April 5th – Still Waiting

NYA – The markets look set up to break out higher, but we need to see some signs of strength.

You recall that I’ve been watching this…

XLF –  The financials still are not impressing me yet. I need to see a recovery.

USD – the Dollar is at a resistance point with the 50ma and a downtrend line. A break out higher would likely send Gold down into its dcl, but this may pause to build up steam.

WTIC – I expected a trade-able run to around $52 in OIL, so we looked at some Bullish set ups in SWN, OAS, LPI, WPX, etc.  These are good trades so far. This thought for OIL can still play out, but as you will see, many of the energy stocks are continuing to act bullishly. People did think that this was Oils low, but it DID break to a second low shortly after this, and I might need to consider whether THAT 2nd low was an ICL.  I will discuss this in a future report, for now “long Energy’ is working. I’m watching this play out.

WTIC – Here you can see that Oil broke to a 2nd lower low after the chart above was drawn.  OIL IS ALMOST AT THAT $52 AREA, and the RSI is above 50% (Bullish).  The Energy stocks that I had pointed out as bullish set ups after that 2nd low are still doing well ( Bullish), and now other energy stocks are setting up nicely. OIL itself has made this run higher  ( as expected)  but we are at a point that is starting to really look bullish.  If this breaks out strongly from here, just stay long & strong and we will take a closer look at the bigger picture.  I’m going to discuss OIL and a few of our energy trades at the end of this report again. Let’s see the XLE…

XLE –  Quite a few of the leading Energy stocks took out there 50sma (Bullish). This looks like it may want to finally break out too.  IF the XLE breaks out and runs, we need to consider that OIL may have put in an ICL, or that Energy stocks are leading & will put in a higher low, resisting Oils sell off.  THAT WOULD BE A GREAT BUYING OPPORTUNITY.

NATGAS – I bought a position in NATGAS and sold it recently ( I’m thinking that I was too early as shown below).  Now I need a dip to get back in. Let’s have a reminder of what I was looking at.

NATGAS – MARCH 31 I pointed out that these looked similar and we could be ready to drop to the green arrow. I wanted to buy NATGAS on the next dip  ( And I still do).

NATGAS NOW – Even back then we had a solid pop and then that drop, so maybe now we will get a dcl on a back test of the 50 & 200sma after a pop?  If not & it just runs higher like NATGAS can, I over-traded this, but I was leveraged and just wanted to lock in gains.

PRECIOUS METALS

GOLD – With 2 R.T. Daily cycles, the 3rd daily cycle can make a new high. It did slightly Tuesday and then dropped at the 200sma. Is it done climbing? I can’t tell, but I am still expecting Gold to dip down into a dcl, but it is hard to wait for that to start day after day. Day 17 – Gold usually makes a low by day 26-32 now. Upside should be very  limited under these conditions. The drop could start at any time, but is a strong pop to $1300 out of the question and then a drop into day 26?  It is not out of the question because GOLD acted correctly with 2 R.T. Daily cycles.  Miners did not act bullishly.

GDX – The MINERS put in a L.T. 2nd daily cycle and they should be weaker. You can see that GOLD is at its Feb highs, and Miners are only 1/2 way there.  Miners are not leading and usually that is a sign of weakness. So far the Miners are pushing on the 50sma, but they have failed to move above it with conviction.  Occasionally it does break above as shown, and rolled over later. We could see this type of  fake out if Gold does break out.  I have been short GDXJ at the 50sma, but shorting is tough during a topping process, especially in miners.

GDXJ – I’m just showing here that GDXJ has broken above the 50sma and still rolled over in the past. Notice that the following drop into a DCL or ICL is usually sharp & deep. That is why I wanted to build a short position at the 50sma. Once the selling starts, it is hard to jump on a short position. This trade is not for everyone, since miners can POP before the drop.

GDXJ CLOSE UP – I still feel that any  POP from here could happen but would also be short lived. It would then roll over into a dcl. The MACD remains bullishly aligned for now. In Feb when price dropped, the MACD crossed under first. That hasn’t happened here yet, so a pop is still on the table.

GDXJ SHORTING

Notice that Shorting Miners is a difficult process, because they linger at their highs, they even POP before dropping at times, etc.  Often if  you wait until the selling starts, it happens so quickly that you can’t take a short quickly enough. If you get in early & try to build a position, your mind is riddled with doubts.  This trade is not for everyone.  Yes, GDX & GDXJ can POP again into say Day 22 before falling into the next DCL / ICL. Do not short if it is not your thing, maybe you can go long energy.  🙂

Nothing has changed, we are just waiting for things to play out to a finish, but the in between action is boring.   I want to buy the dip when it arrives.  I am still short at this time, but if you are in this trade and uncomfortable,  just get out.  JDST is around $14 and it was at $13 when GDXJ was at the 50sma, so exiting and waiting is an option.

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~ALEX

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SWN – The big picture on SWN looked good, so this was a low risk buy.

SWN – I got too cute and took profit at the tag of the 50sma.  I was trying to trade around a dip off of the 50sma, and then buy the dip. When it dipped, it looked as though something may be wrong, so I waited to buy it and then reversed and surged higher without me. This chart looks great.  That 1 day dip was not enough for me to enter comfortably, but he weekly chart still looks excellent and this will probably be much higher over time.

OAS – at $12.63 OAS rested down on to a support area on the weekly chart, and on the daily chart it was  tagging the 200sma. This is a very bullish long term set up.

OAS also ran to the 50sma and just broke above the 50sma and above the down trend line.  This is bullish follow through and I am seeing that type of action in several Energy stocks.  THIS is why that double bottom undercut low in Oil may be noteworthy. These stocks are being bought up.

DNR–  This looks like a bull flag, I may buy this today.

LGCY FROM YESTERDAYS REPORT –

AXAS  ( And AREX) are also acting well.  AXAS had a bull flag but then it dragged on and became more of a pennant consolidation after a nice little run.  Yesterday it Popped. It may be at resistance with that 50sma, but that consolidation could allow it to just pop right through the 50sma, like some other energy stocks have. I’ve seen several Energy stocks set up this way and then have the follow through needed to break out.  I’m liking the energy sector again.

THIS COULD BE SIGNALING THAT IN THE SAME WAY THAT MINERS OFTEN LEAD GOLD, ENERGY STOCKS COULD BE LEADING OIL TOO.  THIS ACTION COULD INDICATE THAT THE LOWS ARE IN FOR ENERGY STOCKS.  THESE ARE BULLISH SET UPS AND ENERGY STOCKS MAY BE THE PLACE TO GO LONG RIGHT NOW. I WILL BE LOOKING FOR SOME MORE LOW RISK SET UPS  GOING FORWARD.  URANIUM IS STARTING TO SET UP AGAIN TOO.

My next report will discuss why I’ve been looking for an ICL in the future for Oil with a possible drop to the $43 area. Since the Energy stocks are acting this way, we will be looking at the idea that maybe that was an ICL in Oil on that 2nd sharp undercut low.  I will discuss in the next report a few reasons why I did NOT think that it was time yet, and why it could be possible that the LOWS are in place.  If so,  we have MONTHS of upside and you’ve hardly missed a thing if you missed the trade set ups that I recommmended in OAS, SWN, WPX, LPI, etc.  These could just be starting their next run higher. realistically,  we caught the lows in SWN, OAS, LPI, WPX, and a few others.  Now you can just ride them or buy the next dips,  flags, consolidations, etc.

MACK – Mack was pointed out a few days ago. It does look ready to break from this base, but these can just continue to trade sideways within a trading range too, so I drew both possibilities for Rob in the comments section yesterday with this chart.