Tuesday April 23rd – Patiently Waiting?
I’ll start by saying that I do not see a lot of ‘market moving data’ this week, possibly until we reach that jobless claim report on Thursday. That means that the markets could bounce without any negative news. That said, the selling last week was pretty relentless in the General Markets, so that selling also could just continue until it exhausts into a dcl. We’ll just have to wait and see how it plays out, but it does seem to be too early for a dcl if we reverse here, and that bounce may be shorted if it is a good size bounce. Let’s take a look…
.
NASDAQ – We have been anticipating a drop into a dcl, and last week we did see some steady selling. The last DCL was broken, so we have a failed daily cycle and even though we could see a bounce here, it should roll over one more time. That could give us 5 waves down. Please do know that the selling was relentless and that might just continue if this reversal is just a very brief pause.
.
THE SOXX is the chart that shows the drop into the last dcl more clearly. We had long ‘bull run’ daily cycles with #1 & #2, but the sell off is fairly steep and could exhaust a bit shorter than those others. We’ll see. From here I think that we can see a bounce, and then another leg down if this daily cycle is as long as the first 2 were.
.
THE SPX has some long daily cycles around 50 days (usually closer to 35 or so)). If we get a bounce to the 50sma and then sell off as sharply as we just did, we could reach the dcl sooner and it may be at the 200sma. I am thinking of shorting the bounce if it tags the 50sma and reverses lower. This MIGHT just keep selling down though.
.
The XBI actually does not look to be following ‘cycles’, because…
1. It looks like 1 daily cycle up (?) and a flat dcl/ consolidation.
2. And then a small rally and a peak, followed by a roll over on only the 2nd daily cycle.
So I’m just going to watch and see how it plays out. Right now it looks ready to bounce at support, and it may bounce to the 50sma
.
So if all of these indices ‘bounce’ to their 50sma, then we may have a bullish week of trading. The DATA this week is average, so it may work out that way.
.
IN THE WEEKEND REPORT, I POINTED OUT THAT THE TIMING IS RIGHT FOR THE DCL ANYTIME AROUND DAY 50, AND IT IS LIKELY IN PLACE: I said…
WTIC DAILY – Oil dropped to $81.06 on Thursday at the 50 sma and I mentioned in Fridays report that I think that is the dcl. Oil shot up and sold off on Friday, leaving us a very high-volume gravestone doji, and I still think that this is now day 1 of the 3rd daily cycle.
.
WTIC DAILY – We made a slightly lower low on Monday and then Oil snapped back again, but that is a new low so it could be the dcl at day 53. Basically, Oil is dancing around the 50sma.
.
XOP DAILY – The XOP reversed right at support, even though Oil still dropped. ERF, NOG, APA, and other Oil Stocks are now rising ahead of Oil.
.
THE USD is flagging and is NOT affecting Gold & Silver at this time. In fact, Gold and Silver slammed down on Monday, but the USD was only up $0.16.
.
GOLD finally lost that 10sma and was down $67. We are on day 22-24, depending on where you start your count from the last dcl, so actually Gold could bottom at any time. The daily cycles used to run 33 days on average, but in this Bull Run, they have been shorter, around day 25 or so. So Gold may drop & bounce and drop to the 34 or 50sma area, or it may just chop and form a dcl soon, we’ll see. In fact…
.
In fact, it may help to just take a look at the last dips down into a dcl.
.
NOTICE HOW MILD THE DIPS HAVE BECOME. This was a steeper run up, so it may be a slightly steeper drop too, but notice how mild and small the candles were as Gold dipped down into a dcl recently. Even the last one was one of the mildest with that bull pennant. We may already be fairly close to a dcl.
.
SILVER had a sharp drop on Monday too. We just need these to stabilize and form a swing low. It does seem that we would need more time for Silver, since it is only day 17, but it peaked on day 11, so I would expect it to bottom by day 22. Also remember that there is possibly an alternate count to Silver mentioned in a few other reports. That count would make Silver due for a dcl.
.
The GDX can be numbered 2 slightly different ways too, since the low at the dcl has 2 days at the same exact price. Either way, we are on day 21 or day 22 and we got that drop that I was looking for. After the bounce at the green 20 ema, it started to rise with as though a low was in place, but we were expecting a drop into a dcl for Gold and Silver, so here it is. I grabbed this chart after the first hour of trading & it looked like buyers were jumping in to save it at the 20ema, but…
.
THE GDX sold off as the day went on. This is the second way to number it, using the first day of the low before day 4. We are close to a dcl, but this can chop around further. We’ll look for a swing low around support or Fib areas over time.
.
So our expectations are playing out as expected and most here are really just patiently waiting for things to develop a little further, so they can buy or add on a dcl. Some may trade the bounce in the General Markets, but that is hard because the selling was relentless last week and that might continue. Others may hope for the bounce so that they can short it later. Some here may only care about waiting for the lows to develop with Gold & Silver to buy some Miners, now that the selling in the Precious Metals sector has started. Others may trade long Oil or Oil stocks. And then we have the fast moving crypto area. It is not always easy to trade, since it can move a lot in a single day, but Some are also trading crypto Miners, knowing that they can bounce 10-20% on a good day, even though we should be expecting another dip into a lower low in Bitcoin over time. So let’s do a brief review.
The General Markets put in a reversal on Monday and they can bounce. I’m hoping for a good sized bounce to the 50sma, since it may show weak volume and become a good candidate for a short with a final leg down ( SOXS, SPXS, SQQQ).
The Oil/ Energy sector should be bottoming with a dcl right in this area. Oil stocks actually looked good yesterday.
The Precious Metals, Gold & Silver, finally lost their 10sma and sold off sharply on Monday. It would actually be nice to get a more visible dcl out of this drop. The last few dcl dips have been mild and a little difficult to see, especially because they formed around the day 25 area or so when they normally used to form around day 33. We’ll need to look for that earlier time period this time too. We look for a swing low that is confirmed by a close above the 10 sma. So far each dcl was mild and they recovered price Very Quickly, so even buying some miners a little early was not painful for very long. It still may be best to be a little patient with this drop, since this drop is leading us into a 3rd daily cycle and it just might be a little deeper than the last. We’ll keep an eye on things as they unfold. Enjoy your Tuesday markets!
.
~ALEX
.
BITCOIN – I expected a bounce this week and then a drop, so I wrote this in my weekend report:
I know that it seems like ‘institutional buying’ could save the day as they buy dips, but I have to stick with my ‘cycle analysis’ expectations as is. Since we got a Half Cycle Low on day 30, I expect a bounce, but day 28 & 30 broke below that last dcl, it indicates a failure. Here I have drawn what I would ‘Roughly’ expect next. It may be that the initial reaction to halving will give us that downside dip into an ICL, and that could lead to the $48,000 to $52,000 area. That should be a strong buy area too, at that time, and it’s really only 30 days away. 🙂
.
BITCOIN – So we are seeing the bounce, but this set up was a failed daily cycle and Bitcoin should not be able to take out the highs. IF IT DOES, that would be Bullish and an anomaly, and it could run higher, but that really is less likely . With a day 30 low, I mentioned that we usually get that 1/2 cycle low there, so you could buy for a shorter trade (The ETFs or Crypto-stocks), but be cautious as it plays out. Those crypto stocks can drop 10% in one day on a small down day in Bitcoin, that is just the way these trade and they aren’t for everyone (unless we are at an ICL, then anyone can buy and hold). So if you see the drop into day 60 as noted in the chart ABOVE, then that will become a strong buy.
