Tuesday March 20th

We are approaching the first FOMC MTG with the new Fed Chairman.  So far, whenever he has spoken to Congress,  the markets sold off. The deep mini-crash in February was actually the first time that he spoke to congress.  So  is Mondays sharp sell off a taste of things to come?  Or is this just a little shake, rattle, and roll until after the FOMC decision?  Let’s take a look at the action…

 DJIA WEEKLY – I used this chart in the weekend report ( this weekend and a week ago), I mentioned that things were not exactly looking all bullish. I used my own indicators to show you internal weakness.

SEMI-MIXED PICTURE OF STRENGTH

DJIA – So we got a drop on Monday and suddenly the DOW is down for the 2018 year, it is a mid December prices.  It broke the uptrend line of the daily cycle too. This now leans toward a Left Translated daily cycle.  So this would look bearish, but …

SPX – I have mentioned way back on the first Feb drop that unless we see real strength,  we could get a double bottom, as in the past. The SPX is below the 50sma too.

NASDAQ – I also mentioned that the NASDAQ & SOX looked much stronger, breaking to new highs, but I saw similar signs that called for a pause or dip soon.  This looks like it would be R.T. & made higher highs, and held the 50sma  (SO FAR) so we have MIXED MARKETS again.

SOX  – We have to see what happens, because these CAN drop a lot further, and with the FOMC Mtg,  it is difficult to say exactly how this will play out…

So with the FOMC Mtg,  it is difficult to say exactly how this will play out, since the Markets have dropped sharply each time Fed Chairman Powell spoke to Congress.    It looks short term bearish and could indicate that the ICL was not in FEB, but lies ahead,  HOWEVER…

With the NASDAQ,  many stocks like MU, AQ, SQ, TWTR, WHD ( green yesterday) , looked just fine.  In fact-

LX – March 15th I mentioned that this 4 day drop was steep, but it might be back testing a break out.  This should have just continued dropping Monday, but

LX – Pretty Bullish for a sell off, right? And WHD also stayed Green.I actually hope that this drops to the blue line again, for me to buy it.

CAMT put in a nice reversal at the 50sma too, so it is hard to get very bearish with Mondays drop until some of these start falling apart.

I still own a couple of these NASDAQ stocks for now,  but the TQQQ dropped back to the Feb Slam Down candle,  so that could be concerning for those that wanted to buy &  hold with a FED mtg Wednesday and the DJIA & SPX looking like they want to break down.

TQQQ – Back near the lows of the Feb slam down.

BASICALLY WE HAVE MIXED MARKETS HERE, with the markets selling off sharply, but some of the stronger leaders holding up so far.  AQ, SQ, MU, CAMT, etc are still above their 10sma, never mind their 50sma.  Time will tell,  Shortly.

WTIC – Oil is still below the 50sma, but it doesn’t look all that bearish, it is starting to actually look a bit bullish – so I exited my shot at shorting it again. I guess I was too early in the daily count for this to roll over. That’s a bit frustrating, but I was using the bearish COT as a guide too, since it has been heavily shorted by smart money.  I already knew that it is not a ‘timing tool’, and that has been proven to me again  🙂 .  You cant tell the markets what to do.  I will call this neutral for now at day 25.

USD – Rejected at the 50sma again.  The USD is certainly weak at this point, with a day 8 peak. Now this looks Left Translated unless it can rally quickly.   USD daily cycles are usually shorter than other sectors.

GOLD – Sounds crazy, but Gold looked a bit more bullish as the USD looked a bit more bearish, but so far I AM STILL not buying heavy into this choppy sideways market.  The FOMC always seems to affect the USD, and Preciosu metals.

GDX – Also looking more Bullish than Bearish going into the Fed Mtg.  Triangles morph or obscure cycles, so I am not using them here.  This MACD looks bullish.

A few times now I have pointed out the progress in the MJ sector.  I used this chart last week.

CBWTF –

CBWTF –  So we see a little follow through. I do own this and am watching to see if it stalls at the 50sma.

OGRMF – A break above the 50sma after the first try failed.  The first important step was re-gaining the 10sma, and this chart is quite encouraging.  This was taken at 10:30 a.m., so ignore the low volume  (I posted this because I bought this one also).

WATCH THE SIGNS OF LIFE GROW

TWMJF FED 28th – At the end of Feb, I pointed this and others  out at $21 as it looked ready to break a down trend & 10sma, the first sign of life

TWMJF– on Match 5th I pointed this bullish sign out.  It had broken above the 10sma, lost it , and now regained it again, then took on the 50sma.  Doesnt this Look like OGRMF did Monday?

