Wednesday March 4th – Surprise!

 

Well, I think we can all see why I discussed Volatility and named yesterdays report ‘Tricky Trading’with the recent Market action. Then you add to that a surprise 50 pt Fed Rate Cut after the open?  Well then you have yourself quite a lively market, with volatility and what is known as ‘whip-saw’ moves.  Has anything really changed?  Let’s take a look…

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SPX – In the weekend report, I called for a bounce with this reversal & then another leg down.

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I also pointed out yesterday that the NASDAQ top in 2000  only had a 3 day bounce after putting in a strong looking reversal candle.  That bounce ALMOST reached the 50 sma, and then it rolled over.

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Well on Tuesday Morning the FED stepped in and did a 50 pt rate cut and the markets rallied sharply – but only for about 10 minutes & rolled over.

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QQQ – As it started to drop, I grabbed this chart because it looked quite similar to the 2000 top chart above. It started reversing just under the 50 sma, and I was looking to short the markets for the next leg down.

 

SPX – So when the FED CUT was announced, the markets had been selling down, they then rallied sharply to the 10sma, and rolled over again.  That Rate Cut DID NOT have any lasting help (as of yesterday).

 

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QQQ  – I decided to short the market using SQQQ as this rolled over. So my stop would be a rally above that 50 sma.

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SQQQ – on an intraday chart, we saw that SHARP DROP in SQQQ with the rate cut. Then the Fed spoke, and SQQQ reversed and pushed higher.  THAT ALONE was the tag of the 10sma for QQQ.

 

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SQQQ – So we see SQQQ slightly broke the 50sma & 10sma & reversed back above both with that rate cut, and this  is when I shorted the NASDAQ with this a starter position in ultrashort at $20.50.   My stop can be SQQQ $20.  I added a little more shortly after near $21 and it kept rising into the close to $22.

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Please read the chart:  SQQQ CAN just  take off higher if the markets crash, but if they rally?  It also may continue to do  some choppy volatile action as drawn here.  I will look to build on that short position depending on how this plays out.

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EDIT:  This is what I see for the futures at 6:30 a.m. Eastern.  I could get stopped out of my short, we’ll see.  I still think that the markets can rally and then sell off, but we’ll see how today plays out.

 

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WTIC  – Oil popped & reversed too. It is also early in the daily cycle at day 19 of maybe 40 days, so I expected it to bounce & then drop again.  WEDNESDAY IS OIL INVENTORY on day 20.  That may start the OIL drop again.  XOP closed red.

 

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REMINDER:

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YESTERDAY I SAID OF GOLD:   THIS  SECTOR IS A BIT COMPLEX NOW, IT IS NO LONGER A STRAIGHT FORWARD SET UP, SO ALL WE CAN DO IS ANALYZE IT DAY BY DAY AND LOOK FOR CLUES.  USUALLY WE WOULD GO BY WHAT GOLD IS GOING, AND SEE HOW GDX IS FOLLOWING IT.   CURRENTLY GDX IS NOT FOLLOWING GOLD EXACTLY, IT OVERSHOT OR OVER REACTED.  THAT CAN BECOME A FALSE READING, AND GOLD WILL REMAIN OK,  OR MINERS MAY BE LEADING THE WAY & GOLD WILL PLAY CATCH UP SOON.   IN THIS CASE, WE NEED TO CONTINUE TO EXERCISE CAUTION.

LET’S TAKE A LOOK AT THE CHARTS OF GOLD, SILVER, & MINERS  – It is still a bit of  A MIXED PICTURE.

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ALSO FROM YESTERDAYS REPORT : GOLD  – We expected a dip to a dcl soon, since we were on day 27 at that peak.  I thought that we might get above $1700 first, and then drop to a dcl, but then Gold crashed.  The problem is that GOLD did not completely damage the chart (yet).  It is ugly, but not completely broken.  It did reverse right at support. Please read the chart.

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GOLD loved the FED RATE CUT Tuesday. It took back the Friday crash, but here is the difference,  this is only DAY 2 of a new 3rd daily cycle and since GOLD did not break the 2nd daily cycle low,  it can break to new highs. That was an abnormal drop Friday, but it didn’t damage golds chart.   The real question is-  WILL IT DRAG MINERS HIGHER TOO, NOW THAT IT IS A MIXED PICTURE? 

 

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SILVER   joined the bounce, but is still down near the lows, not the highs like Gold ( Mixed Picture). Silver is also below the 50 sma so far.

 

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GDX & GDXJ ramped up higher all day with a strong reaction to the Rate Cut. Again, the DIFFERENCE is the timing. That was a day 27 peak, then a drop to a dcl, and that dcl seems to be in place on day 31. That makes this only day 2. Are these now off to the races?

