It Happens

Have you ever  been thrown off of a Bull?  Maybe your stop was triggered only to see that stock turn and move higher.  What can you do? We’ll discuss that after a quick market review.

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SPX –  This was my May 5th chart.  I have been pointing out that the SPX  ( And general markets) are due to rally. 

SPX as of Tuesday – That is what we see happening as the markets were green for the past 3 days.

 

Notice the DJIA  ( Dow Jones).   This pull back was more sideways than a steep drop, it remains close to the May 2015 highs.   That was not even close to a 38% pull back,  so we may be in for a strong rally from here.  The sellers were not able to push it down,  and all I heard was negative news about the markets and earnings.   “Climb the wall of worry”?  The markets might rally to new highs and really run when most are not expecting it.

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IBB April 4– The IBB broke out of a base in March , and I had been anticipating that as a bullsih sign with the rally in the general markets. I pointed this out here on the April 4th chart.

 

The IBB back tested the break ( Still good) , but then just meandered along and then broke back down back inside of that base.  When a “Good set up”  that I feel is bullish for “certain reasons” fails?  I leave it and keep an eye on it as time goes on.   Lets revisit the IBB.

1. So right now the IBB is back inside of the base, but trying to break out again.

2. It has a series of higher lows too, and that is bullish.

3.  The volume is light and this isnt strong looking, so it need more time to prove itself to me. Time will tell.

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WTIC –  Oil has provided no change since my last few reports.

 

NATGAS – Basically NATGAS has moved sideways, being pinched between 2 major moving averages.  It still looks like this could play out in a bullish manner, but as time goes on, it will want to dip into a DCL.   Maybe that is just a drop to the 50sma,  however…

 

I have warned that the 3x ETFs are NOT for long term trades when a sector consolidates, moves sideways, or bases out.  Many that write to me play NATGAS by using the 3xetf  UGAZ. 

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See the above chart again.  Notice that as NATGAS has moved higher out of the lows,  then sideways,  then  higher, and now sideways,  it is well off of its lows.

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This is UGAZ,  the 3x etf for NATGAS.   DECAY over time does NOT put this well off of its lows.  This goes for NUGT, JNUG, DUST, JDST, LABU, UGAZ, etc. etc.  Please understand how these work over time, before you jump in and plan to ride it.  If you do not have a trend,  they will decay.

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CRB – Back on April 25th As the CRB approached the 200sma,  I had a feeling that it would crawl along the 200sma,  and tag the 50sma eventually , building steam to break out higher  (Hopefully).

 

Here is the CRB – Basically it has done just that.  No strong break above and run, no solid drop. The MACD kind of looks like it tried to curl up with todays push higher.  lets zoom in…

 

CRB –  Is the CRB  preparing to break above the 200sma? If it were to do so now, I’d think  that Monday was a DCL, and  we have started the next daily cycle. The 1st daily cycle was really long, so I would expect the 2nd to balance that out with a shorter one.  Obviously there is still room to drop and tag that 50sma, so I stayed patient and watched this play out.

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CRB CYCLES – We have a trend line break on the break back below the 200sma.  A trend line break overhead  ( a move above the 200sma) would make me think that we have left a DCL behind. 

I can also picture a drop to the 50sma into a DCL , and then a run higher,  so we need more time.

 

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Time will tell, for now it is rather 50 / 50.

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GOLD & MINERS

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GOLD  –  It is still above the 50sma, but the MACD shows weakness on the recent climb 

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GDX –  I still see weakness here, although the Miners jumped higher yesterday.

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I mentioned in the comments section yesterday that what really looks good is SILVER and Silver stocks like  AG, EXK, etc.   They keep running, consolidating , and running.  As a trader, I love those set ups, but with the dollar moving higher,  and we are expecting a drop in Precious Metals?  I cannot recommend the trades as low risk,  but I may take a couple as a trader until I get bitten.  So far,  those trades are still working out.  It is a strong move out of the lows.

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EXK –  Many of the Miners have run higher, consolidated, run higher, consolidated, etc.  So it is tough when you dont see them falling back to stay away, but the consolidation in the later stage bases are a bit looser and the RSI is threatening  to break 50%.  I am still expecting more of a pull back, but even with the dollar run the past few days, these are not ugly.  I look at this and remember what CLF did and I can only hope that we see that here in this sector.   🙂  Right now,   they seem to be getting bought up around the 20sma.

 

 

LETS DISCUSS TRADE SET UPS

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  With the recent commodity sell down, I posted the Theme picture.  I got bucked out of my CLF position.  At this point,  we really do see what could be called low risk entries.  Many have landed on their longer term uptrend, and the 200sma, so do we get back on the Bull when it bucks us off?   I hate to rush right back into a stock that has stopped me out or gave me a reason to exit, but sometimes there is valid reason to reassess.   Lets discuss at a couple of ideas.

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CLF –  Like I said, I hate jumping back into a stock that I just sold, but my reasons for selling were rule oriented.  Look at that drop, that was CLF falling off of a CLIFF.  The 50sma was being threatened, and  I bought higher.  I had to stop out.    Now the dust settled a bit and we can take a look.

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A reason for entering could be that when the selling  stopped, it has stopped at support that can now be used as a low risk stop.  CLF is above the 200sma and possibly the new longer term trend line is shown in purple.  It may only go sideways for a bit below the 50sma and above the 200sma, or it could move higher if Buyers step back in.

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VALE –  Same story here.  A 50% pull back to the 200sma and the up trend line. Oversold. So you do see the bullish look and low risk entry, right? As long as we recognize tht volatility could come back and we need to honor stops.

There are other stocks that sold off and are starting to look similarly set up.    I am NOT saying that it’s a guarantee that the selling is over.  It got a little volatile in the commodities and the selling has exhausted for now, but support could eventually give way too,  couldn’t it?     What I am saying is that you have a lower risk entry here that you can quickly cut your losses from if it goes against you.   If selling is complete and this support holds, this may be the next lowest low for a while.

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FLIP SIDE:

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So I can also picture this bear flag forming over time, but dont be ‘Afraid to trade’.  I just wanted to point out the possibilities.  There is always risk, but low risk entries protect you if you honor your stops.

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 I did buy CLNE in anticipation of a possible break higher.  It is currently at resistance.

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CLNE – released earnings and I bought it as it re-gained the 50sma. It is pushing on the overhead resistance with volume.  I added yesterday to my position at this resistance area too.  Some may want to buy a break higher or buy it here, if this trade interests them.   My stop is slightly below the 50sma and even a POP to the 200sma would be roughly $3 to $4.00 – although CLNE is now $3.25

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I also Bought IPI.  They released their earnings and the entire sector seems to be perking up. Here is what I am looking at.

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IPI WKLY –  I like watching tight bases that show signs of breaking higher,  not lower  🙂  If you have been here for a while, you know that these can be explosive. Not always, but we saw it with LGCY.

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IPI DAILY –  Break out and back test possible. This ran from $0.90 cents to $1.50 in April. That is 65%. This looks like it could easily run to $1.50 or $2 again.   Again, no guarantees, but I’ll take that trade with a stop below $1.00 and earnings already released. 

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SO that’s todays wrap up. Monday and Tuesdays trading behind us and the picture gets a little clearer each day.  Commodity selling stopped for now, we’ll see if this support area holds.  Energy stocks are consolidating and seem fine. I’ll be watching quite a few areas, but I’m trying to be patient and wait for some good set ups to present themselves.  Maybe Miners will finally start selling down instead of moving sideways? Time will tell. Enjoy your Wednesday trading.

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~ALEX