Thursday January 7th – Off In The Distance…
There was unrest in the U.S., and the Markets bowed to that Midday. We saw the General Markets that were having a nice rally suddenly sell down, but Oil & Oil Stocks ignored it. Gold sold off, but this may be due to the fact that a DCL is coming due. Some of the other EV, SOLAR, and MJ investments sold off with the Markets too, but in afterhours they actually came right back, so was this just another temporary panic reaction to he uproar in the distance? We may need another day of trading to know for sure, but that is very possible. Let’s take a look at the charts!
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SPX– Here you can see that after our ‘ 1 day crash’ 2 days ago, the Markets started to rally back and even made new highs. They closed at Midpoint after the Capitol was stormed by protesters. This could go either way, but it looks like it wants to continue higher at this point.
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NASDAQ – The Nasdaq actually did not make new highs and I had mentioned that the MACD looks weaker here, but it was headed higher before the pull back too. So let me go to an intraday chart of SPX for clues ( I’ll actually use The SPY)…
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SPY 15 MINUTE CHART – This is a 2 day chart, so I captured …
1. The morning rally after the ‘open’
2. The sell off candle as the Capitol was rushed.
3 Each drop or candle has a wick at the lows
4. Those wicks show buyers seem to be buying the dips and that may indicate that after that unrest the markets will continue higher.
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WTIC – Oil pushed higher and ignored the General Market drop. I do not see a ‘clearly marked dcl’ but could we have a stealth dcl? I would say yes, because in my eyes this is Bullish and wants to continue higher. In technical Analysis, this 2 week consolidation at the 20sma & break out with high volume is Bullish, and…
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WTIC – Take a look at the strong rally out of the Early 2020 ICL. I see a few dips along the way, but I don’t see deep clear cut DCLs for months there either. After a very long choppy consolidation from August and into that November ICL, We are seeing a Bull Run in Oil and Oil Stocks. And…
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XOP – The Oil Stocks have been very bullish and profitable. Many of these ignored yesterdays drop too, and volume is increasing again. Our Lists include MRO, APA, LPI, ERF, WTI, VLO, NOG, CVI, etc.
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CVI: I wanted to point out that CVI is a bullish set up and also a bit of a lagger. It is a buy with a stop and can run from 415 to $20+
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$TNX – At times Gold and the US treasury rates can run together, but most of the time they have an inversely relationship. On this chart I’ve pointed out Gold peaks when the TNX Bottomed and Golds Bottom when the TNX Peaked. I have been saying that GOLD is coming due for a dcl ( a dip to a low) and this may help us to see that GOLD will drop to that DCL now, as the TNX rises to the upper channel. one of our long time readers RAY emailed me about the TNX August low too. THX RAY.
Notice on the chart above The JUNE 4 Peak and AUGUST 1 LOW for the TNX and then notice those dates on Golds chart too for example…
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GOLD – Do you see the opposite of the TNX Chart here compared to the above chart? A June 4 Low and an AUGUST 1 Peak are visible. We are now on day 25 & due to drop into a dcl as the TNX rises. Is this going to break down rapidly?
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THIS IS VERY POSSIBLE: GOLD does not have to ‘fall apart’ here, even though yesterdays drop was large. Gold may just chop down into the dcl ( low), testing the trend line along the way as shown. Honestly, we really just have to wait and see and trust that the dcl is close enough and the next leg up comes after that. It is a BUY THE DIP time AFTER THE DCL is in place.
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I FEEL THAT THIS IS LESS LIKELY: I DON’T WANT TO SCARE PEOPLE OUT OF THEIR TRADES, ESPECIALLY SINCE SOME MINERS MAY RESIST THE SELLING, BUT WE ARE ON DAY 26. DCLs can come on day 30, 31, 32, 33? SO THIS COULD ALSO HAPPEN AND THNGS WOULD STILL BE FINE. It is a BUY THE DIP time AFTER THE DCL is in place. This is why I say buy AFTER the dcl. We don’t know how deep it could go as the TNX rallies.
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SILVER has been the leader and the drop here was not as deep as Golds dip. Some of my Silver stocks actually dropped and closed GREEN.
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GDX -The Miners actually dropped and reversed by the close, so this is very encouraging as we approach the time for a dcl to be due. It shows strength and the buy the dip mode that traders appear to be in.
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EXK – So we see that EXK dropped and almost completely recovered. Some of the miners like EXK look to be climbing the 8 ema or 10sma and that is quite Bullish, so I wanted to show you something…
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I pointed out in a past report that some of the Uraniums started out by climbing the 8ema too. UUUU had a steady run higher that started on the 13sma, climbed for weeks along the 8ema, and now is bull flagging at the 13 sma. This is how strong Bull Runs can act, and I am seeing that in Uranium stocks, Oil Stocks, and now some Miners. What is my point?
