Nov 15 – Winds Of Change?

I would say that we were seeing a normal correction in Oil on Tuesday, and we are heading into the Oil Inventory reports Wednesday, so nothing really changed there. So why did the Theme become “Winds Of Change?”  It is because OIL stocks started to pick up in their selling, The Euro situation changed, Biotech broke down further, and a couple of other minor changes also became evident.  I wanted to discuss these areas a bit more and the changes that I noticed…

 

SPX – Each sell off lately is still being scooped back up, but I’m still seeing the divergence that I pointed out a week or so ago as Price went higher.  The RSI & MACD are still drifting lower. There is still room to drop on the stochastics, so this time price may want to also drop to the 50sma,  or even continue sideways to that 50sma. Why? …

The TRAN, RUT, BKX, etc., broke below their 50sma. Let’s take a look.

 

RUT – The RUT, TRANSPORTS, and Bank stocks are struggling a bit more. These have even dropped below the 50sma.  BKX dropped below the 50sma and recovered Tuesday, so far.

USD – This is a trend line break and the 10sma is following price, this is a decline into a DCL.  Normally a drop like that would Push Gold & Miners higher, it didn’t. Remember this drop as we discuss Miners later. This move actually negates the inverse H&S break out for now. That is a change too.

 

There was a change in Biotech

 

XBI Nov 7 – Here I was pointing out that the XBI in this bull run would dance around the 50sma and then it recovered.  It started to recover, so that looked bullish.

XBI NOV 8 – It then dropped back below that 50sma.  I had warned that if this breaks down below the blue line, it did not look healthy to me, since the MACD was curling down. So if it didn’t recover, that would become a break down with follow through.

I also discussed buying LABD if this breaks higher, when I was asked if someone should buy LABU.

 

XBI – Continued to break down 3 days ago and Tuesday pushed strongly lower.  Again, we see the winds of change.  It no longer resembles the prior sell offs that ‘danced around the 50sma’. I would avoid this until it recovers. That was a reversal candle yesterday, but it may mean nothing. This could dip to the 200sma if it seeks out an ICL.

XBI – Notice the deeper sell off into an ICL Last November

XEU or EURO  – This change surprised me.  The EURO Popped higher and actually started to close above the 50sma. It negated the H&S break down. The RSI broke above the 50% line.  This actually looks bullish and I’m not sure how this fits into the big picture, because this would usually sink the USD even further. Winds of change here, and I’ll be watching as this plays out. I thought that this could drop the USD and raise Gold, but that doesn’t fit Golds expectations – so I am watching all of this closely.

 

Let’s discuss the possible winds of change in this sector

 

WTIC NOV 6 – This was OIL, breaking out and it could do a normal back test to the Magenta line.  I would expect that would be the $54 area.  Even a drop to the Purple line was possible, but as this happened, I would have imagined that Oil stocks would hold up a bit , or just continue to go sideways, etc.

WTIC – Oil did hit $54.81 & reversed into the close.  Take a look at the Dip into July 10 and July 24 and you’ll see that dips are common on the way higher. So this shows that Oil can sell off and recover, but with this selling on Tuesday,  Oil stocks did join in a bit more than expected. That needs to be looked at…

WTIC – Is this setting up a 1/2 cycle low or is this dipping down?  Watch this Magenta line or yesterdays lows. The reversal is promising, and we’ll see what the Wed inventory report does to Oil, but let’s also look at Oil stocks.

 

REVIEW  XLE

 

XLE NOV 7 –  This looked very good coming out of the recent consolidation.

 

XLE NOV 9 – It went sideways for a couple of days, and that is also normal – it looked to be forming a Bull Flag to the 10sma.

XLE – Suddenly after reaching the 10sma, XLE just dropped quickly yesterday. At 10:30 a.m. I posted this in the comments as a possible back test of the recent break out or even a tag of the 50sma?  Is that all it is? …

XLE– BY the end of the day the Volume really picked up and selling looked to be increasing, closing near the lows. Now we have the oil Inventory report to contend with Wednesday and some Oil stocks changed from bullish looking to ugly.  I will continue this discussion of possible winds of change in Oil stocks by discussing some Oil stocks at the end of this report.  We need to see the 50 & 200 hold as support.

 

 

YEN –  I just wanted to point out that the YEN seems to be a bit ahead of Gold.  It broke the July lows already. Interestingly, this looks like a bullish set up. THAT is an interesting change. Let’s look at Gold.

GOLD #1 – Interestingly, Gold looks a bit bullish too, but Miners do not , as you will see. Gold is not breaking recent lows and it’s indicators are rising.

GOLD #2 – The parameters to watch if gold moves higher.  A break above  day 6 1308.40  is NOT expected and if we see that- we will have to accept a more bullish idea, but I do NOT expect that. Miners are still weak.

SILVER – Silver also will not give up the Bullish appearance, but if & when Silver drops, it drops FAST.

GDX –  GDX broke the late Oct lows 8 days ago and recovered. It was only up 3 cents Tuesday, with the USD dropping dramatically & Gold higher. It means that miners are weak at this point.

GDXJ – GDXJ actually broke to new lows on Tuesday and closed red, and that was with the USD dropping quickly. This usually indicates that when the USD puts in a dcl and moves higher, this sector will drop quickly. So that is New Lows for GDXJ.

