Wednesday Jan 25th

Some of our trades are running and others have paused.  We’ll discuss this as we go through our market review.

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SPX – This looks like an inverse H&S and looks to be breaking out higher. The SPX and Nasdaq did hit new highs.

Let’s look at the Dow Jones ( Dow 20,000?)…

 

DJIA –  This was Jan 11th.   I thought that this set up would hit DOW 20,000 back then.  I was wrong. We did not get the follow through then, but was it just a temporary Pause?

 

DJIA – Well, with this B.B. Squeeze we could get quite a burst higher. I think that this set up is very bullish, but we do have the VIX down a 11, so it’s tricky.  A break out MIGHT BE a false break out over time, but it would be worth a try trading it with a stop below these lows and raise it as it runs higher ( For those inclined to trade the general markets).  The set up just looks bullish at this point.

 

USD – We could get a swing low anywhere around here, and if so, I would imagine that we would dip down into our dcl in Gold & Miners. I’d love to see the USD drop below 99.25 over the next few days instead.

 

WTIC – Oil looks like it wants to break higher. Oil and the general markets have moved in sync often, so we may get a move higher in both.

 

NATGAS –  This looks bearish to me.

 

GOLD – No change at this point.   Cycle wise, we anticipate a possible drop into a dcl.  Technical analysis wise- this is a bullish set up and we’d expect it to continue to move higher.  I’m watching the 10sma, as mentioned in prior reports.

 

SILVER – Broke the 50sma and back tested. Remains Bullish do far.

 

GDXJ – Still pushing against the 200sma and also holding above the 10sma ( so far). This type of squeeze action can produce a sharp move, lets hope it is higher.

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Let’s review some trade ideas –  past & present

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THM is a stock that looks like it wants to break out higher sooner than later. I have started accumulating it.

 

PLG –  THIS GOT INTERESTING TODAY. The stock was halted as they announced an offering at $1.46.  Usually price immediately drops there and digests the news for a while (see FSM, they announced one too). PLG  dropped to $1.51 and reversed, closing back above the 50sma.  The last ( and only other ) time I saw this happen, it happened to NAK, and I loaded the boat.  I felt that investors considered it a fair price and also think that price will be higher later. We’ll see what the rest of the week brings.

 

WRN From yesterdays report – a reminder. I’ll discuss this a bit more later in the report.

EGO –  From yesterdays report, many are consolidating sideways.

 

VALE – Reminder from yesterdays report, sometimes they break the 50sma as a shake out and then run higher.  Vale did this. I mentioned this because CLF closed below the 50sma.

CLF recovered its 50sma  ( I mentioned both CLF & AKS yesterday, and AKS gapped open and closed lower ). AKS Looks ugly but it could be a final engulfing.

 

The COPPER plays are running.  See TGB, WRN, FCX, TGB, ETC

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HBM –  On Jan 4th I pointed out this copper stock. It also broke that 50sma, but did a perfect 50% fib pull back & reversal.  It was a buy with a $9.50 target and some readers told me that they took it.  Congrats, I wish that I did, because …

HBM – Now it’s breaking out with excellent volume. This now has a minimum target of $9.50.

 

CLD –  This is trying to break out too. It’s on my watchlist.

 

GV– Notice this CUP & HANDLE.  I pointed this stock out a while back, but did not take the trade. I really like the old CUP & HANDLE, because that cup is a solid base to eventually launch from.  It bores investors and the sellers bail out & move on.

TGB was forming a cup and handle when I posted it in November and  this Dec 5th chart shows that it  popped in a big way.  There is more…

 

NOTICE : I pointed out that this new pop could turn into a larger handle too, in the bigger picture.  It was still at 70 cents.

 

Notice TGB did form  another type of cup & handle and then ran to $1.40 so far. My point?  These are reliable bases and patterns.

 

WRN–  So I posted and bought this and a few other charts along the way of WRN forming a cup and handle. We accumulated it at around the $1.00 area and it Popped to $1.80 quickly…

WRN –  And that POP has consolidated into a possible handle of its own.  This could be forming another larger handle and run the way TGB did.

AND AGAIN, THAT WAS LIKE THIS .

SO we see a lot of nice set ups forming.  I like to show how some are playing out, to build confidence that others may play out that way too.  Also I am still invested in Miners and monitoring GOLD & the MINERS as things play, still looking bullish in the long run here.  No change at this point.

