Jan 31st
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SPX – The Markets are due for a dcl and they dipped down into an area that might act as support. So far this does look like the dcl could be in place. I want to discuss expectations going forward again, because even though it is Very Unlikely that a market would top on day 2, we are also due for an ICL drop. Let’s quickly discuss that briefly.
SPX can continue to melt up, and I have discussed a parabolic blow off top possibility in past reports too. Here you would buy a break above the 10sma like in December, and ride it with a stop. Use that stop because an ICL is also coming due timing-wise and that would lead to a larger drop…
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So we are also coming due for an ICL ( A much deeper low), since the last one came last June. I wanted to show on this chart that back in 2018 the Markets were very strong too ( green arrows), but then suddenly crashed into an ICL drop. ‘Stops’ or awareness remain important, so …
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SPX – I feel that it is more likely that we would see this run to new highs and then stall out before rolling over. Then we would have new highs that roll over as a left translated daily cycle. How do you manage this trade? As mentioned, You buy at the DCL preferably after a close above the 10 sma and ride it with a trailing stop ( or buy your favorite stocks , especially if they have dropped to support). I will discuss this a bit more later in the report.
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ONE IMPORTANT THOUGHT : One thing that now seems like it could possibly affect this roaring market is that roaring Coronavirus, due to its ability to spread so rapidly. Think about this: Last week there were 34 deaths and almost 1500 infected. As I write it is reported that it is highly contagious and now almost 10,000 cases are confirmed and over 200 deaths. That was fast. Flights are now being cancelled, travel is already being banned. Work places like Starbucks , Ford and a few other companies already are shutting down business in parts of China. THAT reaction, if it also spreads, could obviously hinder earnings, employment, etc. THAT reality could trigger the dip into an ICL eventually, especially since we are over due.
1. Drop to an ICL soon?
2. Continue to climb a wall of worry?
3. Does GOLD break out and run as a safe haven if Markets drop?
We shall see soon enough, these markets have been very strong, but just make sure that you use stops if you are invested in General Market Stocks.
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WTIC – Oil is choppy and should be close to a low (dcl) too, but it struggles at the 10 sma.
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GOLD – Please take a look at GOLDS move out of the November ICL. We are on day 12 of a 2nd daily cycle now, and I wanted to see where Gold was 12 days out of the ICL? Guess what? It was at the lows again and actually chopped sideways for 29 days, and then it took off straight up . This tells me that we could continue to chop sideways, so we may mentally need to be prepared for that.
SILVER – A swinbg low formed in Silver and it seems to have put in the dcl later than Gold (we saw this in May 2019). This looks like it could form an inverse H&S, which means that it will move higher , but it also could chop around. I already pointed that out…
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SILVER – I showed a choppy shoulder possibility in yesterdays report. This is Bullish, but choppy sideways action can frustrate many traders.
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GDX – Thursday GDX was green, then red, then green, then closed slightly red. It is down 13 cents, yet I see fear and strong emotions still affecting people, because it is chppy. Please know that this can chop around for a while and that doesn’t make it bearish. Let me remind everyone of something…
GDX – Please also look at GDX on day 11 out of the November ICL , because it looked very similar to what I see now on day 11 out of the dcl. It chopped, it dropped, and eventually pushed higher. Way back when GDX was forming a cup, I mentioned that a multi-week ‘handle’ may form in GDX, based on choppy trade. Yes, a handle would involve choppy trade action until it is ready to move higher. WHAT SHOULD WE CONCLUDE?
WE CAN CONCLUDE THAT THIS MAY OR MAY NOT ROCKET HIGHER RIGHT NOW. THIS MAY REMAIN CHOPPY FOR A WHILE, VERY SIMILAR TO WHAT WE SAW COMING OUT OF THE ICL. DURING THAT TIME, A FEW INDIVIDUAL MINERS DID RUN SWIFTLY AND WE MAY FIND THAT TO BE TRUE NOW TOO. LETS LOOK AT THAT IDEA…
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NEM – We are still seeing various Miners running bullishly, even to new highs , despite markets being bullish and despite the choppiness in GDX.
