Tuesday October 1st
SPX – I’m waiting for a swing low to form in the General Markets. We are on day 39 or day 1, watch for a break through the 10 sma & down trend and that would be a buy ( TQQQ, SOXL, UPRO, etc) . THEN WE NEED TO WATCH HOW THIS DAILY CYCLE UNFOLDS, SIMILAR TO WHAT WE DID WITH GDX? GDXJ. It may or may not form as L.T. after several days & Roll over. The markets have been choppy.
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WTIC – OIL Plunged another 3% and broke the trend line. That is what I like to see before a dcl forms actually. Oil crashed lower, but Oil / Energy stocks did not…
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XLE – With Oil down over 3%, XLE held the 50 sma & 50% retrace. Gush was only down 2 cents, and some Oil stocks went green. I will discuss that at the end of the report, but I would still remain cautious. It might be worth starting a watch list though.
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GOLD – Gold broke down as expected, since Miners were leading the way. This is only day 14, so if Gold or Miners puts in a bounce, please remember that it can still move lower for 2-3 weeks and likely will to become L.T. I have pointed out that Gold has formed a Head & Shoulders pattern.
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SILVER – Silver also lost that Bullish look in the short term.
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GDX – Miners peaked on day 7 and that should be the high point for this daily cycle, so even if Miners bounce after this measured move, IT IS NOT A BUY if you are following my methods. Buying a bounce into an ICL drop is painful. This can drop into the end of October if it wants.
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GDXJ – We could get a bounce to that 10 sma (blue line) or maybe the 50 sma (red line) and then roll over again. I drew the bounce a bit lower to the 10 sma since that what we saw in the April – May ICL drop. I AM NOT SAYING THAT WE WILL HIT $32, I will watch it along the way and discuss targets later.
GDXJ – I have drawn where it looks like we are compared to the April drop into an ICL. A bounce back tested the 10 & 50 sma then too. The indicators match that time period too, so what do I see? There were bounces that lasted 5 days, but they were weak & choppy. It is not ‘time’ to buy yet if we bounce.
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The General Markets are in their timing for a dcl, but it may only be a bounce like we saw in Miners. With GDX / GDXJ, that 7 day bounce was convincing, wasn’t it? Some that sold their Miners felt like they were missing out, but it rolled over after a day 7 peak and broke down further. We MIGHT see that with the stock market after several days too, but it is hard to know for sure with the additional Rate cuts from the Fed recently. If you usually go long the stock market, I would play it the same way that I said I play the Miners at that time. You can go long in case it runs, but use & raise a stop and you should be fine. Below I will also discuss Oil & Energy Stocks a little, and I also want to point out a few Miners charts.
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~ALEX
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EDIT: I SOLD 1/2 OF MY JDST IN PREMARKET AT $17.90, just in case we get a bounce. I may re-short later.
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As Oil plunged down 3% yesterday, I thought that it was noteworthy that some Oil / Energy stocks were unaffected. This MAY BE signaling that a low in Oil is close. I will point out a few of the stocks that may be worth putting on a watch list, and I do still own a couple of Oil /Energy plays simply because I haven’t been stopped out yet.
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DNR – DNR is still holding above the 50 sma. Despite Oils drop yesterday, it was own 3 cents.
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COG – Cabot Oil & Gas actually closed up 17 cents and that is the 2nd day in a row that it was green with Oil down. It is basically crawling under the 50 sma , which is usually bullish preceding a break out, so this could go on a watch list if you are interested in a trade for this sector.
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ECA – ECA landed on the 50 sma yesterday and then closed higher into the close. This also looked good with Oil down over 3%.
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WLL – WLL dropped 37 cents Monday, but then moved higher into the close, closing up 8 cents. It looks to have finished a gap fill, we’ll see if there is any follow through higher. The MACD looks like a bullish kiss & it has finally reached oversold.
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I want to briefly discuss Miners here.
In response to an email : I have recommended that you do not buy the dip yet, or the bounce. Why don’t I buy all the way down? Aren’t Miners cheap now? Miners can drop quickly and even though they can also recover quickly, it can be mentally uncomfortable when your account starts bleeding out. The drop that has already taken place is proof of that, and I do not think that it is over. Let’s take a look…
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EXK -$1.70 to $3.20 is a 90% gain, but notice just how quickly those gains can go away. This recent 4 day drop was a pretty big drop all by itself ( $2.80 – $2.20 hurts). A bounce will draw in Buyers, it will look like a ‘shake out’, but based on Cycle timing, I think we have should still have more downside.
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HMY – I Loved HMY, DRD, RGLD, EGO on the way up, but I sold my HMY & DRD positions knowing that after an Intermediate Cycle ‘peaks’, these can pull back 50 % with no damage to the charts. HMY ran from $1.70 to $3.80 , but it lost the gains quicker on the way down. HMY is already at $2.80, it would be a great buy after a bounce & 1 more drop.
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EGO – The same applies here. EGO tripled on the way higher. Wow, $3 to $10! It trades at $7.77 as of Monday. Buying at $6 later this month would be great, riding it from $10 to $6 would not.
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RGLD – RGLD ran from $80 to $138 and is actually holding the gains fairly well, but if this H&S breaks down, it can drop to the $100-$110 area.
So while I do think that the Miners will be a good buy at the ICL, that could still be weeks away. I think patiently waiting with Cash is the best trading method right now.
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BBBY– I like this type of set up when I am expecting a bounce or lows in a sector. BBBY actually hovered above the 50 sma , but my point is that you have a rally out of the lows, and then a pull back. It could be 1-2 of a 1-2-3-4-5 move, so I look for similar set ups to this, to buy the reversal at ‘2’…
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LASR – Something like what I see in LASR , for example, could be a buy with a stop under the 50 sma for ‘Traders’. $13 to $17 was the first leg, the next could make it to 19+
