Tuesday September 22nd – Sharp Reversals
This might seem odd, but…
Monday was a red day in all of the Markets, but by the end of the day I saw what looked to be many Bullish looking charts. I will discuss that further at the end of the report.
Some of the selling, namely Gold, Silver, and the Miners was overdue so we were anticipating it. Even with the Dow down about 1000 points and the SPX & NASDAQ selling off deeply, some tech & consumer stocks were able to avoid the selling. again, I’ll discuss this at the end of the report, but for now lets get to our review.
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With the General Markets we have been watching for a confirmed DCL, with a close over the 10 sma. We have not seen that yet and we have a Very Long daily cycle.
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THIS WEEKEND I WROTE THIS ABOUT THE SPX DAILY – We could get a dcl next week with this extra long daily cycle, because that last one was rather short. We now have to wait and see, so Stay Frosty, be cautious, and use stops.
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SPX – The General Markets gapped down & sold off on Monday. They then recovered and the SPX has a pretty strong reversal candle and it also still may be a bullish falling wedge.
Same chart: This does raise a few questions:
1. Was that an extremely weak dcl 2 weeks ago that was just too weak to close above the 10sma?
2. If so , will we just see these markets keep rolling over? Or might this form the DCL this week in a long extended daily cycle like I mentioned in the weekend report? Only time will tell, but this reversal might be the daily cycles low if it is not broken Tuesday.
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The NASDAQ also put in a reversal, and I also saw plenty of Bullish tech stocks form Monday, so we may bottom in this area as the daily cycles low. Let me show you something…
I mentioned above that Many stocks looked Bullish yesterday. Notice that Companies like CRWD, AMD, WORK, TWTR, UBER, APP, ROKU, etc etc did not drop with the markets.
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CRWD did not sell off, it actually popped 7% higher and looks ready to form a cup.
ETSY – Last week I pointed out ETSY as a company that may resist a Covid based sell off, since they could remain profitable by selling products on line. ETSY also did not sell off Monday. I will discuss this further at the end of the report, but these charts may indicate that a dcl is forming.
WTIC ran to the 50 & 34 sma and that is where it landed Friday. It then sold off Monday. I’m watching this sector to see how it plays out, but right now I am neither long or short this sector. It is early in Oils daily cycle, so Oil still might be able to bullishly break above the 50sma over time.
GOLD was on day 28 Monday and it dropped sharply. I have been discussing how well this has held up, but on day 28 of a possible 33 + daily cycle we needed to expect a drop into a daily cycle low. SO FAR, it has not taken out the last daily cycle, so we do not have a failed daily cycle- something necessary for an ICL.
SILVER dropped over 10% at one point, but started to bounce into the close ( it doesn’t show up here). This can sell off further and it can also bounce Tuesday & still sell off further too. We really need to give this time to play out.
GDX at 11 a.m. dropped 4% and looks like it could easily take out that DCL (red arrow) this week. This was day 28 for GDX and they can be 33 days long, so …
GDX could just break down into a deeper dcl if the Metals continue to sell off. Or…
OR…
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GDX could bounce first with the Metals Tuesday & Wednesday and then they may have a final drop. After all, this has been a very sideways choppy consolidation so far, right? We have dropped to this $39 level a few times over the past several week and then bounced.
So as a final look at GDX we can just take note of the fact that this has been a very left translated daily cycle that peaked on day 5. The MACD just rolled down on this drop and look at the stochasitcs. A normal daily cycle has about 5 days left in it and that stochastics is not oversold at all. We should try to be patient and see how this plays out.
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I want to be patient with the Miners just in case they bounce for a day and then crash again, but there are still a lot of bullish set ups in the markets to explore. The trades that we have been riding ( like WKHS, SPAQ, NVAX, BYND, INO, ETC) are also still working out nicely despite the market drop, so below I’ll take a look at many Bullish set ups despite the selling.
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Enjoy your Tuesday trading.
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~ALEX
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ETSY – I had this in the reports last week, since staying home due to Covid does not prevent inline shopping and ETSY almost tripled since the March crash. Well as you can see, ETSY did not follow Mondays sell down. It is still a buy and we’ll see if it can then regain the 50sma , making this a shake out.
APPS is a bullish chart and ignored the Monday sell off too. In fact, it corrected from Mid August to Mid September forming a cup. I am specifically showing you this recovery pattern ( a cup) to apply it to other set ups. Take a look at the SQ set up for example…
Take a look at the SQ set up and compare it to APPS above. SQ could form a cup just like APPS did. Does SQ look bearish during a Monday sell off? No, it closed up 4%.
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Notice that SQ recovered the 34 sma during the Monday Market sell off. It is a buy for that reason or when it breaks the downtrend line.
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This is also very similar to the SQ set up. On a day when the Markets were selling off and the Dow was down 1000 points, CRWD pushed 5%higher. The MACD stabilized and the RSI stayed above 50%, this looks like it wants to move higher.
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COUP– This is a bit different, because it has sold off with the markets over the past 2 weeks, but it had a surge of buying volume Friday and Monday burst higher. COUP has been strong from the March Crash until now too. It may start to recover with a cup of its own, but since this set up is different, let me show you more of my thoughts on COUP.
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Let me show you more of my thoughts on charts like that of COUP. Right now it is a short term trade that can continue higher if the Markets blow off higher.
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COUP– I feel that IF THE MARKETS do not roll over & Crash, then COUP may do more of a choppy recovery something like this over time. It ran from $100 to $350 since march, so it is a strong company.
DOCU was
1. Consolidating sideways for 2 months and then broke out very bullishly.
2. Then the markets sold off and DOCU got caught up in the sell off. It is very oversold, but
3. Notice that on Monday DOCU no longer sold down. It is back at that consolidation low and it reversed higher.
4. This is a short term buy and maybe a longer term swing trade too.
SEMICONDUCTORS RESISTED THE SELLING TOO ( SO SOXL MAY BE A BUY). AMAT, AMD, TSEM, etc did not crash.
AMAT – A reversal like this one ( after a sell off) can be bought with a stop under that days lows. It can be a short term trade or possible swing trade.
TSEM – Tower Semi bottomed a week ago and it did not sell off Monday either. It even has a bullish MACD and is ready to break a down trend line. That is a buy short term or Swing trade too.
TRADES IN PLAY: Did our current swing trades break down?
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BYND was recommended down at the 34 sma & it is not selling off with the markets. It is forming a larger cup.
COVID PLAYS:
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INO & VXRT look to be bullishly consolidating around the 50 sma.
HTBX (& IBIO) were slightly down , but the trades are still bullish set ups.
NVAX FROM THE WEEKEND REPORT 3 CHART:
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NVAX was pointed out on Sept 14 as a break out at $100. We had made nice gains on just the partial run in the past. I mentioned it again in the next report and Friday…
NVAX ran to $130 and has pulled back to $104 Friday. This would be a place that I would add to my position if I bought it earlier . Starting a position here is fine too.
NVAX dropped & reversed as a BUY Monday also . It looks like a back test of the break out.
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NIO (Chinese TESLA) — looks to be forming a bullish consolidation.
SPAQ — has moved sideways to the 9 sma. Volume is light on the red days, but the buying was strong.
WKHS is still climbing and it hit $30.99 Monday and then dipped down. WKHS has been up, sideways, up, sideways, etc. It has been so strong that the sideways move barely tags the 9 sma.