TWMJF-  TWMJF stalled at the 50 sma and went sideways. That often happens to build strength to run higher,  and now it looks like it MAY BE ready to run higher, with higher lows and a MACD cross, etc.  If this is to form a ‘Cup’ like I expect, it will run to $35 over time.  That could be $21 to $35 if you were patient & bought that downtrend break in February,  or $17 to $35 if you bought the Feb lows reversal.

CRON – CRON had very strong volume right at the start of the day,  so I bought it above the 50sma as a trade or possible buy & hold if it gets above the 50sma.  

Basically I think that this sector is slowly coming back to life,  trying to form ‘CUPS’ after their initial run higher and sell off / consolidations.  It is not an easy sector to buy & hold, they do move quite  a bit, but I am holding a couple and so far they are acting correctly and others look to be perking up too.

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As for the markets? I honestly expected this drop over time and I mentioned internal weaknesses over the past 2 weeks.  Yes, Bullish markets can extend with internal weakness, but this was actually showing up on weekly charts now too, and that usually leads to a drop.   I mentioned that in your last 2 weekend reports.

  So really the charts told us over 2 weeks ago that the weakness was internal as NAZ & SOX hit new highs and the DJIA struggled at the 50sma, even on a weekly basis.  I put it in the weekend report 2 weeks ago.  Bull markets can extend,  but I put that cautionary note in the back of our minds – these markets should drop soon to some degree.  Now we are seeing a drop before the FOMC Mtg and the next thing to do is to watch to what extent this drop plays out.  Look for clues.  One day does not give us that answer.   We’ll look for clues.  So far…

1.  It seems quite bullish right now that Stocks like MU, SQ, AQ, WHD, LX, and others are not even below the 10sma. Look at those charts in the report above again, they look fine so far.    They did NOT show internal weakness with the market sectors, and now they are showing relative strength in a sell off. These would became a strong buy if we get more of a pull back in the markets and they hold up well.

2.  A drop like this occurred in early March, see the charts below.  They recovered after a couple of days, so let’s give it another day or two.  You may tighten stops, lock in gains if they remain, or lighten up until things clear up.  Look at the charts below, we know that at day 25,  A DCL will be due in the coming weeks.   We could push higher and then drop to a dcl, or as I have pointed out over the past few weeks, it could come in the form of a double bottom low.

SPX BULL CASE – We could get a reversal similar to what we saw on March 2 today or after the FOMC, make a new high above the 50sma before dipping into a dcl.

SPX BEAR CASE – This could be the start of a dip into a daily cycle low, with a bounce today & then the sell off continues after the FOMC Mtg and Powell speaks.  I think he speaks after the mtg, I didn’t look into that yet.

I got emails asking me for my ‘best guess’ now.  ‘Alex, what does your GUT tell you?’   “Alex, what do you feel will happen tomorrow?’, etc.  I will put it this way in conclusion:  It would honestly only be a guess based on what I see.  Trading a ‘Guess’ is not even as good as sitting on your hands and waiting for a day or two.

These are mixed markets :

I see the DJIA looking weak, it has a lower high recently, it struggled at the 50sma, relative strength is not there.  THAT looks like it wants to fall apart & drop to the double low.

The SPX is similar, just a tad stronger and the 2 charts above show a bullish & bearish representation that could occur, because the markets have dropped every time Chairman Powell speaks.

The  NASDAQ & SOX look like the more hopeful ones, and the stocks that were leading remain fine  ( but that can change if selling picks up, right?).  My GUT says we need more info.  Daily cycles are on day 24, and we could begin to drop to a dcl usually that often comes after day 30.  If this is the start of The next dip to a daily cycle low, I want some cash on hand to buy some of the stocks mentioned last week & some that I didn’t mention but will soon…  AQ, SQ, TWTR, MU, WHD, LX, CREE, CY, IO, etc.

Look at a 6 month chart of SGH.  That is a bullish chart pulling back sharply, and if it starts going sideways and others follow that pattern as we drop into a DCL, this could become an excellent buying opportunity.  We need more time to know for sure, wouldn’t you agree?  Each day will clarify the picture, especially following that FOMC MTG.  Until then, I own a few, I own some cash, personally I do trade volatile market set ups if I find them, but basically I am watching how this unfolds into the FOMC.  Enjoy your Tuesday activities!

~ALEX

Note to self:  The more bullishly set up MJ stocks have been doing their own thing, rising as the markets went higher, rising as the markets sold off yesterday. Some Biotech has done this too.