll be interesting to watch this one Friday .  THIS is why I feel these trades are risky and only for experienced traders.  They need constant attention.

CJES –  I look at a set up like this and I usually pass on it.   Good capitulation lows and reversal, but it’s just not the best set up.  Why?  It has no divergence and the MACD is bearish.  It still may bounce 50% or more,  since it is so oversold.  Actually a POP to the 10sma near  $3 is almost a double, right?     I do like to see a bit more of a bottoming process and divergence, but this could V-Bottom.  It could be bought with a tight stop.

You can see how quickly these moved , rising 10%, 20%, even 50% as the day went on.  I showed REXX Wednesday  and pointed out almost a 100% intra-day move.  What did it do Yesterday?

It stalled while all the others ran.  This could have been bought anticipating that it will pop again, or a break above the overhead Moving Averages could still be bought.

 I like BBEP right now too. I bought it yesterday but I didn’t sell it.

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SO REXX shows us that some that POPPED on Thursday may stall or even pull back today.  Those may be opportunities to try to catch another Pop on Monday.  I just wanted to point this out because if OIL put in a Low here  ( Even just a  DCL ) It can rise to the 20sma or go sideways for a week or so.  That can allow some FAST trades in Energy stocks   for experienced traders watching their positions.    I look for those coming right out of their lows .  Since these are moving up 20-50 % in a day,  you can scalp some quick trades while waiting for OIL to show what type of lows it has put in place.     SOME may want to buy & hold for a few days, but remember  LGCY,  you can see that a little bad news took those gains back quickly.   This may not be BUY & HOLD yet for some, but also these may run higher for a week in stair step form.     Also using  tight stops may repeatedly stop people out.  I use mental stops and watch my positions until I get some breathing room.

I just wanted to share this idea with the fast traders.  We may have a few more Pops in energy stocks,  and some may move for a week or two.   I think the lows are in for the markets too,  confirmation is a close above the 10sma.   I also still see GOLD & SILVER as bullish,  I want to see Miners start moving higher.    See yesterdays report .  It is very difficult trading right now,  so CASH may be best for some until we get a little stability and lows that seem a bit less shaky.  I’ll cover more in the weekend report. 

~ALEX

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