Friday November 30th
With a strong knee jerk reaction on Wednesday, we got to see what a little friendly talk about interest rate hikes could do to the markets. Next on the table is the G20 meeting, and center stage is this…
I saw this headline and article that states that Trump is close to a deal with China, and they are scheduled to meet Saturday night for Dinner. The article then went on to say that the deal will likely not be reached in this round of talks, but the hope is possibly a temporary pause in the trade war for a period of time. So even the News is choppy and guess work …
Just about every sector of The Markets Popped very strongly with the Fed Powells interest rate hopes Wednesday (except Oil), and I mentioned in my report that Follow through may be stunted with the G20 Meeting days away. I also mentioned that FRIDAY is the day that you can decide how you want to be positions, knowing that Monday can be a Gap open or a Gap down. Position size is important too. Let’s review Thursdays market action, 1 day after the Fed Explosion…
.
SPX – Keeping in mind the original possibility, before the Powell Pop, was a run to the 50sma area, and then it could fail.
SPX – After the Powell Pop, we now have a pause. This looks familiar when you look at prior tops and this was day 21. There is bullish MACD divergence, so it is possible that we have an ICL in Oct and the next daily cycles low will be another higher low.
DJIA #1 – So the discussion has been , “Was that the ICL, the deep meaningful low that should last for 2 daily cycles? Or was that just a dcl (Daily Cycle Low) and a final drop brings us to the ICL?” So IF that was an ICL, that low should not be broken on the next dip to a dcl.
DJIA #2 – This idea of 1 more deeper low has always been on the table, especially when the NASDAQ DID break the October lows, so all we can do is wait and see now. At day 22, this could begin to get choppy and slowly roll over to the next DCL.
So a couple of ways to play this time period would be to continue to ride the General Markets long with a stop under the OCT lows, raise your stops, or take profits and watch the daily cycle play out Monday , after the G20 weekend mtg.
.
WTIC – This is over 70 days long, so I really expect a swing low on any day. We had a reversal on Thursday.
XLE – The XLE Energy Sector has held up much better than Oil and has strong divergence. When OIL moves higher, I would expect the Oil & Energy Stocks to move higher. GUSH & ERX are 3x etfs that I would expect to move higher. I own GUSH, and will not sell it due to the G20. It is one area that I don’t expect price to overreact.
GOLD – Gold Popped with the Powell speech too, and I get emails immediately asking , “Is this reversal the real thing? Should I jump in ?”, so I pointed out in my report that prior POPS did not have immediate follow through. We often see knee jerk reactions in choppy markets. This was in yesterdays report.
GOLD – Gold did not close over that down trend line, it moved higher and pulled back. Friday is day 12 of the 3rd daily cycle and G-20 could be the catalyst to start a drop into a daily cycles low. It also could blast this higher into day 20+, but I would be leaning toward the cautious side. Missing one day of trading (Monday) wouldn’t hurt.
GDX – There was no follow through on the Miners, in fact, it closed 2 cents below the 50sma again. The lower line is the Daily Cycle Low (DCL), and the upper is the ‘peak’.
So I am just going to repeat the idea that so far, the burst higher after the Powell speech was just a knee jerk reaction with no immediate follow through. We are in the middle of this daily cycle, so we may get another burst in price after the G20, but really it could be higher or lower on Monday. Mondays move also may just be a knee jerk reaction, but because these markets have been so choppy, directionless, and are now in the middle of a daily cycle move, the caution is that they can go either way. It is best to think ahead, have a plan, and be prepared for whatever might happen Monday. Position size may be key. I own ENPH, RUN, NAT, and GUSH as recent trades and I may decide to hold them through the weekend. I need to see Fridays action first, but I like their set ups so far and the sectors that they are in may ignore market reaction.
.
So enjoy your Friday trading, but the G20 meeting is this weekend…. Stay Frosty!
.
~ALEX
.
