Weekend Review Oct 3rd – Small Changes
Small Changes can lead to bigger changes, so we keep an eye on all things at all times 🙂
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In my reports I use Cycles to help us to gauge the ‘timing’ of the markets. For example after an Intermediate Cycle has been put in place, the markets are stronger and dips can be minimal. Later in an Intermediate cycle you will find that upside moves can become choppy and they may find it hard to gain real traction. This is why we start to see L.T. (Left Translated) Daily cycles late in an Intermediate Cycle. These can peak within 10 days and never get above those highs again. I also use technical analysis, chart patterns, even sentiment and a few other tricks that can help to guide us along. ALL OF THIS gives us an edge in the trading & investing that we do. So how does the opening Themes “Small Changes” come into play?
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THE LESSON FOR TODAY: Now with all of the above mentioned, I’ll start this week with a good reminder for all, including myself: In this world that we live in, we should always be ready for change. When big events take place in the world, various areas can benefit and other areas can begin to weaken, so UNCERTAINTY can gradually weigh on the markets too. This all makes sense, we just need to be reminded of that from time to time. A Bullish chart can turn weak and lack follow through if Buyers back off & sellers grow in number and a Bearish chart can gain strength if that sector is seen as favorable under current conditions.
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Change? A second wave of the spread of the Corona virus ( at least in the US) has been predicted with schools & restaurants now fully opening up, Country & state restrictions are relaxing, and people are gathering at an increasing rate indoors when the cooler weather comes into play. We have also now seen the President of the US , his wife, and many White House members becoming infected with the Covid Virus. This change can affect market psychology if the health of a major countries leader was to take a turn for the worse. And don’t forget that the US elections are only 1 month away! What if President Trump is in the hospital during the final month of campaigning & election? Changes such as that could cause uncertainty and lead us into a very choppy month ahead. As for this weekend report? Not a whole lot has changed so far, but we should try to be ready if we see things start to change next week. No let’s take a look at last weeks action.
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SPX DAILY – The SPX & NASDAQ moved over the 10 sma, confirming that a dcl is in place. It is day 6 for the SPX. Trumps covid news release Friday Might have dropped the markets, but they held up above the 10 sma and a good number of stocks remained bullish too. So far we only have a small change here.
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SPX WEEKLY – The Big Picture remains the unchanged. We either
1. Run up to the top of the megaphone and double top or break to new highs, or
2. We see bigger changes and we roll over soon and head into an ICL type of drop.
Currently I am positioned ‘long’.
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NASDAQ WEEKLY – The weekly price also stayed above the 10 week ma and was pointed out as a bullish descending wedge, but notice that the MACD is pointing lower. I view that as something to take note of and keep an eye on.
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WTIC WEEKLY – Oil remains weak and sold off 8% last week. No change here, since this was expected.
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XOP WEEKLY – I believe that the XOP has started its drop into an ICL, and when it finds that low, a nice Bullish Trade Set Up should develop.
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USD WEEKLY – The USD was pointed out recently as finding an ICL. When it took off higher in the first daily cycle, Gold & Silver dropped. Now it is dropping into a DCL, and Gold & Silver bounced. I do expect the dcl to form soon and then the USD will push higher again, so we would have to expect a drop in Gold & Silver again.
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GOLD WEEKLY – So here we see that when the USD dropped into a dcl, Gold popped. I agree that this looks very bullish, but if the USD puts in a dcl ( it is due) and pushes higher soon, we have to expect that Gold would drop again. Let’s visit the Big Picture View…
GOLD WEEKLY – I have discussed how an ICL drop in Gold could also help to form a handle on this giant cup. This is just a basic idea of what we could expect if this area remains choppy and eventually drop into Golds ICL. An ICL may just be a back test of this break higher.
SILVER WEEKLY – Silver remained in the $23-$24 area and this only looks like it is 1/2 way to a back test of its recent break out. I discussed a possible $20 support area at the next ICL and this is still lined up that way.
GDX DAILY-I want you to notice this Sept 21st chart. I realized that the choppiness could stop at anytime as we appraoched day 30 and then just drop us into a dcl around day 33.
GDX DAILY– That is pretty much what we got, with a drop into a day 31 low. So now Miners appear to be on day 6 after putting in a dcl on the last drop to day 31. It closed over the 10 sma, and that adds confidence to the idea that the day 31 swing low is a dcl.
GDX WEEKLY– When I look at the weekly chart I do feel that in a Bull Market this pull back is good enough, but it does also look like it has room to chop & then drop a bit further. I think that this sector could just remain choppy and the last daily cycle was EXACTLY THAT- A sideways choppy daily cycle that peaked on day 5 and never broke higher than that peak.
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So with the above chart of GDX I said: I think that this sector could just remain choppy and the last daily cycle was EXACTLY THAT- A sideways choppy daily cycle that peaked on day 5 and never broke higher than that peak.
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So we’ll take another look at this older chart of GDX from September 21: It shows exactly what I think could happen with this next daily cycle – We had a day 5 peak that simply chopped up & down for weeks, and we may get that again. That was very Boring.
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So we do see a few ‘small changes’ developing, but the big picture remains pretty much the same as it has been for weeks. Will those small changes grow over time, or will they shrink back? Only time will tell.
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Consider this: What If something happened to the US President? Let’s just imagine that he stays in the hospital for a couple of weeks and it becomes unclear how he is really doing. There is growing uncertainty. Rumors spread about the US Elections being affected one way or the other too. Wouldn’t that ‘uncertainty’ cause some kind of ripple effect in the Markets? I do think that we would experience Choppiness because of that situation. We may see Pops on days of possible good news, and drops on days of possible bad news. That could cause volatility and choppiness in uncertain times, so we will just need to understand that going forward. Stay Frosty! 🙂
The above scenario with the US Prsidents health may or may not happen, but if we see an increase in uncertainty over the next few weeks – the markets may reflect that. Here at Chartfreak I will always monitor things day after day along the way. Right now things look this way…
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1. General Markets have a dcl in place and it triggered a ‘long’ buy.
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2. Oil has been struggling and the OIL Stocks have been selling down. The ICL was in March, so they are likely selling into the next ICL. THAT may be a great buying opportunity when the low is in place.
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3. The USD sold off from May through August, but now looks to have put in its ICL. Recently, when the USD pops, Gold drops. The USD is due for a dcl and then the 2nd daily cycle run higher soon, so we should expect Gold to make a final daily cycle chop & drop into an eventual ICL.
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4. Gold & Silver actually looks bullish, but with the USD set up to run higher out of a dcl soon, we would look for Golds current daily cycle to chop & roll over into Golds ICL. THAT ICL will be a Strong Buy Opportunity for the Gold, Silver, and Miners.
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We have actually had some very good trading lately. SQ, SPWR, ETSY, APPS, BYND, CSIQ, SAIL, NIO, BBBY, WWR, AMD, CREE and more have been trading very nicely. COUP, WORK, and plenty of others look to be setting bullishly too, so I look forward to seeing how next week plays out.
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Thank you all for being here as always!
I hope that you are able to enjoy the rest of your weekend !
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