One Day Reversal

 

SPX FROM THE WEEKEND REPORT – This looked like a likely area to get a reversal, and after Monday we do have one in place.  Question is,  is it a Solid new low, or Just a bounce?

 

It may just be a good bounce, but it also may be a good bounce that is just another temporary bounce into the final low. Let me show you a few things

I want to start by saying that there were plenty of the “Good ” stocks that we had been looking at & trading that did hold up very well.  This is good, but I will discuss that in a minute.  Let’s take a look at our markets first.  This is a LONG report, but I just want to prepare the readers for possibilities…

 

DJIA – Day 29 was the low Friday and yes, we have a reversal. ( EDIT : FUTURES ARE STRONG TUESDAY MORNING) It is 1 day short from the normal timing for a dcl, but day 29 could be close enough.   At this point, I want to mention Three things to take note of:

1. Look at the reversal on March 2.  It ran to resistance 6 days higher and rolled over. At that time, I also pointed out STRONG STOCKS that held up well, but it was too early for a dcl and still rolled over as expected. We must keep in mind that this market may just be bouncing. WATCH THE overhead resistance at the 10 & 50 sma.  Daily Cycles can go to day 40, buying a swing low requires a stop.

2. We got a high S.O.S. number on what would be day 1 of a new daily cycle yesterday?  That seems unlikely and may signal that we make a new low on the next drop. Now Look at the low of Feb 5th. That was a 2 day bounce & THEN a final low.  We could see that too.

3. These ‘reversals’,  even the March 2nd bounce,  could be bought just in case it takes off higher and the you would have to watch things along the way

MARKETS COULD RESUME THE BULL RUN WHEN THE LOWS ARE IN,  OR:

 

SPX – A complex double top could form, as GOLD runs higher this summer, allowing Gold to Break out & run.

SPX – SPX could rally & roll over like it did in 2015/ 2016.  That is when Miners had a massive run.   I AM NOT just making this up hypothetically,  I have many reasons to look at these possibilities, as mentioned in the past.  For example: The USD is in a bearish down trend in the big picture.   Rate Hikes are coming fast, housing may take a hit and Companies taking loans may slow down as they just spend cash on hand.  Gold could start rallying, and more.

 

FOR NOW:

 

The TECH stocks ran better than the SPX & DJIA  out of the March 2 lows, and the NASDAQ and SOX  actually made new highs, so let’s look there.   Yes, this reversal could be bought, but again it is not a confirmed low,   and the SOS may indicate another quick drop to a final low is still ahead.  Look at Feb 5th.  Then a rally /  bounce.

 

While this idea is fresh in our minds,  what about those Bullish looking stocks that held up well during the sell off?   THEY MIGHT BE BASE BUILDING / CONSOLIDATING.  We don’t know if they will just take off higher & Higher, or continue to churn and build bases.   So far they are strong and holding up well, so they can also be forming tiny pauses / bull flags, and then run higher, so they can be bought during this bounce in an attempt to capture the gains.  They did well on the March 2 bounce, so let’s examine a few trade set ups.

 

SQ #1 – This has been a strong stock and after a small 3 day sell off, it has a reversal. So this could just continue higher ( Buy with a stop) or  …

SQ #2 –  I just want you to be prepared for possible further consolidation / volatility too, like we saw at the Feb lows. I do see similarities at the ‘reversal candle’ .

SQ #3 – And if the markets drop to a new low?  Sq certainly could too. This would be a totally normal and bullish back test for a strong stock in a volatile market. Buying this reversal is still a trading  strategy, just in case we start another leg higher.

SQ CHART #1 again:  So for now,  SQ (  & Others shown below) can be considered a buy with that reversal that may rally higher.

 

SGH -m This wa smy Match 15 chart and SGH was in a long consolidation. It was not an easy ride, but it was breaking out.  How did this one handle the Market pull back?

 

SGH – What market pull back?   🙂   This is the benefit of a base building consolidation.  THAT IS A STRONG STOCK.  Its not a buy here, it is extended, but I wanted to show you the strength on a good break out after a consolidation.

 

AQ –  AQ is consolidating as the markets are volatile.  I sold mine last week and may buy it back.  The buy on a bull flag is the break behind the apex. ( Yes, this MIGHT just go sideways like it did in February to get to ‘oversold’,  but it is healthy, it did not sell off during the Markets sell offs) .

 

 

CASA –  Another bullish consolidation during the ‘sell off’.  This barley sold off.  This too could just go sideways like January-February to allow the 50sma to catch up,  but it also could break the flag and do another leg higher.  ‘Leaders are often bought up again.

