Wednesday October 16th

 

 

I have not had time to proof read the report for typos, please excuse any mistakes if there are any.  You will see that I wanted to answer an email question about Miners by using a few charts.  I also added a few trade ideas at the end of the report & still wanted to be able to release it by 8 am Eastern. Thanks.

 

SPX YESTERDAY :  I MENTIONED that the gap does not have to fill, and pointed out  that the one in September didn’t. This was day 7…

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SPX  – So day 8 saw the markets rally higher. I think that it can continue to run and we’ll watch it as time goes on.  If you are long, you can comfortably raise stops to the 50sma. SOXL, TQQQ, & UPRO are doing well.

 

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I have mentioned stocks like ROKU, TSEM, MU, AMD, SQ.  They are looking good.

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WTIC  – Oil dropped on Tuesday for the 2nd day. This tie it looks to have closed below the 10sma. I am not long Oil or any energy stocks, but let’s take a look at Oil / Energy anyway.

 

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XLE  – The XLE looks better than oil and is pushing on the 50 sma.

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XOP  -The XOP is choppy at the bottom, but it is starting to resemble a “Complex Base Bottoming Pattern‘.  These  choppy complex bases rally strongly & then drop and frustrate many traders,  and then they REALLY take off.   Have you ever seen a complex base pattern?  Yes, you have if  you were with me in 2016, because I was pointing one out to you then…

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COMPLEX BASE–   These bases really frustrate the bulls & bears and then take off leaving them behind, so I am going to continue to watch the oil / Energy Sector for clues going forward.

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KEG  – I looked through different ‘stocks’ and found a couple that do look Bullish. I’m still not buying, but this is a higher low break out above the 50sma for KEG. DNR, OAS, MRO, VLO, LPI, etc have interesting set ups, but many are not buys yet, in my opinion, unless you use Tight stops.  No recommendation here yet.

 

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UUP  – Another day where we had the

– USD down

– Gold Down

– Silver Down

– Miners Down.  The inverse relationship is not in play.

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GOLD  – Gold reversed & sold off  under the 10 sma again, but has yet to break the September lows, however…

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GDX #1 – GDX & GDXJ made new lows.   It is possible that GDX could bounce here, but Tuesday was a steady sell off in Miners.

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GDX #2 – GDX can also just continue to just sell off, if the bears gain some momentum. My count had   had GDX with a day 7 peak, and this is only day 22. Daily cycles often go into the 30+ day area, and that leads us to the FOMC Mtg . FOMC WED would be day 33.

 

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GDXJ #1 – Again, this lower trend line makes it look like we could see a bounce before we continue down, but…

 

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GDXJ #2 – It also looks like it could just break down, and keep this tight dome top in play. In fact, look at that flat blue line along the recent lows on the chart…

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RGLD  – Selling can just accelerate when support gives way. We are seeing that in some of the stocks…

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CDE – This is  a good reason why I sell near the top of an intermediate cycle & try to buy back in lower. Riding these Miners down is painful, and once they break, it can get ugly. $6 to $4 is already giving too much back, but it could drop even further now that the support is breaking.,.

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SA  – Another example of why we sell near the Intermediate cycle peak, and try to buy lower. I am starting to see many Miners back even landing back near the May lows.  Can you be happy buying at $11, riding it to $16.50, and waking up back at $11  ICL to ICL?

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MAG   – Mag could almost be cut in half in a little over a month if this selling continues.

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USAS  – Riding the ICL to the highs gave us great gains, but riding them back down could leave one with great pains.  A back  test of the 200sma was always possible with an ICL due.

