Thursday June 15th – Due for Some Dip Soon?
So far we’ve had the CPI, the PPI, and the Fed Rate Pause, with no immediate damage to the markets. Let’s do a quick review, but before we do I just want to remind everyone that we have jobless claims today at 8:30 am ET and Quad Witching Friday. Along with that is the idea that this daily cycle in the General Markets is Very Bullish, but also it is due for a drop into a dcl at any time. So with all of that in mind, lets review the charts…
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This was The QQQ when the decision came out. I always mention the dangers of trading that Knee Jerk reaction, because it often reverses and chops around. As you can see, we dropped sharply and then tick by tick it worked its way back to Green, and…
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The NASDAQ gave us a reversal / somewhat of a ‘dogi’ looking candle. We are due for a dip at day 35, and it is very overbought, but doesn’t this look a little like the bulls keep stepping in and could give it a parabolic blow off top in time? We’ll see.
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THE SPX does have a DOJI, a candle of indecision that can follow through in either direction. I think that we’ll have to see what happens to the Futures at 8:30 am with the Jobless Claims report.
WTIC – Sometimes I just want to write “Oil is sucking wind again“, but that is unprofessional. 🙂 So I’ll just continue to repeat myself, “Oil is choppy and frustrating, since it cannot find follow though or pick a direction.” This is day 28 of maybe 40-50 and we are still at the lows.
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XOP – Oil stocks were holding up around the 50sma, but I drew this channel recently and mentioned that a trip to the lows was possible if Oil remains choppy. That looks even more likely now, so Oil stocks are not as weak, but they are still choppy too.
The USD actually dropped sharply to the 50sma and then started to reverse. This is a big area of interest for us, because the USD is overdue for a dcl. If this bounces and runs back to the 200sma area, we have to expect the Precious metals sector to drop.
GOLD ( 5 minute chart) crashed when the Fed paused rates, but then it stalled and waited for the Fed Speech…
GOLD then bounced back during his speech, but sold back to the lows toward the close. It is NEVER a good idea to trade based on the initial reaction of a Fed day. So how did the daily chart look?
I see GOLD green here, but I believe that this is reflecting the Gold price as of 1 p.m., since it really closed as a bounce to the 10sma and a drop. Let me show you spot Gold for Wednesday and the live shot at 6 a.m. ET…
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Gold Live 6 a.m. ET. Gold on Wednesday was that pop and drop and right now Gold did break the recent lows, but is trying to bounce back. Gold has been choppy and may remain choppy.
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SILVER was stopped at the 50sma and dropped lower too. Lets look at Silver live, since it did not break the recent lows…
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SILVER is tricky and this is why: We had a normal day 32 dcl in April. Then a drop to day 23. Was that an early day 23 dcl? Or was that a 1/2 cycle low and we are now on day 37? Either way, this is an odd set up, because a dcl is due on day 37 , but it should break the day 23 lows. Again, is this really day 14 with a day 23 dcl and could sell off for another 20 days or so, into the next dcl? The set up is odd if you’re trying to use cycle counts.
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I tossed around this idea too, but I have to view it as less likely due to the abnormal cycle count.
This could happen if the USD just rolled over and failed. We would still have an ICL in March, but the daily cycle that followed would be 55 days long with a day 32 1/2 cycle low. This is not normal, but banks failed in March and threw a few things off of a ‘normal’ phase. Let’s just say: If silver gets above the 50sma, this is likely the next path.
GDX looks similar to Silver, with a low around day 21. It didn’t break the day 21 lows like Gold did, but that may be what we see next if the USD bounces here with a dcl. If day 21 was not a dcl, then one is actually due around now.
I mentioned that I was going to watch the stronger Miners ‘DRD’, and see if it sells off below the 50sma as a sign or hint that weakness is here. So far, it is still holding up.
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At this point, I have had some buy and hold positions in the reports of the past couple of weeks with Biotech, Tech, and even shorter-term trades in EV / Clean Energy with the IWM breaking out. That said, if we are expecting some selling into a dcl soon, some may want to raise stops or take profits ( I sold 1/2 of my position size heading into the Fed just to be safe). EV and Clean Energy seems to have joined in on the bullishness lately, but right now starting new positions may have added risk of choppiness. Most of what we are looking at would be to get ready for a buy the dip play (unless some wanted to try to go short once the selling starts in the general markets or use JDST/DUST when Miners sell down). I will say that it is very difficult to short a bull market, because buyers often continue to step in and cause bounces, or reactions to good news can also cause a solid bounce along the way, but that choice is each ones to make. We have SOXS, SQQQ, SPXS, JDST, DUST as leveraged short possibilities, once the selling starts. Those may offer 1 day ‘day trades/ scalps’ or a couple of days of gains. For now, I am trying to mentally prepare for a dip in all sectors, and if Gold & Silver decide to break out above the 50sma, that would signal a bullish run back to the highs for a possible break out, so we’ll keep that in mind too.
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Enjoy your Thursday trading!
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