Friday May 26th
Today is the Friday before a 3 day weekend in the U.S., so I’m just going to do a quick review, and you’ll need to decide how you want to be positioned heading into that long weekend. I also want to include a lesson at the end of the report. I overtraded a stock this week and ended up adding up some losses, so I’ll share that with you as a lesson. 🙂
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THE SPX was actually selling off this week as we headed into the Fed Minutes. The only reason I am pointing to the first dip at the green 50sma line (Day 31) is because it matches the lows in the Nasdaq and SOXX. Was that low a dcl or a 1/2 cycle low? It could be either, but the first 2 daily cycles ran 50 days long, so I chose to view it as a 1/2 cycle low. If so, the Fed Minutes drop into a dcl was interrupted yesterday when NVDA shot up almost 30% on earnings. That ‘Fed Minutes low’ was day 51, so this can rally higher (out of either a 1/2 cycle low or dcl).
THE NASDAQ just looks to be acting bullishly. It broke out of that upper resistance after tagging the 50sma and ran higher. The dip earlier this week, which I expected to ‘back test’ the breakout, was also reversed with NVDA yesterday too. This is a bullish break out from a consolidation and these markets are rallying as the USD rises.
The SOXX was pointed out as a lagger 2 weeks ago.
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– It did a shake out in April, was trapped under the 50sma,
– but then The SOXX broke a downtrend line & that 50sma.
– As it headed toward the highs, it looked like the Fed Minutes day gap down drop was going to send it back to the lows of the channel, but wow did NVDA come to the rescue in a Big Way. The SOXX gapped up, sold off and then rallied to new highs. This looks to be day 20 of a daily cycle. It is a solid break out, just like the NASDAQ had.
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So let me just mention this in review: We have been looking at the BULL MKT turn into the Bear Market correction, and then more recently discussing a RECOVERY MODE. Well…
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I looked at all of the Semiconductor stocks that I could find ( NVDA, TSM, MU, AMD, AMAT, etc) and they seem to have joined recovery mode too. TSM for example…
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TSM SEMICONDUCTOR had a Bull Run, double topped, and dropped with the Bear Market. After a choppy low around the 200 week ma for many of these, that NVDA earnings beat sent them ripping higher and they look to be in recovery mode too.
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WTIC – Oil has been choppy, but what else is new? It reached the 50sma and was rejected yesterday. This is only day 15 and Daily Cycles for Oil are long (40+ days often), so this has plenty of time to chop around and eventually try to break out again, but Oil has been choppy and frustrating for a LONG Time now.
THE USD is on a slow and steady march higher. It is in the timing where it should start to drop into a dcl, but so far it has been pushing higher, sending Miners lower. The target may be 2 daily cycles higher to the 200 week ma. I’ll discuss that more in the weekend report.
As the USD was steadily rising, GOLD resisted the drop for a bit with some sideways chop, but yesterday Gold dropped again. We are now almost at that lower trend line that I drew a while ago. My thinking for Gold is a June ICL and a peak for the USD in a 2nd daily cycle in June too. I’ll discuss this in the weekend report. THAT ICL will be a very bullish and important buy opportunity for the MAJOR breakout.
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THAT LOW, as drawn here earlier in the week, will be a very bullish and important buy opportunity for the MAJOR breakout.
I have been drawing up The GDX ETF this way and so far it is playing out very similarly to the Feb-March drop. That drop was a slow & steady dip lower and people HATED IT, but look how quickly that recovered to new highs with the following rally.
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I mentioned earlier that if you decided to ‘hold’ through the sell off, you could buy a JDST position as a hedge to ease some of the pain. It has done well since then. If we get a Bounce in Precious Metals and a dip in the USD, this should back test and you can buy it then on the dip too. That will be explained in the weekend report too.
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We were watching the General Markets sell off rather quickly with the Fed minutes due out this week, but suddenly NVDA really saved the day. The USD has been steadily climbing and Miners have been steadily dropping. We hate these drops, but it should lead to a great buying opportunity as Gold prepares to break out to new all time highs and begin a major bull run. Also as a sidenote: When the markets are choppy or difficult, sometimes it is best to keep position size small or even for active traders – you can take a few days off and wait to see what the markets want to do. I actually got chopped up a bit in Crypto stocks this week, and they really just went sideways, but I have losses. How? I’ll explain that below as a lesson.
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So we are entering a 3 day weekend and the markets are closed on Monday in the U.S. I will have the Weekend report released on Sunday. Enjoy your Friday trading and your Long Weekend!
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~ALEX
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BITCOIN has simply been chopping sideways and looking weak on day 14 out of that recent low. It is still above the recent day 62 low, but since this is a 3rd daily cycle, I want to be careful in case it goes sideways and breaks lower. So I have been trading MARA and RIOT and they are looking fine, also chopping sideways, but I actually got chopped up. Let me explain.
THE LESSON:
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MARA #1– Looks fine, but the chop really got me. It is hard to explain, but I’ll try.
1. Normally you would buy & Hold at the 50sma reversals and I did start a position at the purple arrow at the 50sma. I was off to a good start. I started small, but as it pushed higher, I added to that position, just like I did in early April when I made Big Gains, but that also makes my cost basis higher. Next I’ll explain my losses…
MARA #2 & The Mistake: Jumping in and out of choppy markets.
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1. See the blue writing: In early April I went in Very heavily at the MARA break out and made very good gains on that rally ($8.50 – $12.50 on the breakout alone)
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2. So last week I went in very heavily as it started to breakout at arrow#1, but it reversed and slammed back at the 50sma all in one day.
3. So I’m talking about buying thousands of shares that I added above $10, and I had to sell them at the drop as it threatened the 50sma. That’s in above $10, out near $9 and was a loss of thousands of dollars. No problem , I’ll make it back with that next reversal higher at the 50sma, right? So…
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So I bought this green candle reversal at the 50sma. This again should have been a simple ‘BUY & HOLD’ at the 50sma, but it started to rally too, so…
After I bought that reversal again at the 50sma as a buy, I started small. The next day it rallied again in the morning at arrow #2, so I beefed up my position again for the breakout and run. I added again at the #2 arrow as it started to rally from $9.50 toward $10.50. It then sold off and the next day broke the 50sma. So I added again thousands of shares again above $10, and sold it under the 200sma at $9. Thousand down again. The choppiness continues …
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So again, this is a normal Crypto choppy move along the 50sma.
It should be a simple ‘BUY & HOLD ‘ at the 50sma. Normally I would buy at the 50sma and try to hold on for the ride, up & down, but by trying to really go heavy on each rally attempt at a breakout, I had to sell out and take the losses twice. Why did I do that?
I made very good gains in April doing that. Adding on the breakout was the golden ticket. At this point, after this week, I think I gave much of those April gains back trying to do it again here twice with MARA & RIOT.
