December 20th – Post Fed Syndrome

I think that we knew that the Fed would raise rates, and I think that we had a good idea that there would be a’Reaction’.   So let’s take a look at Wednesdays market action …

 

SPX – This was my chart going into the FED WEDNESDAY.  Day 34 Tuesday.

 

 

 

I have been discussing my thoughts on the Equity Markets, Gold, Silver, and Miners extensively, so I am going to be more brief and to the point now that things are playing out.  You should easily recognize what I am saying from discussions in past report  ( though I am getting emails and questions as to whether this is  ” a fake drop in Miners? Is this a buy? “, etc., so I will be clear on my opinion of that). 

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So for the General Markets –  We were on day 34 and we are within the timing for a dcl  (Daily Cycle Low), but they can extend and go to 40 or so days too.  That said , this is what we do…

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SPX – Watch it drop and wait for a swing low and a break above the 10sma.  Do not try to catch this falling knife.  My 2 boxes simply show that this drop is uglier than Feb -May 2018.  It has been  TRAPPED below the 50 & 200sma. 

 

CPCE –  This is the extremes where Lows in the market are born, and we are due anytime now.

 

 

WTIC  –  Is it a shake out?  We do have divergence and a reversal after the inventory report, however the  XLE closed near the lows, so this may be a back test of the break down.  Watch the circle for a price recovery or rejection. 

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THIS IS WHAT I SAID TO WATCH FOR WITH A BEARISH REACTION TO THE FED-

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GOLDS upper trend line may stop the rally.

 

GOLD  – So far that is exactly what we saw.  I would expect more down side.  Yes, this can bounce around like it did the last few times it hot the upper trend line, but I think that this is the top for this intermediate Cycle. 

 

 

LET ME SHOW YOU CHARTS  OF MINERS FROM YESTERDAYS REPORT & POST FED – 

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GDX – I pointed out that the 200sma was often a  ‘false break outs’ in the past , to suck in more buyers.  Also notice the BLUE TREND LINE OVERHEAD.   This was a pre-fed warning, or at least something to watch for on a FED DAY. 

 

 

 

 

 

GDX –  GDX ran exactly to the blue trend line, and reversed .  It also dropped below the 200sma, another false break out.

 

 

GDX – By the end of the day,  this was a HUGE Bearish Engulfing, reversing at that trend line, and losing that 200sma.  I am now asked, ” This looks overdone to the downside, should I BUY this?”    Well, This can bounce tomorrow, and this can get choppy, but this is not a buy to me at all.   LOOK AT THE STOCHASTICS,  along with the cycles timing, this can sell off for weeks.

GDXJ   –  GDXJ needed to play catch up, and I said that it could run to the 200sma before the FED and die there.

GDXJ – It ran to the 200sma, and reversed .  I captured this BEFORE THE FED, at 11:30 a..m.  it was already falling.  I also then announced that I sold my Miners to lock in 3 day gains. 

 

 

GDXJ  –  Later after the FED, this was GDXJ at 2:30.  Rejected at resistance.  I actually have people telling me that they bought this dip.  I do NOT recommend that you buy this dip, because to me, this is probably a top, not a dip.  YES, IT CAN CHOP AROUND LIKE IT DID IN OCTOBER AT THIS LEVEL, BUT I do not expect a break out & rally, so I may short it if it does.

 Let me show you 1 more thing that I feel we could see…

 

 Let me show you 1 more thing that I feel we could see…

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Click to enlarge,  this is a ‘Falling 3 Method’.  You get such a strong  1 day slam, that for 3 days it bounces and fools people into thinking that the 1 day drop was all we get.  Then we get another big slam that leads into a prolonged sell off.  

 

 

Let me draw it on the GDXJ chart for you…

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GDXJ  –  So if you see this rise for 3 days?  Now you will not be fooled.   If it can’t break back above the Wednesday candle,  it is a dead bounce.

 

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The General Markets continued their decline, but are due for a swing low, so it is important to wait for that swing low to form.  Sentiment is bearish and this is the time that Lows can come form.

 

 

GOLD & MINERS:  This has played out EXACTLY as I figured the bear scenario would, tagging the trend line & reversing.  We see Break outs above the 200 sma , failing like we have seen in the past,  plus we are on the 3rd daily cycle in Gold-  due for a daily cycle low.   That said, I have readers asking me if they should buy.  “The 1 day sell off was too extreme, everyone is bearish now, I feel that this is the buy”.    Buy with a tight stop if you wish,  but I definitely cannot recommend buying.  It has played out as expected if we got the bearish scenario, so I cannot recommend buying.   I  see further downside, and even if we bounce Thursday and Friday,  if  Wednesdays candle remains the top, I feel that the top is in place and we will drop for weeks eventually.  If we chop around at these highs, I may  even take a short position in Miners.

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I will also be watching stocks like AU, KL, ABX, etc , to see how they pull back.  Future entries in these current leaders could pay off well, once we get the sale prices in place. Why buy up here, when lower prices are coming?  Buy low, sell high.

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Enjoy your trading, there are still trades that are not falling apart.  THESE ARE TRICKY, CHOPPY, and DIFFICULT MARKETS, so for some, CASH IS KING for now.  I have a few trades going that are holding up  ( See below), but when the markets bottom and turn,  CASH may be a good thing to have on hand to catch some quick trades!

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  Just as an example of what I am watching during the market turmoil….  TWTR is holding up, drifting to the 50sma as possible support,   so I’ll post a chart below.  There may be some good opportunities when the time comes, so I am looking for them now.

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Let’s just see what Thursday brings our way!

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~ALEX

 

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WHAT TRADES?

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TWTR – This may not be quite ready yet, but this is NOT crashing down with the markets, right?  Look at the 50sma.  Look at the red uptrend line.   If this is what it does in a market crash, what will it do when the lows come in and we get a good market bounce?

The NBEV, WTER, and a few other trades were not affected by the selling Wednesday either   They are ( SO FAR)  Pulling back on light volume to support levels.   Reversals at the support levels can offer a low risk entry.

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NBEV – Gently dropping to the 10sma  ( I hope, and not the 50sma).   Volume was light for a crash day in the markets, right?

WTER – Dropping to the 50sma?  Cup & Handle?

There are still some trades out there, but we definitely want to be selective stock pickers, until we get the swing lows in place in other areas,  THEN we may get some fast sharp bounces out of the lows.   I will post more ‘picks’ at that time. 

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UBX is still above the 10sma,  though this was captured in the morning, and it closed at  $15.75.  That is still above the 10sma, so watch this one.

 

TK – This shipper broke off of the lows with OIL, and didn’t get caught up in the Market sell off.

 

MCOA – this is the penny  HEMP Stock that seems to be breaking out and trying to hold up at support. So far, so good.