April 7, 2016 – Signs Of Strength

Signs of strength are popping up everywhere…

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April 4th – I’ve been expecting a dip down to a dcl.

We had the Fed Minutes released today and the SPX ( or markets in general ) is NOT breaking down. These markets are not breaking down at the 13 sma, and they look like they still want higher prices. Is this just going to go sideways as a consolidation?

Consider this too…

You may recall : A while back I said that for a couple of reasons , I suspected that march 27th could be a DCL.  I said that due to a few indicators that I use that indicate where a DCL could be.   Well, it seemed too early and too shallow , so I wanted to continue to be cautious and wait for a deeper dip.  THAT MAY NOT HAPPEN.  MARCH 27 could be the DCL, and this market remains strong. 

EDIT: I awoke to futures down, but each morning sell off has been bought and the markets keep closing green, so I am still thinking that we could be on day 9

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We have been discussing / anticipating the break out from this base in Biotech.  IBB, XBI, etc . What a nice break out today, a Real Sign Of Strength!

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WTIC –  This was Tuesday with a reversal.  We  have been stalking a DCL in OIL for many many days. A day 25 high makes it likely that this will be Right translated  (R.T.) . So we should run to new highs from the daily cycle low.

We have a swing low , and I believe we have our DCL in place.  The follow through was a nice sign of strength.  Very R.T. –  Energy stocks are looking good again and the last time they ran, the gains were HUGE.   More on that later.  OIL IS A BUY (  USO, UCO, ETC).   The volume was high, but it was only 700,000 – ignore that spike.

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CRB – I’ve been watching the CRB for a DCL too.  It is deep in its time to find a low.  This was  Tuesday, April 5.

CRB –  April 6th, A SIGN OF STRENGTH  🙂  This is a swing in place too and cycle-wise this is also R.T.  (Bullish). That could be a shake out at the 50sma, to lose the weak hands.

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 GOLD –  Speaking of Signs Of Strength, this is also holding up very well. If EVERYTHING is looking so Bullish,  we may want to keep our eyes on Gold too.  I expect a deeper drop, but as mentioned in yesterdays report, some Miners are set up in a high consolidation that is very bullish looking.   They are showing a sign of strength too, by not selling off.

Notice the 50sma has held. If the overhead trend line breaks,  I have to think that this can run higher. EDIT: I woke up to Gold at $1240 

I want to remain patient in the GOLD , SILVER, MINERS area.  I still have to expect a deeper drop into a DCL,  but that doesnt mean that the Miners will drop.  Some are just consolidating here. For now I am focusing on that red trend line overhead on Gold in the above chart.

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Conclusion:   We are seeing Signs Of Strength almost everywhere after a good healthy sell off in many sectors.   It seems to be the clearest in The Biotechs, Energy and the CRB.  I believe we are seeing the pullbacks and consolidations of our first run up in OIL/ Energy and the CRB come to an end.  That first run higher gave us some great gains in Energy and Commodity stocks.  It could be time for round 2.  Also the Biotech sector is catching fire, I’ll discuss that a little too.

( For the sake of time, I want to release this report at 7 a.m. Eastern, but I also want to add some more charts.  I cannot send a separate email alert for the same report, so please check back in a while and I will have added some more charts below. I will also write in the COMMENTS below this report  –  saying when I am finished. )

~ALEX

 I have already pointed out many of the commodities endlessly as they pulled back, so to save time, I  will just show CLF right now.

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I wanted to post some of the set ups in ENERGY STOCKS. As you look at these charts,  think to yourself OIL just sold off for 9 days in a row. Do I see signs of strength here?  I am showing charts using technical analysis that are properly setting up. If you are concerned about fundamentals, do some additional research. I trade based on charts, keep positions reasonable, and spread them out into a basket. These performed excellently on the last run, when their fundamentals and future hopes were probably ugly. 

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OAS – OAS ran up almost 170%.   On the pull back it remains over 100% off of its lows.  Yes it is up 13% yesterday, but it could run right to the 200sma and even break out higher if OIL goes above $40 again.

WPX –  This correction is running uphill. Higher lows.

LGCY – I wanted to point this out on April 1st, but didn’t post it because I thought that it might be too soon and people would jump in early.  I have been watching for a trend line break , and yesterday we got one.

WTI – Quite a run at the end of February  ( Short cover?).

EMES – I want to show you this base. We saw a 200% + run, and a pull back to the 50 sma. 

EMES WKLY –  Now check out how that move looks in the big picture.  THAT was a 200% move?  In time, if this company can pull it together and Oil moves higher, the gains could be great.  “IF” 🙂

EMES from 2014.  So , this is a FUEL PROCESSING COMPANY.  They were involved in ‘sand’ and ‘fuel’ processing, so sort of a duel operation.  They Mined and produced silica sand for fracking, so you can understand why their business slowed right down. This company must have had some serious business losses to drop this much, but it has been forming a base now. They expect a recovery, but of course they’ll say that.  I am watching this one .

ERF – NICE CHART SET UP. Solid consolidation. 

SM – Solid consolidation.

AREX – Some of the cheaper juniors are showing signs of life

SYRG –

CIE –  A really tight consolidation can become explosive when they break higher. 

OK-  Please dont get overwhelmed.  In the past I got 1 or 2 emails saying something like, “So many choices, I dont know what to do.  I was looking at CHK and thats not on your list, but I liked it. What should I do?”   ( CHK looks good above the 50sma).

1.  I have not included every good Oil/Energy set up, there are many and your watchlist may be used in place of these. 

2. Yes, I know that you cannot buy each one of these. I am giving people choices,  these all look like bullish set ups as OIL looks to have put in its DCL. There are also others.

3. You didnt buy it right on the 50sma and now it bounced up 7%. Too late?  No, That doesn’t matter when these can run 40-100% +.  If Oil has put in a dcl, the run  can last 30 – 45 days.

I buy a small basket to minimize risk. These set ups are considered lower risk, because the down side using a ‘stop’ is contained. The consolidations can lead to nice run higher.