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~ALEX

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You can skip this part if you don’t care about NAK possibly getting into a parabolic move–

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I do not know if NAK will go parabolic, but I pointed out that it might, so don’t get too cute and sell off your entire postion or you may get left behind.   I have been asked about a possible parabolic run in NAK, and how will I sell?  I don’t always know until I see what we have, but I’ll try to explain.   I have been able to ride a few of these runs in the past, and you will never forget it.  If you have been riding NAK from 30, 50, or 70 cents to now, it  may already be that beautiful trade that you will not forget.  Now let me try to address selling, and you may learn from my mistake in the past.  I tried to get too cute with one trade, if you know what I mean.

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For starters: I posted these 2 charts of a possible parabolic NAK move.

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NAK WKLY – It went from 2 weeks up, 1 week down, 2 up, 1 down and then changed into 3 weeks higher now. I was successfully trading out around 25% of my position on each top, and re-buying even more on the dips.

NAK –  However,  if this gets parabolic, it could get a bit crazy.

So I will never forget 2 parabolic trades that I rode in QTWW and PEIX in 2011.  ( QTWW has since been bought out).  I bought, traded, and rode these.  This is where I learned the hard way, not to get too cute. I sold my entire position a few times and had to re-enter higher twice.

 

This was my PEIX trade. I CANNOT REMEMBER MY EXACT POSITION SIZE, SO THIS STORY IS ACTUALLY WHAT HAPPENED, BUT THE POSITION SIZE MIGHT HAVE BEEN SLIGHTLY DIFFERENT.

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CHART #1 – I bought the base ( You know I love to do that when the volume pops). Notice that it moved from about $4.50 to $8 in 4 days! Let’s just say that I had grabbed  3500 shares and they almost doubled in 3 days, but then got cut in 1/2 in 1 day, as shown. I sold everything.  I thought it was done rising even though volume selling was light, I was out  near $6.50 or so  (Nov 1st). I didn’t get my double…

 

PEIX CHART #2 – The very next day you see that it gapped up from below $6.50 to almost $7! I jumped back in , buying it back higher near $7 , but now I didn’t dare to go as heavy ( Maybe now 1600 shares, less than 1/2 of what I held before). It then ran to $11 and did a reversal candle at the top as shown, so I sold it all near the close. Well, 2 days later it put in another huge reversal candle intraday, it reversed from $8 to $10!! It was acting crazy, and could go parabolic – I bought it back where I just sold it, but I was nervous because it was so jumpy. This time I bought even less shares.  It was now a lot more expensive, so now I had MAYBE 800 shares. I’m thinking maybe  1/2 of the last amount.

 

And it never looked back. Imagine if I held on to the 3500 original shares? I would have had 3500 x $28 in just a couple of weeks!  A parabolic run can get whippy, and since I sold it completely a couple of times, I had to buy it back higher.  I was nervous with each higher entry, so I bought less.  Now it was more like 800 shares. Still a great trade, but I sold at $21. The final trade was closer to  800 shares $10 – $21, rather than 3500 shares $4.50 to $28  🙂  TRADING a parabolic run is tricky. Sitting tight may be more rewarding despite the whip saw moves, until the top comes. Easier said than done!

 

Yet it looks SO easy to ride in hindsight. The pull backs look quick and uneventful when you look back, real time it may be scary. There is no good answer as to when the best time to get out will be. You will NOT sell the exact top.

This is why I learned to buy & Hold coming out of the base.  Buying NAK  at 30 cents, 40 cents, add at 60 cents, etc makes this easier to ride now. If you bought at $2.25 it gets a bit trickier. Nak is now at $3.32 and could get a little whippy.

There may not be a perfect answer as to selling a parabolic move,  but I’ve learned to at least sell ‘a little’ on the way up so they don’t take it all back, buy dips if it remains healthy.  My advice going forward?  It will be a learning lesson.

This is where I came up with the idea that as it runs higher,  I’ll sell maybe 1/4 of a my position at known peaks, and re-eneter on dips if it dips in an orderly manner, building my position up bigger and bigger.  Now that pattern in NAK may have changed, so I try not to get too cute and I won’t sell the entire position.  Surprises come to the upside in a parabolic move until it tops, and if you sell out completely, you could get left behind. I want to hold some longer term anyway, as core position.

1. If it runs quickly higher and your position is a large one- Maybe sell more as it goes higher ( 10% each day?) until your position is at core level?

2. Maybe use a trailing stop or look for a sign that the run is done.

3.  Hang on and try to sell it all with a large topping reversal candle  ( not easy).

 I think this will be a good learning lesson for you as a trader / investor.  How will you successfully manage your position. Anyone that wants to tell you that they sold the exact top?  It is a mighty slim chance, just make sure that you pocket some profits along the way if you have been in it for a while.  It is definitely a lesson in Greed vs Fear.