November 5th – FED-LECTION THURSDAY
It is a Fed Thursday and even though we pretty much already know that the Fed plans on leaving interest rates low for a while, we always see volatility around 2 p.m. onward. At the same time, the US Election results are very close to being announced and we already see some protesting and arguing about the honesty, transparency, and legitimacy of the count. It doesn’t matter whether any allegations are true or not: That perception and reaction could lead to volatility. Lets just expect an active day in the markets and below I’ll discuss what we have so far…
.
The General Markets here represented by the NASDAQ certainly had some bullish follow through as it broke back above the 50sma with conviction. It would still appear that the call of an ICL in September and a deep emotional 1/2 cycle low took place in the sell off heading into the Election week.
The SPX consolidation resembles a large W-Pattern. This was one of my thoughts as mentioned when it broke down below the 50sma. I mentioned that it may not break the lows and form a bullish W-Pattern.
The IBB (Biotechs) have been sideways and choppy as they put in a very LONG consolidation. This sideways move started in April & May. The volume was outstanding and this may be ready to break out & start an upward run.
It had been hinted at by many that the markets would Crash if Trump lost the election, but what we really might see is simply ‘Sector Rotation’. If Biden were to win, his goals have been linked to Clean Energy , legalizing Medical & Recreation Marijuana nation-wide, working on health care, and favoring relations with China. Those Medical Marijuana stocks are set up in a way (Bases) that they could really take off higher and now Biotechs popped, Chinese Companies have been setting up and running, Clean Energy and EV (electric Vehicles) are bullish too, so overall the general markets still look bullish after a choppy consolidation, despite any election result fighting. WATCH THE ABOVE SECTORS TODAY FOR CLUES.
.
BITCOIN HIT $14,500 this morning, and honestly companies like MARA, RIOT, HVBTC GBTC (etf) , etc should respond bullishly.
.
WTIC – OIL has been steadily rising out of the lows, but…
XOP – Oil stocks did not. This often indicates that the move by Oil is just a pop out of a dcl that will stall. I am leaning this way especially because the General Markets & Oil were both strongly higher, yet Oil stocks died.
GOLD dropped after being rejected at the 50 sma yesterday. This is a bullish set up and we’ll just have to see how it responds after the FOMC Mtg. We KNOW that low interest rates have been bullish for Gold, but often we get that volatility and even a false reaction when the Fed speaks.
WE COULD SEE GOLD FOLLOW THE MINERS and put in an ICL like this, OR…
GOLD may already have that mild ICL in place that I mentioned when it broke the down trend line & back tested it. Today is the FOMC day that we have been waiting for to get out of the way. It is a day of indecision for this sector, and then we should get the DROP or POP . Either one should eventually lead to this sector rallying for 3 + Months.
The only question left is ‘Where will that ICL for Gold be marked?’ – And it is either in place at the end of September on time, or it is now overdue.
.
We are in the same situation with Miners. Miners are coming out with some of the best increases in Revenue and Bullish earnings, yet they are not just rocketing higher. Is the ICL Still ahead? It could be, so let me show you the cycle counts.
.
GDX – This would be day 29 if day 25 is not an early dcl. If it was an early dcl/ICL, this is only day 4. These cycles often run 33 days on average, so one more spike down is possible. I have explained this 1000 times, so we already know that yesterdays drop is normal. Read the chart.
GDX – The last daily cycle was 31 days long when it bottomed. Do you remember when I pointed out that it rallied right before that drop? Well we just did the same, but the 50sma rejected GDX. We could see a sell off after the fomc mtg ( I drew an example below) or we could see a rally. A break above the 50sma would be very bullish.
.
Nothing has changed in our Precious Metals analysis, but I really did get a couple of emails asking me if I was concerned about the drop in Miners yesterday and what does it mean? Let me be clear just in case I wasn’t:
I Hope we slam down to a day 32 new low and strongly reversal, since that is a clear identifying mark, but I really don’t think that will happen. That will be a clear ICL buy to me. Currently I am thinking that Gold has an ICL in late September (similar to Dec 3, 2015) and Miners broke to new lows as thier ICL ( a head fake). I am not concerned about yesterdays ‘pause’, it did not do any damage to the charts and we may just break out and run higher from here. A drop & Pop.
