October 18th – It’s Still A Rough Ride
The release of the FOMC Minutes really didn’t seem to have any meaningful or lasting reaction in the markets. It may have added a little knee jerk reaction or volatility, but overall there was no big directional change. Let’s take a look at our markets, and again, there really are no major changes from yesterdays report to discuss, but we’ll still review what we have…
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SPX – I have been looking for a steep drop and an ICL. We have that steep drop and a reversal after the 200sma was taken out, so this could be a shake out. It is a swing low, and yesterday I said that this could be bought ( TQQQ or UPRO, etc) however…
This is a direct ‘Copy’ from yesterdays report… click if you need it enlarged
IWM – The IWM sold off even deeper than the other sectors and deeper than it did in Feb & March of this year. I am interested in seeing how these markets react at the 50sma.
As a reminder: This is my Chart from the weekend report as a possibility if we are topping after this ICL plays out. It is still short term trade-able and we’ll see if we can continue on to new highs, or are we in a ‘topping process’?
WTIC WEEKLY THIS WEEKEND – We had our weekly swing high in the weekend report. I also saw MACD Divergence on this double top. This trend line should be broken…
WTIC DAILY NOW – The 50sma has been broken after the ‘inventory report’ Wednesday. The way I look at this? Day 43 is getting late, so a swing low & break above the 10sma would likely be the next DCL, but this can go to the 200 sma or deeper until we see that. Some daily cycles have been a bit over 50 days long. Unfortunately, I closed my DWT trade last week
USD – The USD is beginning to look bullish again. It crossed the 50sma. At this pint, Gold is not reacting to the downside when the US popped, so for now we will just watch how this plays out. That looks like a dcl though.
GOLD – I may or may not get my running correction, but the FOMC Minutes release did not send Gold down very far, and I sea bull flag possibility too. The set up remains bullish at this point. Even a drop to back test the base ( Or 50sma) is fine at this point, I believe that we have our ICL in place.
GDX – Volume is lighter on this drift lower so far. Are we heading to the 9 sma? That is my first target if we keep dropping.
I am getting asked, “Where is GDX using Cycle count, I want to sell everything before the dcl ?” My answer is that I do not recommend selling everything here. Maybe even —- “Forget about cycle count, or you may scare yourself out of a good trade.” That DCL may or may not already be gone by on day 21. WAS THAT DAY 21 A DCL? It could be. Let me show you the 2008 lows again –
#1: THIS WAS HUI 2008 ICL. Was day 17 the DCL? If not, the next dip on day 26 was a dcl, but it came in a lot higher, it was a higher low. Was that higher low a day 26 DCL? Or was that day 10 of a new daily? Well, Our current GDX chart is very similar & tricky to read using cycles, but remains bullish too.
#2: THIS WAS HUI 2008 ICL. This really does look a lot like GDX Now. Yes GDX can drop, but if you sell everything and this happens, you’ll be left behind.
NOTICE GDX NOW – We could just do this if this acts similar to the 2008 Bottom. I personally wouldn’t sell everything, however…
GDX – I did say that we could dip down and tag the 50sma ( or shake out), so if you are heavily leveraged and are concerned, you could just lighten up. I really wouldn’t bail out of ‘everything’ . Remember, NO MATTER HOW YOU COUNT THIS, IT SHOULD BE Right Translated!
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Let’s see what Thursdays trading reveals regarding these various sectors.
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Enjoy your Thursday trading!
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~ALEX
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As you know, I’ve been watching many of the MJ stocks with the idea that they will be excellent growth companies, and they have been. Profits & Revenue are exploding. It should be noted though, that they also have already had a nice run heading into Canada’s Legalization day. The old saying goes , “Buy the rumor, sell the News”. In Canada , it is ” Buy the rumour, Sell the news , Eh?”, 🙂 and unfortunately, so far that is the short term reaction. Let’s take a look…
MJ ETF– So the ETF is still technically fine, but I’m also seeing a double top with divergence, and that is a warnings that some of these may be overbought and the selling may continue (or further choppiness & consolidation). I lightened up on some of my holdings to lock in gains, and will see what happens going forward. Wednesday some were green, but most were red. See the chart
For example, OGRMF dropped a whole lot, but found support and reversed at the 50sma. So it remains ‘technically ok’, but now OGRMF also has stronger divergence since the drop added weakness to the MACD & RSI. So lets Stay Very Frosty in this sector and see how these play out.
This is also directly Copied from yesterdays report: I drew this idea after a big reversal in many MJ Stocks occurred : Will it drop the way I have drawn it? Will we see further consolidation?
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CBWTF THURSDAY– It dropped again, but tried to recover, reversing off of the 34 sma. So the answer is , “Yes, this may continue consolidating & going sideways.” I’m still holding this one for now.
IF SLOW & STEADY IS MORE YOUR PACE, SOME OF THESE METALS STOCKS ARE STILL ACTING CORRECTLY.
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Stocks mentioned recently are still acting ok. We’ll look at a few. We discussed CZZ , SID , AKS, CLF, X, CSTM, GGB , etc
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CZZ at $7.55 was a Buy in yesterdays report, it was actually a buy at the 50sma nack test near $7.10
CZZ – Now $7.78 – it is still steadily moving higher.
SID – Also in yesterdays report, SID is breaking from a base.
AKS – Break out & back test
CSTM – When the Metals stocks run, I have traded this . It is oversold, but this doesn’t look all that bullish, right? Watch for a break above the 10sma. Let’s take a step back…
CSTM – The BIG Picture shows that we are at a point that usually acts as support, and if the sector warms up, this ought to run again. Eventually I would expect a break out higher and the run could be very good. Why? Well, Do you remember AMD…
Do you remember AMD, and that $9 – $15 consolidation that was also trade-able? I used to say that if this ever broke out it should run higher than $20, but it really excelled and ran to over $34. Consolidations can be exceptionally good when they break out, so keep an eye on CSTM too.
