Tuesday March 10th
DJIA – The Dow has lost almost 6000 points and I don’t think that ALL of the selling is over yet. We can bounce, but I still see more downside. Notice that the last bounce was just a back test of the 200sma. That was a good place to go short. Most of us probably went short last week ( SQQQ or SOXS for the NASDAQ or Semiconductor short).
,
SPX looks like it could bounce & then drop again. Why do I say that? We are almost at a support line , however…
.
SPX – We still have more ‘time’ in the daily cycle. The reason that I would still expect more downside if we bounce here is that we are on day 25 ( Usually a daily cycle has around 35-40 days recently). COULD we get a shorter daily cycle if the selling is so extreme that it exhausts itself? Maybe we could, but I have to expect this to play out as a giant sell off in a 30+ day daily cycle. If you want to lock in some profit in SQQQ on the way down, that is prudent.
NASDAQ – I have had a 7500 measured move target for NASDAQ. I have expected it to get there in an A-B-C type drop like we are seeing, but a 1 or 2 day bounce to back test that 200sma can be anticipated.
WTIC WEEKLY FEB 26 – Over a week ago I called for Oil to break down and drop to near $40 at first, and then a drop to prior lows is possible too. Prior lows were $26, so ….
THIS CHART SHOWING $26 WAS IN OUR WEEKEND REPORT: “…Oil actually still looks set up to drop to that 2016 target area ( $26, but it could stop short near $30), and that may just happen rather quickly. Why? As seen in the daily reports, this daily cycle has plenty of time left in it.
.
WTIC – This drop is actually ridiculous! It looks like exhaustion. A $10 drop in Oil in 1 day? 24.5%?? With so much time left in the daily cycle here too, I have to wonder if we will see a possible exception to the rule, so this is what I’d have to think we see.
1. If this is going to be a 40 day daily cycle, then we could bounce & chop around and THEN drop into the DCL, possibly only slightly breaking that $26. Or
2. Maybe this capitulation exhausts here and the lows are in, we bounce & double bottom? OR…
3. This would be so hard to believe, but could we bounce and drop even lower, like near $20? We have to wait and see , but I think we’ll see Oil bounce soon with this high volume gap down and possibly give us clues along the way.
.
Precious Metals: Same Old Mixed Picture
.
GOLD – Gold held up through the storm of the market sell off. I am seeing divergence in the RSI, so this does have the look of a double top. Did Silver & The Miners hold up?
,
SILVER – Silver dropped and recovered, actually breaking the 200sma & re-gaining it. Volume on the drop was light, so normally this would be encouraging at the least. Silver may have put in a dcl last week, but then we have the Miners…
,
GDX dropped and closed at the lows.
1. Good news is that GDX It held the 200 sma, but GDXJ did not.
2. It looks to me like the Miners became the sacrifice again, when margin calls came in, or people wanted to sell some of the gainers to offset the losers. The lows were not broken though, and volume was 1/2 of what we saw last week. THAT is usually a good sign.
.
I just want to repeat this important thought: The DOW losses 1,000 points, loses 1,000 points, then rallies 1000 points, then loses 2,000 points. These are TOUGH markets to trade in, and being in cash or just having a small position or two ( The shorts we were trading) while mostly in cash may be best until things really settle down. As for me personally? Let me tell you my own experience over the past 3 or so weeks ( and remember that I am in front of the screens for most of the day).
.
I have been about as transparent about my trades over the past 3 weeks as possible for an active day trader, and even though I got the General Markets Short correctly with SQQQ, I got the call for Oil short correct ( which I didn’t take) , I also traded the DCL in Precious Metals by riding JNUG & a few Miners higher, and recently I also traded some Very Bullish Biotechs. You saw me trade INO from $4 to $17, selling along the way, but even with all of that, I gave about 1/2 of those gains back in this chop already yesterday. It has been very hard to hang on to the gains, even though I was selling INO on the way up, which usually helps. I sold my final 1/2 position above $17, and yet I got caught Monday in a few sell offs where I used loose stops, went to lunch, and they got hit after giving gains back. Those losses ate into some of my nice INO, SQQQ, and other gains quickly. The whip saw is pretty unavoidable and often unpredictable. So it is not an easy market at all. I will discuss that below a bit too.
.
