WEEKEND WRAP UP – MARCH 21
WE DID NOT GET AN OFFICIAL BUY SIGNAL ( Confirmed DCL) in any of the Market Sectors. As you know, the more that time goes by, the more inevitable a dcl becomes. Well, we are now really within the timing area for a low to form. So along with the Big Picture Charts, I will add a few Daily charts to the weekend report in order to show the daily cycle counts too.
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SPX – Back on March 13 I discussed the likelihood of bounces to fail near the 10sma until the ‘time’ is right. We have been seeing 39 day cycles on average lately.
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SPX – Since Wednesday was day 31 , we entered a time that could produce a dcl, so we look for confirmation with a break above the 10sma. That Wednesday low was almost broken, so Friday was probably day 33 and we will break the lows making Monday day 34. A DCL can form next week, but waiting for a break of that 10sma is the safest way to play it.
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SPX WEEKLY– I have been watching the long term support for weeks, and this week it was broken.
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SPX WEEKLY– So putting in a DCL or an ICL could really give us a convincing multi week bounce, even recovering that break down, but…
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SPX WEEKLY– My expectation is that we are entering a recession. As mentioned in past reports, many small businesses could go bankrupt under the current covid19 conditions. We can play the long side, but I’ll be ready to flip short on the bounce, looking for clues after we enter then 2nd daily cycle.
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THIS CHART OF THE START OF THE GREAT DEPRESSION was in last weeks report. Obviously that yellow line went even lower this week. Now notice that the BOUNCE that followed was convincing for months, but a bear market emerged.
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FROM FRIDAYS REPORT FOR WTIC – OIL SLAMMED down 25% Wednesday. Thursday it pushed higher so watch the 8 ema & 10sma here too. I have mentioned the cycle counts and Oil USUALLY has 40 + days in a daily cycle, but I do see some Oil stocks making & Holding higher lows. Oil dropped Friday, and is back near the lows, similar to the SPX. They may bottom at the same time.
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WTIC – We broke below the $26 level this week with that 1 day 25% slam down last Wednesday. Eventually regaining it may become the ICL.
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WTIC WEEKLY – I took another look at OIL and noticed this interesting set up. So Oil could eventually bounce back to $50 Oil .
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GOLD COT – I wanted to include the COT for GOLD & SILVER this week, because we are seeing gradual improvement. I wouldn’t call it drastic, but gradual as the Metals sell off.
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COT SILVER – Silvers COT has dropped a good amount, but as you’ll see, it also crashed down in price more than Gold.
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I want to start this section off with 2 charts that I had in Fridays report. There is something that I wrote on the chart for GOLD, but I forgot to include those thoughts in the words that I write above the chart, so I am going to update this in the weekend report. So lets start with the USD…
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USD – LOOK – AT – THAT! The USD crashed down , broke all lows, and then rocketed higher in a V-Bottom. That is a shake out. Why did I write “Imagine if Gold does what the USD is doing?” on the chart?
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GOLD – Well Gold also crashed through many of the recent lows and I do think that EVENTUALLY Gold will put in a low and it could react sharply higher, the way that we saw Miners take off higher. EDIT: I wrote on the chart that I would expect a lower low for GOLD to do the shake out & then run higher. THAT could happen next week, so GOLD CAN PUT IN A NEW LOW & CYCLE TIMING ALLOWS FOR THAT. A shake out does not have to happen, but it just seems more likely than not.
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GOING FORWARD: I WANT TO DISCUSS BEST CASE SCENARIO VS WORST CASE IN THIS REPORT- JUST TO KEEP IT REAL
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GOLD – So we could see a stop run here, and that’d be best case scenario. If that was an ICL, that would also be best case scenario. We want to see a run higher sooner than later, and an early ICL at 4 months has happened before, but it is rare.
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GOLD – So if we get a move higher from here, this would be a reversal at the 50 week ma. Best Case Scenario again. Look at this chart though. DO you see what I see as concerning?
