Friday March 27th – Step By Step
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SPX – We got our Buy signal and the markets have a dcl. If we have an ICL (likely), This can now do a bear market rally for weeks, though there will be bumps and pull backs along the way. The markets closed at the highs, it could even run to the 50/200sma.
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VIX – The VIX rallied as the markets dropped, and it should not drop as the markets rally. The VIX hit resistance and dropped as the markets closed at the highs.
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SPX – Notice that the strong rally out of the lows in 2016 ( Blue arrows) ran straight up and then chopped sideways for months…
SPX POSSIBILITY – I have copied and pasted the 2019 rally ( First Red arrow) onto our current lows. I wanted to show you that even a strong rally higher can eventually just chop sideways, back testing current resistance areas before completing a 2nd leg down.
And as a reminder, I mentioned that this is something that I want to keep in mind (a-b-c down) as we rally out of the lows. A bounce out of this kind of a sell off could actually last for weeks & even months. really?…
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Yes, this was my chart used recently to show The DOW DROP from the Great Depression vs Todays in Yellow. Both were Very sharp & straight down, but then we saw a rally for MONTHS actually, before the sell off resumed in a bear market drop. So we will take it STEP BY STEP, But another sell off could eventually follow the first one.
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I showed UPRO for a rally yesterday– UPRO, UDOW, SPLX, SOXL, etc are leveraged plays, use a stop.
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UDOW FROM YESTERDAYS REPORT – And UDOW is a leveraged buy, use a stop.
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WTIC – Oil did NOT put in a low yet, and I have mentioned that Oil can bottom anywhere here or even after 40+ days. A drop to new lows from here would give us that low, but divergence is showing and the XOP is holding up, so Oil may rally soon too.
XOP – The XOP & many Oil Stocks are holing up and may not drop if Oil does. These look to be bottoming, with a MACD Cross and the RSI rising. When OIL bottoms, these stocks could rally Big. I mentioned ERF, TUSK, PUMP, BE, NOG, DNR, WTI, WLL, etc as stocks to watch.
GOLD – Gold is still holding up near the highs after a very strong 2 day rally, but it paused. It could be just a 1 or 2 day pause, or…
GOLD We might even see GOLD put in a consolidation or bull flag of the recent gains. We really have to wait and see but it is only day 8, and if that is an ICL (likely), this has plenty of time to move around.
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SILVER FROM MONDAY – I was pointing out areas that might ‘stall’ silvers climb. Resistance levels with the first one being at $14.50 resistance
SILVER did pause near $1450, but remains bullishly set up and is not overbought.
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GDX FROM YESTERDAYS REPORT – I mentioned Wednesday that GDX may stall and we could see a normal pull back, even filling that gap at the 10sma.
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So far GDX did tag resistance and start to pull back. So I would expect the 10 sma to be about as far down as it gets, but it may not even drop that far. For example:…
GDX – I have also seen stocks ( or ETFs) Crawl along the resistance building strength for a break out. Whichever way this plays out, we may get a buying opportunity in Miners. We already bought Miners at the lows, but you can add if your favorite Miner tags the 10sma in the next day or 2. Some Miners have been very rewarding.
For example SVM – Buying that reversal at $1.50 to $4.60 is a HUGE move. A normal drop to the 10sma could take place, but it is also a big drop, so a great entry would be near the 10sma IF we get that drop. It also may just crawl sideways, so we have to wait and see.
CDE – And I just want readers to know that this run does NOT have to be straight up. We can see Multiple days down and remain healthy. So CDE stalled Thursday, and people automatically wonder, “What is wrong with CDE?”. Just take a look at prior runs and you’ll get a clue. Look at the run $4 to $8 in 2019. There were 3 & 4 day pull backs along the way.
And take note of the fact that MANY of these Miners are screaming higher, so they can dip down here and there. SVM ran Bullishly out of the ICL in May 2019 from roughly $2 to $4.60 in 3 Months. WE JUST DID THAT IN 2 WEEKS!
These are not your normal Bull Runs, and may not be your normal pull backs, but use the moving averages as a guide.
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So far things are playing out as expected in various sectors and this is Friday, the last trading day of the week. Enjoy your Friday trading & also your upcoming weekend. BE SAFE and if you live in an area where you can get out and do things, visit family, etc, you may want to. Due to rapidly changing local conditions, we are now unable to dine out, enjoy many recreational areas like Parks,Beaches, playgrounds, movies, etc. and even visit our older loved ones ( my parents) without risking their health! It really does help us to appreciate what we had when we had such freedoms, so if you still have those freedoms, Take advantage of it now while you can. The door may be closing shut fast.
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Enjoy your Friday and Weekend!
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~ALEX
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