JBL #1 – Remember JBL?   The inverse  H&S Set up

JBL #2 – Earnings were coming out, and then it just GAPPED OPEN, leaving many behind here at $28 ish.

JBL #3 –  Back at $28 ish.  It came back to allow a low risk entry at the trend line / Gap Fill.  🙂

IO –  Ready to go again after crawling under the 50sma?  This one FLIES when it moves higher. That Rally in Feb was Earnings ( roughly $17 – $32).   THAT is good to know.  This is a BUY in my opinion.

TWLO –  At the Feb sell off, TWLO was ignoring it, and I mentioned how much I love these BASES when a market comes out of lows.

 

 TWLO WKLY – 2 days later I also showed this weekly –  BOOM!  Did it get crushed in the market sell off?

 TWLO WKLY – Crushed in the market sell off?  NOT-AT-ALL, it’s at the highs.  ( I always point out these bases, because Many Miners will eventually leave their bases & leave people behind).

SPWR  –  Solars continue to act bullishly too.  I ended up buying this Monday for a possible short term trade, and FSLR, CSIQ look good too. SPWR tagged the 50sma when markets sold off.

 

TWTR  – At the gap & 50sma,  this power gap may not fill.  If the markets sell off again,  this may bounce around the 50sma .

 

 

WTIC – Oil is on day 30  ( of a daily cycle that can run 30 – 50 days).  I actually like the look of OIL,  but XLE is a bit stagnant, so I exited my Energy trades for now.  I good profit, 1 loss.  THAT MAY NOT BE THE CORRECT MOVE, They actually closed Green when Oil closed red Monday,  but I dont like holding too many positions and wanted to add a couple of other trades.

 

GOLD –  This appears to be day 4 and it still looks really Bullish, but resistance is overhead. GOLD didn’t reverse & sell off when the markets reversed from lows and closed higher.  That seems noteworthy.   Gold could back test the 50sma if it cannot break out. WATCH MINERS IF IT DOES.

 

GDX – Not as strong as Gold, but it is pushing on the 50sma & GDXJ pushed above it. I bought Leverage last Thursday on the dip after th FOMC.  I  didn’t mention it, because it was not a safe trade if this ends up L.T. ( left translated) .  I sold it all yesterday, I still hold my miners.

GDXJ – Above the 50sma,  volume was a bit light though.  I am seeing some Miners act very well ( I will show some next), and others just ‘O.K.’.  This is a bit of a ‘do or die’ area.  Can the Miners take out the Feb highs?

 

 

GFI – That is a NICE move out of the lows. It Mimics the DEC ICL , so we’ll see if  these can outperform the DEC run.  🙂   If so, a back test of the 50sma may be a good buy.

HMY –  HMY Just keeps going.   I bought this at the Feb lows, and sold it  as it looked to be breaking the 10sma near the end of February.  It is much higher than where I sold it.  I want to buy this next dip on HMY.

 

KGC  –  KGC broke the 50sma yesterday.  The RSI is turning Bullish.

 

NAK- I do still own my NAK, but the drop has me close to letting it go. So far it is on support.

 

This is a LONG Report for a Monday, it is like another weekend report, so please expect the next one to be shorter  🙂  I Just needed to explain some things about volatility and this double bottoming process in the General Markets.  I got an email that said,  ” So that 1st Drop in Feb was THE LOW, the bounce was wave 1, this dip is wave 2 and Now reversal Monday starts wave 3, so I’m fully loaded with leverage.”      MAYBE THAT IS TRUE,  MAYBE NOT .  Remember, We don’t even have a Confirmed swing low in place yet and if FEB wasn’t the ICL,  we had a high SOS number,  we could still break to new lows in the double bottom to find the real ICL.  We had a higher SOS Number than is normal at a dcl.

 

Again, look at that drop in  September – October 2015.    1. There was a drop, a bounce , a drop and then it ran higher & rolled over to ANOTHER double bottom low. 2 double bottom lows in a row.

SPX – I also agree that this could be a bottom and then run higher, and you have to take your chances with stops until it fully plays out, but it also can be a volatile time in the bigger picture, so continue to have trailing stops.  2 of a few possible paths to a wave 5 top shown.

 

SO we have trade ideas and cautionary notes as this drop attempts to bounce here.  We got a swing low yesterday, but it is unconfirmed and we saw that in the drop in February too.  This is the chart that I used on Feb 14th.  Ignore what I wrote about a confirmed dcl finally in place,  and just look at the  first reversal & swing ( Unconfirmed) and how it rolled over 1 more time.   THAT is what our  SOS  ( Sell on strength)  number might be indicating.

Enjoy your Tuesday Markets, a little has changed since the weekend report, but it is heading in the right direction so far.

 

~ALEX