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So I have had a couple of emails asking me,  “When will we start buying some of these Miners,  they are really cheap now?  Why not just buy knowing that they’ll be higher?  I’m thinking that Earnings could send these higher quickly”  I do understand that thinking, and you can buy your favorite Miner anytime you want, but I have been trading Miners since 2001, and am reporting my recommendation based on my own personal experiences.  What I have seen is that even in times of good news, when they are  dropping into an ICL,  some of these could still crash down further.   Miners can drop a lot percentage-wise, so I just wanted to show that to everyone here with the charts above.   Yes, I do think that they’ll be higher later, but riding them down can cause a loss of much of the gains that we worked hard for in the May through Aug -Sept rally.  Emotionally , watching your account go from $10,000 to $6000,  or  $30,000 to $19,000,  $50,000 to $30,000   is not very fun.  I HAVE DONE THAT. It happened to me in 2008.  I will never forget the pit in my stomach when day after day I watched my account erode. It was cut in 1/2 because  ‘I loved buying Miners’ in a Bull Market.

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Of course, what if you want to own your favorite Miner and think that it is reasonably priced or going to take off higher at earnings release?  That is absolutely fine, and if that is your trading plan,   you can certainly add it when you want to.  I would say start small and watch things play out from there.   I am just hear to show you how I trade this sector from ICL to ICL, after I made & lost money in this sector back in the 2000’s.  It was a learning lesson for me.  I watched my separate precious metals account in 2008 get cut in half.  I remember how sick that made me feel in my stomach.   It is VERY HARD to be patient, but that is my plan and my recommendation.  You do NOT have to try to short Miners,  that is tough to do with all of the bounces, but even just sitting on the sidelines & waiting for an ICL can really pay off.  I do know that feeling of wanting to buy my favorite Miner because it just dropped from $6 to $3.50!  It is exciting,  but $6 to $2.75 is even better 🙂

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We do have other sectors to trade in the meantime, some ideas are below. We are dealing with occasional choppiness, but that can be normal coming out of a dcl.  My recommendation is to try to be patient with precious metals for just a little while longer. We seem to be on day 22 of the GDX GDXJ ETFs.  Most of these Miners are likely going to continue to get even cheaper with the current set up. That said: The choice is always yours.

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Enjoy your Wednesday trading!

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~ALEX

 

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TRADE IDEAS:

FIT – Fit was trade-able out of the lows, but it has consolidated those gains in the past 3 weeks. Dropping to the 200sma makes it a ‘possible’ buy candidate soon, but WAIT FOR A REVERSAL and you’ll need a stop under the 200 sma.  Notice that it DID do a false break of the 200, and could do another, so keep that in mind. Also watch for earnings release date- This MIGHT Break down, since it is not following the markets, but so far this is a good looking set up after a good solid run.

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NOTE: In the Democratic debate, several candidates discussed ‘putting drug company CEOs in jail for the opioid crisis’ and other perceived crimes, so I DID wonder if this would negatively affect the Biotech / pharma sector Wednesday. Lets see how these open & trade on Wednesday, but I will cover the sector anyway…

LABU – LABU or Biotech / Pharma was a buy, and still could be bought. I want to look at some stocks in this sector too…

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CDXS – This double bottom base looks ready to break out & run, with a strong MACD divergence.  A  push above the 50 sma could become a buy. The sharp drop from $19 to $13 may be ready to reverse higher. WAIT FOR A BREAK HIGHER OR SIGN OF STRENGTH.

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INFI  – I mentioned unusual activity in INFI  Tuesday morning and it just kept climbing with volume. I didn’t buy it, but by midday it was up 10% as seen here.  It closed up almost 14%. This could break the 50 sma & run too

 

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ZIOP – ZIOP is running along the support of the 200sma.  I would find the earnings release dates on these before buying.

 

THESE ARE FOLLOWING THE MARKETS HIGHER, BUT STILL POSSIBLE LOW RISK ENTRIES- see also TSEM 

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AMD recommended yesterday here…

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AMD – Still a low risk entry

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MU – Broke above the 50 sma

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ROKU -This was recommended as a by above the 10sma near $105, you can add here with this sign of strength.  It looks ready to run to $170 ( maybe more). That will be a fast double 🙂

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SQ – Breaking higher from a base, SQ usually runs well.

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NM – NM is making some pretty big swings ( 50 cent drop), but watch for this formation. If it completes, you buy the break out.