Friday – The Oil Leak

Friday, the last trading day of the week.

Well, honestly the Oil leak that we experienced yesterday was no surprise to most of my readers.  I expected that drop and I wanted to point something out from here…

WTIC – This Doji was pointed out yesterday as a topping candle. We had an OPEC meeting that would review possibly continuing with cuts. Could this drop if they agree to continue with the Oil cuts?  Yes, it was due and even though OPEC agreed to continue with the Oil cuts, Oil sprung a leak.

WTIC – One thing that I want you to notice is that often when OIL has that one big 3 or 4% slam day ( see red arrow) ,  it doesn’t usually bounce like many other sectors do the following day. It may bounce  intra-day, but often that OIL SPILL  just continued to sell off day after day in the recent past.  Oil is overbought and has plenty of room to run lower.  Thursday  DWT, DRIP, DUG, and ERY were all great trades from that DOJI top at the trend line.

OIL & ENERGY STOCKS

OIH (and XLE) – Almost daily I have been pointing out this weakness compared to Oils rally. The OIL & Energy stocks were just not finding real buying power even though Oil was rising in price.

XLE May 19th –  A week ago I was showing that the 50sma had capped price again, after a false break out in march.  I wrote on the chart that I wanted to wait & be patient.

MAY 23rd–  Oil was green, but look at OIL & Energy stocks. This was still warning that Oils rise may not be real.  We’ll see how this plays out from here.

XLE – The XLE dropped basically after tagging that 50sma again, as expected. If Oil itself continues selling down, I want to see how Energy stocks and the ETFs react this time too.

You may recall that I did point out some possible  ‘leaders’ in that sector, since they seemed to be acting stronger than others  ( ERF, BTE, RES)   I said that I was NOT buying them yet, but I wanted to monitor these stronger ones as things played out, since I was anticipating a pull back in oil. 

From the comments section Wednesday: Now I want to watch how these hold up.

SPX –  That ‘slam down low’ cleaned the plate of bears and sellers the reaction upside has been continuous.  It is hard to find sellers at new highs.  The SPX is breaking out to all time highs, similar to what the NASDAQ did weeks ago.  I expected this to slow down and eventually dip down into a DCL, but it is finding buyers after a long consolidation, and that may be the dcl. Most other 1 day slams gradually rolled over, but semi-loose trailing stops work best in situations like this.

XLF –  This still stands out as concerning to me so far.  The XLF did break above the 50sma Thursday, but then it dropped back down, so now we see a doji at the 50sma. It now also looks like a bearish rising wedge. The XLF is just not in sync with the General Markets, unless it suddenly breaks out higher.

Thursday I also pointed out that GOLD looked like a legit Bull flag here on day 11.

GOLD remained in an uptrend.  It is breaking out on day 12. Again we see that GOLD is much stronger than Silver and the Miners. A normal price target here would be $1300, and that would make this 3 R.T. daily cycles in a row, plus another new high in Gold.  This would be happening while SILVER & THE MINERS sold off and remain fairly weak?  The Miners peaked in Feb and made lower lows and lower highs in March & May so far. We just have to see how GOLD plays out, and how the Miners react to it.  This is NOT normal.

GDX –  Lower highs and lower lows, and is in a downtrend. My observation has been that  GDX cannot close above the 200sma in a meaningful way.  GDXJ cannot close above the 50sma in a meaningful way. IF THAT CHANGES with Gold breaking to new highs, we will conclude that it is bullish and have to react to that.  I was being patient and haven’t gone short yet. I said that I wanted to wait for a possible tag of the 50sma area GDXJ, and 200sma GDX. Anyone that went short ahead of me should have their stops in those areas.  If Miners do not react to Golds rise, it could be a fake bull flag break out?   These charts were from yesterdays report and show those Moving Averages.

You can see that a similar sideways frustration occurred in the last daily cycle.  This is why I wanted to be patient and wait before shorting the miners.  GDXJ closed above the 50sma on day 26, but still did not make a new high! It remained L.T.  We’ll see if the 50sma & 200sma still hold down the Miners.

In yesterdays report, I went through and pointed out with several charts that various Miners are showing pretty big  ‘differences’ at this time.  It is as though they are all telling a different story.  Some were near the highs ( RGLD, GOLD, ETC) and many others are still near the Dec ICL lows. Some look awful, others look fine.  Yesterdays report covered this in detail, if you need to go back and see what was discussed there regarding Miners.

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 Friday is the last day of trading before a 3 day weekend in the U.S. markets. Obviously there will be a lot to cover in the weekend report.   The last daily cycle in Gold was actually around 41 days long, so to be Left Translated, Gold could even peak on day 13, 14, 15, etc.  That said, Gold should not be allowed to make a new high above the April highs here. So far GOLD is in an uptrend with higher highs and higher lows.  Silver and Miners definitely are in a down trend  and they are weaker.  From the looks of Silver & Miners, this move higher by Gold has been a solo act at this point.  That is very different from normal expectations, and reminds me of OILs rise without the energy stocks.   We’ll see what Friday brings our way.    Enjoy your Friday trading and have a great weekend.

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~ALEX

Yesterday I showed JBL and compared it to TTWO.  I said that it looks ready to break out after a shake out below the 50sma in a similar fashion.  Let’s review.

TTWO _  April 20th, The break out in TTWO was pointed out.

TTWO – The solid follow through $60 to $77, about 25% in a month.

JBL – Yesterday,  I mentioned that with this long consolidation, it could be a break out after a ‘shake out’ at the 50sma.  Is it time for JBL to run?

JBL –  So far, so good, this may be ready to run like TTWO has.  I’d put a stop below the 50sma, because it should not go under that point again after that shake out.

CYTR –  I liked this base and Bought it at about the $0.48 average area, and posted it real time in the comments and in the next days report.  I was asked about it in the comments section 2 days ago and I said that I am still holding it.  I like this set up.

CYTR – Notice the 10, 50, & 200 sma are all piled up together and acted as support. That is usually bullish and this surge was 21% on Thursday.  They are releasing news next week that could affect this stock Bullishly or it could sell off  ( sell the news?), so be aware of that. If you bought this with me, you may want to sell a partial if your position is sizeable.