SO we definitely have seen some rapid change, pretty much just since Yesterday. Today will be a day to see whether or not any of this has lasting affects, will it have follow through?   I don’t want to ‘panic out of my positions’ early and just sell Oil stocks before the Oil inventory, but that selling did pick up in many Oils stocks ( I’ll point that out below).  I may just sell to lighten up.  WTI still acts correctly, so a stop under recent lows may be fine.  LGCY above the 50sma seems ok, etc.  Others may not look good and you may want to lighten up too?    I have mentioned in past reports that I DO NOT like to hold more than 8-10 stocks at one time, it is like trying to babysit 10 kittens.  They go in all different directions and becomes hard to manage properly.   Also, I am an active trader for a living,  so this is what I often do.   I sold off a couple of my Oil stocks ( I got in early and simply took profit)  to buy OGRMF, APHQF, SPRWF, and MYMMF-  and I thought that after those FAST TRADES played out in Medical Marijuana, I could  just re-enter Oil stocks again  or be ready to enter Miners.  At this point, Oil stocks have changed a bit and I need to watch how that plays out.  I did sell all of my MYMMF near $2 yesterday and still own the others.

 

Today is a day to watch how things are playing out, I am especially interested in watching the Oil inventory report and Gold vs Miners /  Euro vs $USD.  Let’s discuss Oil stocks a bit more below.

 

~ALEX

 

 

So some things seemed to have suddenly changed, Let’s take a closer look.

 

WTI –  W&T Offshore was not really affected by the recent selling in Oil or the XLE,  but as you will see, others were.  I would expect that this will get pulled down too, if the selling continues.

 

WPX – WPX was fine right up until Monday when it broke the 10sma. This was a bull flag to the 10sma after a nice strong run higher.  You can see that the winds of change are here.   It should find support at the 50 & 200 area, but if the selling in Oil continued, it could get caught up in that sell off.   Just so you know –  If I owned this, and saw this along with the XLE & OIL, it would have made me think of selling the break below the 10sma & re-entering when support proves itself.     It would depend on where I entered the trade.

LGCY -LGCY put in a strong reversal after earnings, so I bought it and added again.  This looked ready to break out above the 200sma.

LGCY – And it closed above the 200sma and looked ready to go for sure. This is a bullish set up, this is why I bought & added.

LGCY – For the next week, it too went sideways and stalled here as what looked like a flag consolidation.  Now it also dropped Tuesday toward the 50sma.  I still own it near break even, and  will have to see how it acts after the oil inventory.  I will NOT ride this below that double candle reversal under the 50sma.  You may want to sell it even before that.  It is not bearish, but it has ‘changed’.

 

PDS  OCT 27 – This was a BUY on the weekly reversal candle as earnings were released.

PDS  OCT 27 – A strong reversal buy when earnings were released.

 

PDS – I posted this chart as we got follow through above the 50sma.

PDS -This also started to go sideways, but that is normal, and I thought that this was a 1/2 way pause. I still owned it.

PDS – Tuesday, and I still owned it until the close.  It dipped to the 50sma, and closed under it. Why a sudden 8+% sell off after a strong run higher and flag pattern?  I dont know, but something seems to have changed.  I just want to watch this from the sidelines now, and if the Bull run continues, I will find another entrance, for now I locked in much less gains than I had at $3.20, that’s for sure.

FCEL –  Fcel was fine on Monday too.  It tagged the 50sma and reversed higher Friday, and that looked good. Monday it drooped down a bit, but Tuesday it dropped 14%. It may slow up at the 50sma, but this is a sharp sell off after a strong candle higher in early October. What changed? I found NO NEWS on it.

  If you own something that looks suddenly weak or like it has changed from a bullish set up to a weak one ( below the 50sma or major support),  don’t hesitate to cut it loose and re-enter later  if it acts properly. Missing a little gain is a pain, but missing a bigger loss is the goal.   Look at the chart of PDS gain. 

Honestly,  PDS looked GREAT to me on Monday.  It looked like garbage all of a sudden by the close yesterday.  It may recover, but I just didn’t see the same set up that I did on Monday. My gains were evaporating.  I can get back in if it regains its bullish look.

  I was asked what I was currently holding.  Please know that this could change at any time, because I am a very active trader, I don’t like to hold too many positions at one time, and I may even sell one stock simply to buy another and avoid holding too many at one time.  I know that I can always get back in later.    I doubt that I will be selling the Medical Marijuana stocks unless they really sell off.  They seem to have great upside potential even as they pull back a bit. I have been asked by 1 reader to try to mention if I see a reason to sell these the Medical Marijuana Stocks, because they do move fast.  I will announce in the comments if I sell any of these, and I will also mention in my following report when I do sell  OGRMF, APHQF, SPRWF.  I sold all of my MYMMF yesterday.  Also,  I bought NAK at the $1.20 area, so I do not plan on selling NAK as long as it trades above the 50sma .

I am still holding NAK, OGRMF, APHQF, SPRWF, LGCY, WTI, MBOT, and sold PDS into the close as mentioned above.  When I sold my FCEL, it looked perfectly fine above the 50sma,  I simply sold it because I was buying MJ stocks.   I also hold a couple of positions that some readers may remember me buying, in a separate account and held for over a year.