MY GOAL IS TO EXPLAIN WHAT I AM ABOUT TO SAY A LITTLE MORE IN A FUTURE REPORT. MAYBE EVEN TOMORROW. I feel very strongly that when this choppy droppy toppy market finally settles down and becomes less volatile, we are going to have a Great buying opportunity in front of us, in the Precious Metals. And yes, I am thinking that MINERS will, at that time, become accumulated. They can become very much sought after for future gains and not just sold off with the stock market to off set losses like I think we are seeing now.
QQQ – So on this chart in February I mentioned the NASDAQ top 2000 compared to now. I see similarities. Remember that AFTER that top popped in 2000, that IS when the bull market in Miners began. It began in 2000-2001 as those markets continued to sell off. As far as I’m concerned, the bull run in Miners has already begun now, because we have enjoyed trading Miners as they have doubled and tripled over the past year or two. We are just hitting turbulence with margin calls and the volatile toppy market now. I expect this to change & for Miners to become precious again 🙂
At the next ICL, if the markets are selling down in more of an orderly manner with less volatility or even bouncing for a few months, I feel that money will gradually start to flow out of the General Markets and into Miners. That would be the opposite of what we are seeing now where we see Selling the up trending Miners to pay for or offset the recent stock market crash. Be a bit cautious, keep positions small because right now many traders are getting whip sawed, yet at this time you do want to try to preserve capital for when the next best set up comes along, and they always do. CASH IS KING. So if you are trading, keep positions smaller and please use stops. I made pretty good gains last week and gave 1/2 back yesterday with loose stops and a quick sell down in some of my holdings. I will explain a few of those F-A-S-T biotech trades below, enjoy your Tuesday trading!
.
~ALEX
.
.
Just a few trades to discuss what we are dealing with and how choppy they can be. I got stopped out of a few, but you can monitor these and other trades mentioned in past reports and I will try to offer more trade set ups when things settle down a bit.
.
INO – I bought INO around $4 and sold some on the way up near $9 and then all of the rest above $17. NOW LOOK AT THAT DROP! It’s at $10 again, but I kept saying on the way up that I was selling here & there because I expected this after it got too extended. I also felt that way because…
IBIO – I saw IBIO do something similar. It shot from 25 cents to $3.25, and then crashed to $1.25. The gains are excellent if you catch it right, but then the drop is deep! So INO COULD just flag like this one, and this may consolidate and then run higher again with the Coronavirus on the run. We’ll see…
NVAX – I bought NVAX near $10 with a reversal at the 10sma. I warned repeatedly that these move QUICKLY, but a reversal may give good upside gains. I also drew that it could get choppy after that $6 to $18 move!
NVAX – See the red reversal day? Then it went to $11, $12, $13, $14. So far so good until yesterday. I drew this midday to show that it possibly was heading back to the 13 sma. I was still in it at $11, but gave $2 /share of gains back at that point.
NVAX – There is a support line just below price, but it dropped all the way to $9.90 from a $14 peak last week. Let’s take another look…
NVAX – Using only the 20sma, this may be support. By the close it dropped just below $10 when I was away at lunch and I had raised my stop above there above the 20 sma, so I just rode it from near $10 to $14 ( did not sell any this time like with INO) and back to $10 & stopped out . This MIGHT hold here & find support at the 20 sma, but what I’m saying is that I just gave all of my 4 day gains back in this chop, and that was at one point roughly gains of $4/share.
VXRT – I still own this one, but after seeing NVAX, I almost sold it to lock in gains.
BCRX – This was a nice break above the 50 & 200 sma that I mentioned I had entered, and even though the back test looks normal here, it stopped me out too. This got caught up in the market selling and that is actually a drop from $4 to $3, about a 25% drop. So these choppy markets can be very disappointing, even though the set ups look valid.
CLX – It has still been choppy, but CLOROX is hanging in there, since it is likley selling well with the spread of the Virus. So some stocks may do ok, but they are still a bit whip saw and it may be best for most to be patient and wait for some of this chop to stop, or Keep Positions Small!
.
UWT & GUSH – I almost HATE to even mention this, for fear that some will get hurt. Be careful, be safe, this is NOT for everyone, but this could be a SNAP BACK trade that offers quick profit. It looks like capitulation and even a small bounce could be scalped for decent gains.