 

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GDX – After blasting higher, it did sell back off to the 50sma in the final hour of trading. Obviously we still see trading, profit taking, sellers in this sector, but it can go higher. Let me show you something else too…

 

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POSSIBLE WHIP-SAW

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GDX – If you think Fridays drop and then Tuesdays rally shook people up?   This kind of action would really frustrated  people by having them jumping in & out & in and out – afraid to miss the rally and afraid that it is going to sell off.   This will chew people up, so be cautious that choppy whip saw action does not cause over trading. You set a stop & let it do its thing if you are in a trade.  Also keep them small. 

 

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 This is what I wrote at the opening of yesterdays report entitles “Tricky Trading” .

I want to start this report off with a gentle reminder:  I love to trade and I know that others do too, but in times of uncertainty and choppiness ? We do not always have to be invested or in a trade, we can be in cash and waiting for an opportunity that fits our personal trading style.  Some may want to wait for a better, less risky set up. 

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 After a large sell off, people tend to feel the need to jump back in with Supertight stops trying to protect funds.  Usually they  are just raising stops way too quickly for a volatile choppy market.  I will discuss this below. Keep position size small. Enjoy your trading or rest up on the sidelines until things settle down a bit.  THEY WILL settle down over time. An ICL is coming due in a month or two and that will be the best Buy for Miners.

 

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~ALEX

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I still got emails showing how some were victims of yesterdays whip saw, and it sounds like this is because their stops are being placed intra-day tightly in choppy volatile markets, or they simply sell  every time price changes direction intra-day. This is over-trading. Price almost always changes direction through out the day .  Let me show you something.

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IF I say that we are  “looking for a swing low ( DCL) and place a stop under that dcl,  raise it over time”, it looks a bit different in this wild choppy action.  Here we see our reversal candle.  Usually you buy the reversal candle nd a stop goes under it or at the 1/2 way point. Now  ANY movement whip saw , volatility included doesn’t usually stop you out.  Since this is a 3rd daily cycle, we would be more cautious and raise that stop ( or sell ) as time goes forward because this could become L.T., but obviously this is a Very Large trading range and this trade may not fit your style. Buy a Miner or 2 instead? Wait for the next ICL?  IT IS NOT EASY, AND IT IS NOT THE SAME GAME WHEN WE HAVE THIS KIND OF VOLATILITY.

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SOME BIOTECH ARE HOLDING UP AND SOME ARE INVOLVED IN SEEKING A VACCINE FOR CORONAVIRUS

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FROM YESTERDAY : INO –  It didn’t get crushed in the sell off, has bullishly climbed the 34 & 50 sma.  It reversed Monday near the 34 sma, So I took a position in it.  INO  dipped, tagged that 34 sma, and reversed higher. It traded as high as $6 recently, so I want to see if this will climb there again.

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INO  shot up over 60% at one point and I actually sold 20% of my position at $9 in after hrs, with price up over 100% at that point for the day. They are speeding up their coronavirus vaccine work & announced they’d be ready to test it on Humans in April.  CAN IT GO HIGHER?…

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NVAX – This is coronavirus related movement too. You an see how wild it gets, but this is dangerous to just jump in when price is not at support.   I am showing this to compare it to what we could see with INO , if you bought it with me.   We do see Large pops and then large drops, so this is why I sold some. I do want to continue to ride 80% for a bit longer because…

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THIS IS ANOTHER BIOTECH ACTING LIKE THAT

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  notice on Feb 27 IBIO had a large pop of 160% for the same coronavirus vaccine reason. If you sold that pop, then…

 

You would have missed this:  The next day was an additional 200% by the close, and MUCH more midday, so selling too early can be the wrong move, but taking some profit is always in my plan, because often they will take it back when it drops later!

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VIR – Another Corona stock benefit.   This company shot from $10 to $30, gave it up back to about $17, and then went to $75 in days. It is now $40, so the ride is not always a fun one or easy, but a small position AT SUPPORT can develop into profits nicely.

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RISKY

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NLNK – This needs to show me some more action, but I just wanted to point it out because they developed the Ebola Virus and the POP in December was when they sent a shipment of it out.  THIS WAS FOR EBOLA, but they may work on a corona virus too.  At this point, a break of the 20sma or downtrend may get me interested in this one.

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THESE BIOTECHS ARE RISKY THOUGH.  THEY JUMP BIG IN BOTH DIRECTIONS IF TRIALS FAIL,ETC

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ONTX – I also own this for the chart pattern, since it was unaffected by the market sell off.  It held that 50 sma as markets crashed last week, so I figured I’d buy it near the 50sma.  I can put a stop under that 50 sma  and I like the base.