.
After choppiness and sideways consolidations, there are often MANY Bullish set ups. I see that now in just about every sector except for Oil (though Oil Stocks may be forming bases too). I will point out some Bullish stock picks below and if you are waiting to add to or load up on Miners- today may help us to see where Gold goes from here.
.
Enjoy your Thursday trading!
.
~ALEX
.
The last few days have discussed Miners. My next report after this Fed Mtg will likely point to Miners, but for now? I have many favorites in the Tech Sector that I like to point out after consolidations or pull backs. You have heard me mention companies like DOCU, SQ, TWTR, APPS, UBER, AMD, CRWD, TSEM, MU, etc etc . I will show you how some of these have pulled back with the recent market sell off, and how they are now set up bullishly. If you have your favorites, you can see if they have done something similar that also makes them a buy. Lets take a look…
.
DOCU is breaking from a downtrend after selling off and recovering the 50sma. This is a buy, even though we see DOCU has been chopping sideways for 4 months. When a 4 month consolidation breaks out, it can run for months too. I’ve seen that with AAPL, GOOG, NVDA, and other bullish stocks. Also see the last DOCU consolidation that broke out & run. DOCU is oversold.
SQ has always been a strong runner. It dropped to the 50sma in August/September and then took off higher. It has now done what looks like a shake out & recovery, so that is a buy with a stop under the lows.
CRWD is a runner too, but it is a bit more choppy at times. Right now we see another shake out & strong recovery. It followed the markets, so if the markets remain bullish, we should see moves higher again.
.
ETSY -I have discussed ETSY in the past as possibly being covid -resistant since online ordering works in its favor. Notice how it has very consistently consolidated bullishly and then we get a run higher with each break out. It remains oversold. (Etsy gapped open and dipped into the close forming a doji. A gap fill to the 50sma would be a perfect buy).
APPS was a buy 2 days ago with that reversal at the 50sma and also 1 day later with the follow through. What about now? It is hard to enter a stock that is up 3 days in a row, because it may pull back so personally if I enter a trade like this, I start small. If it keeps running I make money, if it dips to the 10sma I can add when it reverses. That is how I play it, but this IS Bullish.
.
BY REQUEST: I didn’t know this company , but was asked about DOYU and I do like this set up.
I view it as an inverse H&S that sold off deeply under the 50sma & recovered it. That was a strong run from $6 to $18 earlier this year and now it has consolidated those gains and looks ready to break that downtrend and possibly run again. It’s a buy with a stop under the right shoulder lows.
JD was a Buy after a dip recently, and I have several charts showing it as a buy . It was a buy at the end of August, and here at the end of September…
.
JD – I just wanted to point out that if you bought it in September, it ignored the market dip and you would likely still be in this trade. It broke out from an odd looking Cup & Handle type of consolidation and should just continue to run higher. I will show you a nice break out & run in another stock soon.
.
MARA & RIOT really should respond to BITCOINS new highs, it has recovered the 50sma.
.
Do you remember that vertical run for SOHU? Well SOHU has consolidated those gains and looks ready to go again. These stocks move swiftly! This could double from here.
.
YNDX is another Chinese Company that has done well and looks ready to run again. It has NOT yet regained the 50sma, but it does look ready to do that. That would also break a downtrend, so I would call that a buy. It ran from $30 to $75 this year, and this is a normal pull back.
.
SOLO is an EV Stock that I posted as a buy over the past week. It is still looking healthy and should have further to go. The EV (Electric Vehicle stocks) have done well under the Trump administration and also would do well under Bidens clean air administration.
.
And finally NIO ! I have recommended NIO along the way as “The Chinese Tesla” and now it is starting to look just like Tesla with a parabolic move! Beautiful. I have traded in & out and made good money on it, but I don’t own it now. SOME OF YOU STILL DO! Congratulations!
I was asked “Where should I sell before this tops out?” and to be honest that top can come today, tomorrow , or next week. When I am in a stock like this, I just layer my way out and ride it with a stop. I sell 20% of my position, then another 20%, etc etc until I get down to maybe 40% and then let my stop rise daily & eventually cut the rest. A gap down is always a possibility and will jump your stop, but then you just sell .
