July 26th – FED WED
Today is the Fed Rate Decision, and I just want to show you as a reminder what happens EVERY SINGLE TIME the decision is announced and then he speaks.
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Well, here we see a BIG CRASH! This is ugly, so one would think that this will lead to a crash for sure!
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And then he starts speaking at 2:30 and we rally back? And at times we rally and when he speaks it sells back off, so you just really can’t tell exactly what is going to happen, but volatility is a guarantee.
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This was GOLD and SILVER on a Fed Day. They were rising early in the day, but then they suddenly started to sell off from 10 am to maybe 1 p.m.? That will keep the buyers away, right? But then at 2 p.m. we see that they both ran Straight up out of the grave. So please…
So please remember that no matter what the market look like heading into the Fed Mtg, IT CAN CHANGE QUICKLY after 2 p.m.. Now with that reminder fresh in mind, let’s see where things stand heading into Wednesday…
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THE SPX gave us a Pop and Drop on Tuesday. It actually pushed to new highs and looked like it would break out, but sellers stepped in at the end of the day. I am expecting a run up into Fed and then a sell off, but these markets really are quite resilient.
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SOXX – As the Semiconductor ETF continues to chop higher, that MACD divergence is strong and should indicate gradual weakness. I am expecting a pull back and I want to short this using SOXS, but I also want to see what happens after the Fed Mtg.
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WTIC – As we’ve been discussing, Oil has been bullish and it did find bullish follow-through above that 200sma breakout. Oil stocks are also continuing to do well.
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USD – If the Fed Decision does not alter anything, this is what we have with the USD.
1. After a DCL at June 22 & a day 9 peak, the USD very bearishly crashed below that dcl and then it also lost the multi-month lows.
2. The USD bounced back into day 22, but the day 17 lows should be too early for the dcl, it should instead simply be a 1/2 cycle low. We are now on day 22 Tuesday and the Fed day is day 23.
3. With this set up, it SHOULD drop after the Fed Decision. The first move could be a false move, but by Thursday I would expect the USD to begin selling down again.
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GOLD rallied above the 50sma and has a day 15 peak. It then back-tested the 50sma like any other Bull Run could, and now it has reversed the day before the Fed. On a ‘Fed day’, anything can happen short term, but this is a bullish set up on day 19 today, and it should start to make a run higher soon.
SILVER is a bullish chart too.
THE GDX ETF has formed a bullish wedge that dropped down to the 50sma. So far this remains very bullish.
I wrote this in the comments section yesterday: Many Miners tripled, and they are still hated. This was MUX $3 to $10.
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By the close on Tuesday, MUX is now back at the recent July highs!
The July highs were $9.17 and Tuesday MUX hit $9.15. One good day on Tuesday erased the 3 day sell off. This is bullish price action with the Miners, especially when you consider how the USD just rallied so strongly.
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EXK had a strong run out of the lows and now it has pulled back 38.2%. Even a deeper drop to the 50sma or 50% Fib level is Bullish.
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Today is a Fed day and what else can I say? We have to just expect volatility and see if the current set ups hold up after the 2 p.m. decision is released, and then again after Chairman Powell begins to speak. Today may be a good day to take a walk and enjoy yourself, because whatever happens this morning may or may not matter later 🙂 Enjoy your Wednesday trading?
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~ALEX
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RECENTLY I DISCUSSED THE BULLISHNESS SETTING UP WITH COMMERCIAL METALS TOO:
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I posted this in the comments Monday, because as I ran through my charts, I noticed that many of the ‘Metals’ stocks are setting up bullishly now too. If we do get a General Market pullback that lasts for weeks, We may see Commodities like Oil, Metals, Precious Metals, and Uranium benefit. Money could float from one area and into another.
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CLF popped up over 10% yesterday after posting that chart, but sold down a bit and closed up 6.48%. This sector is bullish and CLF is now above the 50sma and 200sma. This sector may also get some buying if the Markets sell down (rotation out of Tech and into Miners and Metals and maybe a few other areas).
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HBM was breaking out on Tuesday after that was posted in the report too.
X looks ready to break out. X does have earnings release this week (Thursday), so there is a little risk involved if they fail to meet expectations. This could break higher and run, but bad earnings could bring it back to the 50sma.
BY REQUEST: CAN I SHOW JUST A COUPLE OF CHARTS OF STOCKS THAT ARE ON MY WATCH LIST? Yes, but once we see what happens after the Fed and what the General markets direction will be, I may be able to show more of them.
You can also look up a few of these charts that I like from my watch list. I like… SOFI, XELA, RKLB, MRKR, AMAM, AI, CVNA, and several others are setting up nicely. Below we’ll look at a couple of those charts. Some have higher risk because they can move up 10- 20% or down 10-20% and still be ‘o.k.’, so please be aware of that. These aren’t buy set ups until after the Fed Wednesday volatility.
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SOFI – This is a beautiful Cup & Handle after a strong run in May from $4.50 to $10. I rode some of that as a day trade, but after I sold and jumped out, it just kept on running without me. I actually missed most of that move as a result ( It was non-stop $4.50 to $10, and offered no good pull back for re-entry after $7).
I just want to point out another of those ‘bases’ that I watch. XELA. Please know that sometimes I watch these bases bounce along for Months and they just keep crawling along the floor while I’m looking for signs of life. When I see signs of life, I might start a position.
XELA had a reverse split, so the moves can be exaggerated, but let me point something out to you. In March it Popped and failed to hold above the blue 50sma. In April it Popped and failed to hold above the 50sma. In May it crashed after the split and then tried to get above the 50sma, but failed to hold. Right now it is $5.52 and the 50sma is at $4.94. The 20sma is at $4.93. The 34 sma is at $4.90. These set ups (if no bad news comes out) often start to trend higher. It can have BIG swings and be hard to hold, but it could make some nice gains over time too.
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BIG LOTS : This is a tough one because even though it is in recovery mode since the May/June lows- it also has large daily moves. If you did a buy & hold on this capitulation low area though, it has doubled and is now above the 50sma. I was reading that they have a 30 cents qrtly dividend, which would be impressive if that is true. It would seem less likely that they’d need to raise money with a public offering too. IF WE GET A DIP INTO A DCL with the Markets, watch for this to tag the 50sma again.