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What is my point? I am NOT selling my Miners as a dcl approaches. It would have been very hard to re-buy UUUU if you sold in Mid December, right? I may add on the dip for some, but I think that some Miners could dip & chop sideways and ignore the Dip. EXK , CDE, AAGFF ignored yesterdays sell down by reversing higher into the close.
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Yesterdays Rally had my account very nicely Green in the morning, but by the close and the sell down, it was heading Red. Then when after hours trading started, MANY of those stocks were being bought up quickly and my account recovered by the close of after hours.
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If you were reading in the live area from 1 P.M. to the close, there was not a lot of Panic talk, even though the rush of the Capitol is a big deal and the Markets started to sell down. I do not trade on fear and temporary news driven price movement, I look for support areas to place my stops and I let the market wiggles take place. In fact, I mentioned that I actually Bought the dip in SUNW at $5.50 during the final hour of trading when it landed on intraday support at $5.50. I can place a new stop at that support and I reasoned….”Why should Solar Stocks sell off for more than a day with that news? Why should EV sell off? Why should MJ Stocks sell off? A rush on the Capitol shouldn’t fundamentally stop their progress.”
In many years of trading I have seen in the past that at times we will get a ‘News Event’ like a terrorist shooting or something along those lines and a 1-2 day ‘Knee Jerk Reaction’ in the Markets occurs with some selling. Usually it ends rather quickly and it doesn’t break support levels. When the ‘News Event’ passes, things go back to normal trading and the chart shows a 1 day dip that didn’t violate any boundaries. I think that we may see that here now. Today will let us know if there is follow through or not, but I will say that MANY of the stocks I’ve looked at recovered in after hours and especially the MJ Stocks were even up 8-10% at that time. THAT is a big recovery if it holds.
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I am not adding many new trades today, we have MANY already in play. Oil, MJ, Solar, EV trades actually may rally after the panic sell. No boundaries were violated at all in yesterdays dip, so if it lacks follow through, we should see the rally continue. Lets see what Thursday brings our way and it may be another nice recovery day in a bull market. Enjoy your Thursday trading!
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~ALEX
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I was asked about BANKS / FINANCE. Yes, they looked rather slow and steady too, so for the long term traders looking to avoid a lot of volatility or something for the long term retirement accounts, this may be a good area to invest in. WFC, BAC, JPM, MS , etc may be good area to buy & hold. A few of those like WFC , MS & JPM POPPED out of a consolidation, so I would watch for a dip to buy.
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WFC – you can see the long consolidation in the Jan 5 charts of WFC, BAC, JOM, MS, but they ‘Popped’ yesterday. If it was a break away gap they will just run, but if the gaps fill, that would be a buy. Put them on your watch list and my strategy for entering after a pop is…
1. I may start a mall position despite the gap and then…
2. I add on dips as it fills the gap or
3. As it dips to the 10sma if it just keeps running.
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I was also asked to look at PAVE ( infrastructure): Let me explain something. THIS IS AN ETF and I actually didn’t see that when I first looked at it. I thought that 6% is a nice day and $17 to $22 was a good gainer for 2 months, but we’ve been buying Solar, Oil, etc for 100% gains in a month or 2, so I may not be interested unless I want this for my retirement account.
THEN I NOTICED that this is an ETF. That means that the individual stocks may be doing a lot better, the same way the TAN ETF (Solar) does good while Solar stocks do excellent. The XOP ETF does good while Oil Stocks doubled and tripled. So…
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I took a longer look at PAVE – It has doubled this year. It was not straight up, we had our choppy box consolidations, but the gains were steady. This may be a good one for a retirement account or the buy & hold crowd, since infrastructure has been discussed by both Trump & Biden in the U.S. Let me know if you have interest in any of the smaller stocks in this ETF, and I will look at the charts for you.
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I OWN THE NEXT 2 STOCKS:
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SOLO is a buy again in my opinion, and I bought it. It is low risk / high reward if you look at the downside with a sop vs the upside at former highs or more (100%).
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Yesterday I bought SUNW and grabbed this chart at 11 a.m. as Solar Stocks ripped higher. It is also low risk vs high reward. SUNW rallied higher from here, but sold off into the close, and this is the one that I bought at $5.50 in the final hour. It closed at $5.80, but as you can see it can run to $8 or higher if it gets going.
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AND AFTER THAT RECENT CONSOLIDATION- BITCOIN CONTINUES HIGHER AS EXPECTED. BLOCKCHAIN STOCKS MARCH ON TOO:
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Remember The cup & Handle DEC 31
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THAT DEC 31 BROKE OUT & WE HAD ANOTHER BULLISH CONSOLIDATION.
AND BITCOIN MARCHES ONWARD & UPWARD