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GOLD – I’ll Call this worst case scenario. Our next bounce could be just a dcl, that rolls over into the Real ICL. Why?
1. THAT would be a normal a-b-c down. Also
2. We are NOT as oversold as most ICLs get.
3. Six months is the average time for an ICL, and we are only 4 months forward from our November ICL
4. We are not oversold like past ICLs
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GOLD – An early ICL is possible, and Look at the bull Run of 2008 – 2011 and you’ll see that at times the pull back did only go 1/2 way to oversold (Green Boxes). So in a BULL RUN, I’d say that it is possible. IF WE BOUNCE & DROP HOWEVER…
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IF WE BOUNCE & DROP HOWEVER, we get a normal long term ‘back test’ of that Base break out. We will just have to wait and see if we get Best Case Scenario or Worst Case, but both remain long term bullish.
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SILVER is oversold and did a stop run already. It did not recover yet though, so it issn’t a shake out yet. I went long silver assuming that it would rally with the cycle count in the right area for a dcl, but I got stopped out ( loss) on that trade. I want to discuss that at the end of the report.
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Now I am running into the same problem with Miners that I saw with Gold. The selling was so sharp yet quick, that it is not as oversold as past ICLs. 🙁
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GDX – Miners crashed down over the past couple of weeks and broke the healthy chart patterns. We do have a high volume slam down, and that could be an indication of a low. I have pointed out past capitulation high volume lows as an example, and a Best Case Scenario would be an early ICL due to the sharpness & extremeness of the sell off. We could still see a quick drop to a new low and reversal back higher next week too.
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GDX – This would be the worst case scenario for Miners and it would be that maybe we need 1 more daily cycle to complete the intermediate cycle. That could be a bounce ‘back test’ of the break down, and then a roll into the ICL for May . We would become oversold & back at 2016 lows, a scenario that I never thought possible until this crash took place.
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GDX – A close up shows that this crash likely ran all of the stops that any longer term investors had in place for the past few years. GDX then bounced strongly and actually closed back above every one of those lows…
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It has to be noted that under extreme market moves & conditions, normal moves are no longer the norm, so it becomes a bit unpredictable. Does this have to become as oversold as past ICLS, like normal sell offs? OR has the sell off been completed under extreme conditions in a flash, and therefore enough is enough? It seemed IMPOSSIBLE that it would droplike that – is it IMPOSSIBLE for it to recover? We have R.R.Tracks on the daily chart, so we’ll see. Really only time will tell…
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The General Markets are coming due for a pretty good bounce. It seems that we’ve dropped deeply into an ICL area, but we are waiting for a confirmed swing low. That can be traded as a ‘long position’ when it arrives, but it might also make good short when the time comes too.
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As for Oil, it has sold off very deeply too. It should be looking for an ICL soon. With Oil, it does still seem early, since They often have 40 – 50 day daily cycles, but some Oil stocks are showing higher lows. That may indicate that Oil will bottom early, we can’t really know for sure. Waiting for a confirmed swing low will be the signal there, and then pretty good bounce could take place in oil & oil stocks too.
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So with Miners, does this have to become as oversold as past ICLS, like normal sell offs? OR has the sell off been completed under extreme conditions in a flash, and therefore enough is enough? Really only time will tell. I’ve seen a few Miners begin to look as though they’ve been trying to bottom and may be under accumulation, so I have a couple that I bought. We’ll see if we get a permanent low out of this, or is it just going to be a bounce, and time will let us know. Raising stops along the way once we get a sustained bounce will help us to lock in any gains from the Bounce if it decides to roll over.
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I hope that everyone can have a nice weekend and that you are able to rest up a bit. The Markets have been more volatile than ever, and the extreme moves seem to now be reflecting the drastic changes that we see going on around us day to day. With the C-Virus spreading globally- it is naturally disrupting business, time with family & friends, and other areas in life that we used to consider as a place of normalcy. It’s really important to think of others and help them out if we are in a position to do so. THAT can be very rewarding for the giver & receiver in times like this. Keep in touch with family and just let them know that you are thinking of them and care. It all goes a long way in comforting others and helping everyone get through this with some positive thoughts. If this plague that resists all science has to run its course, at least we still have the power to lighten the load along the way.
