July 28th – Bungee Markets

We all watched the markets slam down quickly mid day on Thursday, and then they rebounded back a bit as the day went on.  Bungee Markets are not all that fun to ride, so let’s take a look at our Thursday trading…

SPX –  This isn’t the first time that this has happened, and the last few times the markets took a dip, they dropped to the 50sma. Day 19 could be a topping area.

NASDAQ – I just realized that 1 of the indicators that I developed for the Gold market seems to be able to predict when the markets are more vulnerable to a sharp drop as they climb.  Notice that the indicator also usually goes UNDER the zero line by the time the drop is complete, so it looks like we could drop a bit more, maybe to that 50sma.

NASDAQ –  You can see that these drops are not as rare as some would think. The bull is never THAT easy to ride and when the slam down comes along, it takes many days of gains away with it.

NASDAQ –  The last 10 days of trading were gone within 1 hour of the drop again. I’m sure that many ‘traders’  got stopped out, while the longer term  ‘investors’ probably had their stops under the 50sma, not watching the wiggles.   Then the market moved higher again into the close, even recovering the 10sma.  The last time that it did this in June, it worked out a bottom around the 50sma, so the selling may not be done. The last 2 times that the NASDAQ dropped, it also erased all of the recent gains in May & then in June.  Easy to make money, hard to hold on to the gains on this bull.

IYT –  So when you look at transports,  they didn’t even drop that much in June, but this time they dropped and did NOT recover.

TRAN – Breaking the June lows, they closed near their lows yesterday.

SO you can look at some of those charts, and the damage looked real. See  JBLU,  FDX, LUV, UNP, UPS, KNX, SAVE, etc.

UPS

LUV

XLE –  Oil itself has been doing well, up near 50 again.  The XLE is FINALLY really showing signs of recovery above the 50sma too.

XLE – Real signs of improvement can be seen in the big picture. The down trend is being broken.

NATGAS from JULY 11 -After a capitulation low, Natgas turned up sharply and the indicators that I use to test if a a low is possibly forming said that the lows were likely in on that drop.  NATGAS broke above the 50sma and then lost it again after this, so where the lows really in?

NATGAS – I honestly thought that NATGAS was going to break those lows, but it stopped selling down and we see that yesterday, after the inventory report was released,  NATGAS turned back up. That capitulation low is still the lows as of this point.  NATGAS still may have bottomed and ‘stops’  placed below that capitulation low did not get hit.  ( I would have been stopped out below the 10sma personally, because that is where I would have placed my stop, but I didn’t take the trade).

UGAZ & BOIL –  THIS TRADE COULD BE CONSIDERED TOO DANGEROUS ( LEVERAGED) FOR THE INEXPERIENCED.  Yesterday I was entertaining taking a short term trade in Natgas, and I almost took this one yesterday when I mentioned NATGAS in the comments yesterday.  The reason that I didnt was simply that there was too much going on with that General Market sell off, so I waited.

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GOLD –  Gold usually dips into a visible  DCL after an ICL  after about 30 days ( RED ARROWS), but as you can see on this chart,  it seems a bit too early for Gold to dip down now on day 13.  All of those drops ( Red Arrows)  were also back testing the 50sma, and Gold just pushed through the 50sma yesterday.

GOLD – Gold is at resistance actually, in this 1260 area

GOLD – Day 13 was a new high.   Once again, that does not seem like a weak final daily cycle.  This looks like the start of a new move higher.

GDX – Still held back here, but holding above the 50sma & 10 sma.

We are also seeing Earnings in the Miners sector, and unfortunately we are getting a mixed reaction. This means that one NEEDS TO KNOW when the earnings are going to be released with the Miners that they own, and decide if you want to hold through or sell & get back in.  Let’s take a quick look.

CDE–  Earnings came out & CDE gapped lower.

GG –  GG actually gapped open higher with their earnings, but it sold off as the day went on.  Volume was huge, this may re-enter that wedge 🙁

NEM – And then there are the success stories, like NEM popping higher and holding the gains.

ABX –  ABX had a bullish reaction too.

So it is Friday, the last trading day of the week.  We see that The General Markets  had a sharp drop that came out of nowhere again, erasing days of gains and leaving many wondering why it happened and will it continue.  Timing wise, it could be the start of a drop into a dcl.   OIL, NATGAS, and the XLE all look to be Bullish and recent lows are holding, even as the markets sold off.   Gold, Silver, & The Miners did not have follow through yesterday, but I believe that the Lows are in place for them too.  I am watching individual set ups and the ETFS  GLD, SLV, GDX , GDXJ, for more signs of what’s to come. It remains bullish to me, though individual Miners need to get through their earnings volatility.  Enjoy your friday trading and have a great weekend!

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~ALEX

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 I want to point something out about AMD , CY, TTWO, JBL, NKE,  and a few others that I have mentioned over time.  I was mentioning these as more of the BUY & HOLD style set ups for longer term investors here.  I mentioned them when we considered that the NASDAQ could eventually enter a blow off top, and I would imagine that these would benefit.  TWTR was mentioned too, but yesterdays earnings slammed it down and kept it inside of the base building process. It is not ready to break out & run.      SO this morning, we will take a look at AMD.

AMD CHART 1 –  I have been pointing out that AMDis in an uptrend and looks bullish as it continues to climb to new highs, but it is not a straight up drive.  Like most Bull Runs, it will have consolidations and sideways consolidations.  At this point, you can see that AMD is in the middle of a move really.  This is more of an investment than a trade, and it can continue higher or drop down to the $12 area again, especially if the NASDAQ stumbles.

AMD Chart 2 – So short term, this is how I would look at AMD.    If the NASDAQ was charging higher, I would expect this to break out and run.  If the NASDAQ stumbles, this could drop to the 50sma. It has been inside of a wide swinging uptrend since the May lows.