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GPL – GPL dropped Thursday morning and then closed at the days higher. This former lagger is climbing higher, though it is choppy action. It was recommended here near the lows.
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DRD – Though it has been Choppy too, DRD still moved up 55% from the ICL lows and despite the choppiness over the last 3 weeks, it just managed to tag new highs Thursday.
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ELYGF – We had another good day for ELYGF, even though GDX & GDXJ were choppy. AFter chopping along the 34 sma for many many day ( I own it, it was boring), it just took off straight up and without news. Several other Miners may do this despite the GDX / GDXJ Choppiness.
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So the majority of stocks in GDX & GDXJ may be chopping around, but I do not view it as bearish action at this point. I understand that some do not like to hold individual miners, you would rather grab an ETF and let it ride. That is fine, and seeing several other Miners acting correctly can at least add some comfort to the idea that the sector isn’t Bearish or ugly, it is building energy to break out.
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IN FACT, I wanted to save this next chart for the weekend report, but I’m hearing a lot of fear or discouragement in our live comment – trading area on down days, and even panic in an email asking me, ” What is wrong, are Miners about to crash? They can’t get any traction and I am ready to bail out!” I understand that Choppiness can cause that kind of discomfort, so it may be best for some that feel like that to step aside & plan on buying the break out instead. That may be more Your style. This choppiness may continue, HOWEVER, let’s check this out now.
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We are at the end of January, so we can look at a Monthly chart. This really is is an EXTREMELY BULLISH set up, even as it chops sideways. Yes, it is choppy & difficult day to day, so I will discuss that further in the weekend report, but this is bullish. Honestly, this really could break higher at any time & that may make it hard to get back in too.
For now, we are on day 11 and we have a DCL to put a stop under. You can also choose to just stop out if the trend line is broken below $28 too, since I think that THAT may indicate that we are going to experience more choppiness.
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I will have some other thoughts / trade ideas below, Enjoy your Friday Trading and your weekend!
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~ALEX
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If the stock market is going to run higher from a dcl, you can find a trade by looking at your watch list of former trades, and see if they pulled back to support areas. Some on the list were CRWD, UBER, AMD, MU, TWTR, NTNX, FIVN, PAGS, SNAP, LVGO, etc etc. If they drop to support, that would offer a low risk trade entry, and a place to put a stop. Beware of earnings though, some like FB had a bad reaction to the initial earnings release. What about possible bullish set ups for the dcl? For example…
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AMD – AMD did drop with the markets, but it reversed slightly above the 50 sma, which is right at the 34 sma. A move above the 10sma could be bought with a stop.
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NTNX – This was my Jan 6 chart after reversing at the 50sma area.
It then ran from this $30 area to $37 again, and now …
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NTNX – It is now back to that 50 sma by dropping to $31.72 with the market pull back. Yesterday it reversed, closing at $33.28. It is a buy with a stop, since it could at least run back to that $37 area, maybe more if the markets stay bullish.
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CRWD – I traded CRWD and it has pulled back to the 34 sma on last weeks drop. It looks ready to go already. It was a buy 2 days ago, but it just crossed the 10sma, so that makes it a buy here too. This looks pretty strong if the markets are going to move higher.
TWTR – I also owned TWTR for a while too. It made relatively small gains as a slow mover filling that gap down from October. It reversed on the 34 sma yesterday, so it could be bought with a tight stop at those lows. Higher lows / Higher highs so far.
So those are the kinds of things that I look for if we have a dcl in the General Markets.
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BALMF – I added on this Miner, it is also going to be a longer term Bull Market BUY & HOLD for me, similar to ELYGF.
BALMF WEEKLY – This is showing the potential upside and the recent rise is why I like it.
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CGC – So far the MJ Stocks broke out and are acting correctly. I own CGC and a few others as long as they hold up like this. I’m not sure what will happen if the Markets dip into an ICL.
GRWG – And as mentioned before, I really like this LONG Base in GRWG. I re-bought this too.
GBTC ( For Bitcoin) – The GBTC trade broke above the 200 sma and we have higher highs and high lows. I mentioned it at the 34 sma, and I think that stops can be raised under the 200 sma now.