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I want to conclude this report a little differently due to the current conditions. I’m still going to conclude on a positive note, though things are rather dim at times lately, and shouldn’t be minimized with so many families worldwide being affected. It is true, things are difficult right now, but this kind of market disruption is always temporary. I have been through a few in my days of trading. The 2000 Tech Bubble Popped. The Stock Markets shut down for days during the 2001 Twin Towers attack and various sectors crashed with uncertainty. 2008 was the Financial crisis. Events like those always shake things up and as dire as things seemed ( The 2008 Financial Crisis had banks literally collapsing, massive foreclosures were rolling though neighborhoods, the economy & banking system were thought to be ready to completely collapse. people actually started building bunkers thinking that there was no way out & it would never end), but it ends. Often there is a calming down period as the dust settles and then a Bull Rally emerges from the ashes. In 2008 it was Precious Metals first in Oct 2008 and and then the market recovered a couple months later in 2009. This time I think it will be the Precious metals first again, and it could be stronger than ever. So my point is that as tough as things have become with the Virus, I feel that it will end in a similar way after it burns its path through this place in history. The Spanish Influenza in the early 1900’s (google it) ran its course of devastation, and it eventually ended too – and modern medicine is better than things were back then. We wait for this to run it’s course too, taking precautions along the way. I am a trader and take trades, but for most I have recommended more caution: Small positions if any, maybe WAIT for the confirmed DCL’s to be safe, and so on. Steps like this will help us to preserve funds , so that you can take advantage of the lows when they present themselves.
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Make the most of you weekend, take care of important things now, but look forward to the good times ahead too, and thanks for being here at Chartfreak.
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~ALEX
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I want to point something out about trading under these conditions, and I want to be perfectly honest. I found some great trade set ups last week, and I took several. Under these conditions, some succeed and some fail, but even the ones that popped successfully are rolling over. Last week I pointed out PUMP as a successful trade. I also traded WLL and TUSK. Add to that trades that I made in NVAX, GHSI, CLX, USLV, SVM, AG, and even a couple of others. After some really nice POPS, I ended my week of trading with overall losses. WHY? Well, I want to show you the answer to that question …
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After reviewing my trades, most were very good at the start, but my losses came because I held on too long. Even good trade set ups can roll over and become losses with this volatility. I am still holding SVM & AG for example, but they are currently priced under my Buy Point. I bought NVAX and made really good gains for 2 days ( almost $4 / share!) , yet I held on & sold as a 25 cent gain/ share when stopped out).
Next I showed in Fridays report that I made good money on a small position in PUMP , it actually gave me 40% gains, HOWEVER, I went heavier in Oil & Miners stocks and gave it all back in those other trades when they gradually went against me. They move very fast. I had USLV (loking for Silver to catch up to the POP in Silver stocks) , JNUG, HL, SVM, CDE, and AG in Miners, so one by one they popped and added to my gains, but then the next day they went lower and robbed me of my former gains.
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SO LET’s TALK ABOUT THE RECENT EXTRA VOLATILITY AND EXTREME SWINGS ADDING TRICKINESS TO THE EXECUTION
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So even though I bought at the right point and initially they made good gains ( That did happen in CLX, SVM, HL, JNUG, AG, WLL, TUSK, NOG, and a few others), I eventually sold for a loss or break even after hanging on too long. Add that to my gains that I locked in on the way up , and it still seems to chip away with my style of trading.
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Another Example: I bought a break out Clorox, thinking the corona-virus will help Bleach / disinfectants. I went IN at $185, rode it to $2.15, then thought it would build a bull flag, so I didn’t sell some on the way up like I usually do to lock in gains. CLX then stopped out even on a Bull Flag break down . I did this on several trades, but others were sold in the red after being nicely green. THIS is frustrating.
