Friday May 17th – Options Expiration
Today is the last day of the trading week, and with the General Markets and Oil trying to bottom, and Precious Metals ( Gold, Silver, and Miners) bouncing around at their recent lows, it has been a Bumpy Ride. Add to that Options Expiration, and I would say that the last day of the week won’t be much better. Let’s just take a look at what we have…
SPX – SPX looks to be on day 3 of the new daily cycle, but it has been a bit choppy here as these lows try to form. This is the 3rd daily cycle and this is the one that I have been saying needs to be watched a little bit closer. It may roll over and start a market sell down. Time will tell.
I DREW THIS YESTERDAY JUST FOR US TO KEEP IN THE BACK OF OUR MINDS – Markets can rally for 2 – 3 weeks and still become left translated. If this happens, this may be what causes the Miners to surge higher out of recent lows.
NASDAQ – The NASDAQ broke the 10sma but sold off. This is also trying to confirm a dcl.
WTIC – The DCL is in place for Oil, but this has been a bit choppy at the lows too.
GOLD – Gold has been choppy at the lows, and actually dropped more than expected yesterday. This is a day 8 peak on day 10. Even though GOLD dropped a lot, Miners held up better, as you’ll see.
SILVER – Silver just gave it up. It sold down to new lows. As I have pointed out in past reports, Silver has bottomed 2 weeks after gold in the past. I pointed that out in Dec 2016. With a Silver break to new lows…
With a Silver break to new lows I would have expected a CRASH in Miners, but…
.
GDX – GDX dropped and bounced off of the 200sma. Keep in Mind that the Miners bottomed in September after GOLD put in an ICL in August last year. In 2016 Miners bottomed 1 month later too, so this was actually encouraging to see Miners hold up better than Gold & Silver. That said- I want to discuss this sector a bit further…
.
As you can see from these charts, just about every sector has been choppy and sideways this week. I have been stopped out of a few trades over the past 2 weeks and yesterday I did sell my leverage in Miners and posted that in the comments. Why did I sell if my stops weren’t hit? I will post a copy of what I wrote about that in the comments when I sold. It isn’t that the lows were broken, but basically we didn’t get enough of a move higher out of the lows to be comfortable holding Leverage over the weekend. IF YOU OWN LEVERAGE, you have this one more day in the week to make that decision for yourself.
Look at this chart: If JNUG slowly moved from a buy point swing low toward the 200 sma this week, it would have been easy to just hold it over the weekend. JNUG would be at $8 or $9, and that is what I was hoping would happen after the lows were in. Instead it has been choppy. At this time, if the General Markets start running higher, this may just remain choppy like last September or it may drop. I’ll watch what it does Friday from the sidelines, and please read what I wrote on the chart. You can see that Monday Popped Miners higher, Tuesday & Wednesday went sideways. Yesterday dropped.
.
This is what I wrote in the comments section yesterday , click to enlarge…
I want to explain my thinking again with a new chart, and this idea was in yesterdays report.
Last September the ICL was choppy & sideways similar to now. It DID eventually rally, but it wasn’t until the Markets rolled over and started selling off that Miners took off higher. Miners did rally as you can see here, but most here do remember the choppy Bottoming process until the Markets rolled over. You can see that the Miners really haven’t crashed down recently either, so they are either firming up at an ICL, or they could drop ( USE STOPS) to one more daily cycle while the General Markets bounce.
Same Chart: GDX HAS NOT CONFIRMED AN ICL, JUST A DCL. Miners have NOT had a serious major sell off since September, this is a just normal correction so far. If you have leverage, you do need stops, since this could sell off as a dcl / bear flag with 1 more daily cycle. At this point GDX has held on above the 200sma and that is pretty good with Gold & Silver dropping yesterday.
.
Conclusion: I am thinking that we are due for a DCL in the General Markets, they will bounce for what could be 10 or 15 trading days, and then if this 3rd daily cycle in the General Markets is Left Translated & starts to sell off, and then a 4th one really sells it down, that would be when the Miners really take off higher. That would be similar to the Market sell off at the end of 2018 and the Miners rally from November to February.
.
So for Friday, it is Options Expiration and things could remain choppy. I do still like the MJ trade set ups , but I’m not going to post a boat load of new trade ideas for Options Expiration Friday. The ones in past reports are still playing out, but I will discuss a couple of trades below.
.
Enjoy your Friday & Weekend!
.
~ALEX
.
ACB – With the MJ Sector starting to look bullish again, This Gap fill reversal was seen as a possible low, especially if it gets above that 10sma.
ACB – It broke above the 10sma Wednesday and Thursday was now pushing on the 50sma & downtrend line. I took a small position and will add if it breaks out.
HEXO – This is what I wrote about HEXO in yesterdays report as we had reversals at the 50sma…
HEXO – I still like HEXO while it holds above the 50sma , even though it broke higher and dropped. It does need to see some buying soon though.
ALSO IN THE MJ SECTOR:
LBUY – Yesterday in the comments section I posted that LBUY Popped on good volume in the first 15 minutes and then pulled back a bit. I used this chart to capture that move. This could break out through the 200sma, and it actually closed up 13%, but could have much more upside if it finds follow through.
VIVE – I also posted this MJ Stock as what looks to be a bottoming process and it too had good volume in the first hour. It closed up at 57 cents (up 23%) and I think that this could run to the 50sma for starters. These could be good short term trades.
Yesterday I mentioned a few Companies that held up well during the sell off . Here are 2 more….
.
LX – The TECH Sector still has stocks that didn’t really “SELL OFF” with the markets, so stocks like LX look ready to break out when the markets find follow through. THis can go on a watch list as a good 1 or 2 week trade.
VIPS – VIPS reversed at the 50sma too .
