Thursday March 15th

After the recent selling or pause  ( 3 days in the SPX & DJIA,  2 days in the NASDAQ or SOX), it would seem unlikely that anyone has been stopped out. I want to take a look at where we are cycle wise and discuss possibilities going forward, based on a comment that I made in the report yesterday.

SPX – Here we see the S&P where selling has landed it back on the 50sma. This chart is basically neutral to bullish. It is a day 22 peak so far, I would still like to see a higher high again though, to really ensure that this becomes a right translated daily cycle.

DJIA – The Dow is actually stuggling at the 50sma ( please don’t write and blame this entirely on G.E.  🙂  ), and it is a bit bearish at this point.  The DOW was the rocketship of November through January, and then Crashed hard. This now only has a day 11 peak, that needs to change. This could be support however, with a push higher to follow.

TRANNIES – We have an FOMC MTG next Wednesday and the Trannies looked a bit weak at the 50sma too, but if this becomes an ascending wedge & breaks higher, it is bullish.

THIS NEEDS TO BE MENTIONED :

DJIA  –  I am going to be pointing out the bullish Tech Sector/ SOX next, but just because the NASDAQ & SOX are breaking to new highs, this is not an overall healthy looking market. THIS NEEDS TO CHANGE in my humble opinion. The DOW shows weakness.  Can the DOW fall apart  while the NASDAQ flies higher?  Or would this drag on the rest?  Reminder: We have an  FOMC meeting next week.

SO WE HAVE SOME MIXED SIGNALS

NASDAQ – Obviously the Tech sector has been more bullish. It broke to new highs and peaked on day 21 (So far).  If it drops today it may just fill a gap and hit the 10sma.

SOX  – The semiconductors have been doing very well. Maybe you have traded CY, CREE, MU, etc as they break to new highs. I pointed out that the SOX already did a double bottom low (Shake out) and then ran to new highs. It could have lead the way down & is now leading the way higher, but in the back of my mind I still need to keep an eye on the weaker DJIA, NYA, TRAN, RUT, etc.

This is a comment that I made in the report yesterday, please re-read the blue words.   I cut & Pasted it here, so if it seems small, you can click on it.

Those individual stocks are holding up, they are not running stops,  and some even continued a bit higher.    This is encouraging as Markets pull back. Let’s take a quick look…

AQ – This is one that I still own from early March and it may be a bull flag

SQ – I was expecting a back test with this weeks selling, but it moved higher. This could still back test later when we get a sector DCL, but that would be a ‘buy’.

TWTR – Another stock breaking out with the General Markets selling down. The MACD is not confirming this high, so it may pull back later when the markets drop into their dcl.  The 50sma is climbing, and this can run & pull back to the 50sma later like it did in January.  As mentioned in a prior report, the earnings Gaps may never fill.

I CANNOT EMPHASIZE THIS ENOUGH:  THE FOLLOWING CHARTS ARE NOT A PREDICTION, THIS JUST GIVES US AN IDEA OF WHAT MAY HAPPEN :

I was asked if this dip should be bought by those that didn’t buy & hold yet.  The following 3 NAZDAQ charts are simply to help you to see how this could unfold, and then you can decide if you want to wait for a dcl, or take a trade and see if you get more upside. I will show you a bullish version, and I will show you a less bullish idea.

NASDAQ CHART #1 – SO we have the NASDAQ on day 22 and it can go 30 days, 35 days, 40 days, so we may have more upside potential in this  sector.

NASDAQ CHART #2 – It is possible that another leg higher unfolds ( Guessing near day 30ish) and then a drop into a dcl.  The DCL could back test this break out or the 50sma in April. Buying here may give you a run higher & then a drop right back down to this area for a dcl.   This would give us more upside & MAYBE the SPX could even break to new highs by then.

NASDAQ #3 –  This just shows that with DJIA weakness,  the NASDAQ could also go sideways and keep popping and dropping. Markets can get choppy, so if you buy here, just expect a possible run higher or some sideways chop into FOMC, I cannot predict which one will happen.

THE FOMC MEETING NEXT WEEK WILL BE DAY 27 for the general markets, so …

REMINDER :  Do you see how fast a raging bull can go south? Everybody was buying in January, right? And then the Peak of January to the Low of FEB took 8 days. Use trailing stops if you buy now going into the FOMC.

Finally –

WTIC  – So I am back in my short oil trade, but it is basically neutral looking at this point.  It is the high Smart Money Short position in the COT that keeps me in this trade, thinking that we did not see an ICL yet. I am viewing that this should be an a-b-c down.  A break higher will have me out of this trade.

Weekly from yesterday  –  Time will tell

Nothing has changed in Precious metals. Enjoy your Thursday trading!

~ALEX

I posted GALT & CVRS.  I chose to buy GALT personally,  but so far CVRS looks better trade,   🙂   Oh well, so far it looks that way.

On March 12-  This looked like a good area to buy- a drop back to the 50sma on March 12 near $4.60.

GALT –  2 days later it  bounced higher & then it dropped back to the 50sma  yesterday.  I was asked if I am stopped out.  Not yet and since it broke the 50sma in early March, I may allow it to do that again.  Unfortunately this moves quite a bit daily,  so my stop may have to be $4 based on this chart.  That is a bit more of a loss than I want to take, but this went from $4.25 to $5.82 in 2 days last week, so I cant use a tight stop ( Unless I dont mind getting stopped out at the 50sma & buying into a reversal if that happens).

The better of the 2 trades so far…

CVRS from March 13 – a buy with the good volume pops. A couple of people wrote to me that they took this, and where would I sell?

CVRS-  This could become a giraffe neck, since it closed near highs, not many sellers yet. I think that this could run back to the $2 area, based on the above chart.