Tuesday July 30th – What’s Everbody Talking About?
Tomorrow is the FOMC Meeting, and we all know how that can go. We have to expect some volatility until we get past that time period. It is expected that a discussion about cooling inflation and future interest rate cuts is on the table, but no rate cut is expected at this time. Can you imagine what a ‘surprise’ cut would do? No doubt that would really drive the markets higher. That said, I am not expecting a surprise cut, I just wanted to mention that thought, to keep us on our toes. We seem to be set for a rate cut in September and possibly another one after that, but tomorrow is still a big day. Now let’s look at the charts to see how they are set up going into that Fed Decision.
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The SPX does not ‘look’ bad, but I have already said that this makes me uneasy. This looked more like that last ICL type of a drop, but we are only in the 2nd daily cycle. I have also mentioned that the SOXX is now bearish to me, so we are ‘holding up ‘ here at the 50sma, and this would normally be a buy with a stop, but I am still quite cautious. The SPX is holding the 50 sma, however…
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THE NASDAQ lost the 50sma and is still below it. That MACD looks like a wide-mouthed bass and it will be interesting to see if the Fed Mtg can cause a recovery, but right now I see more weakness here. Next comes the SOXX…
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Semiconductors often lead the tech sector and THE SOXX is breaking down. How so? The SOXX broke below the last dcl and that is a ‘failure’ and quite a sign of weakness in what is supposed to be a strong bull run, so I am cautious. You can do as you see best for your style of trading / investing, but please use stops. I see warning signs. Until I see what the Fed Decision does, I am cautious and MIGHT even go short. This is very oversold, but it is also bearish looking to me.
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WTIC – Oil rallied out of the ICL, but now it looks like it wants to do a complete round trip, which is a run out of the lows and then a dip back to a higher low that almost back-tests the ICL. Oil lost support of the 50 & 200sma and now it has been unable to recover. THIS IS DAY 37 AND WE HAVE A NEW LOW ON MONDAY. Oil can be 40-45+ days long, so it may drop to the lower green trend line over time ($74ish).
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THE XOP was also rejected at the 50sma but it held up on that the 200sma. It may continue to chop along, but I would have a stop in place to be safe. It could follow Oil until Oil bottoms.
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THE USD has put in a dcl and is on day 9. I am actually expecting the USD to roll over again, with talk of a rate cut and that could help Gold, Silver, and the Miners to bottom.
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I am expecting the USD to roll over with talk of a rate cut and that could help Gold, Silver, and the Miners to bottom, especially since they are within the timing of finding a daily cycle low.
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GOLD is within the timing for a dcl at day 33, and this very well could be a dcl in place at the 50sma right before the Fed mtg. That said, Gold is under the 10sma and those Fed Mtgs almost always cause a very volatile reaction. This could even do a false breakdown known as a shakeout at the 50sma and then recover, but any selling really should be short lived from here.
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SILVER is also due for a DCL, and that daily cycle low should also prove to be an ICL. The timing at this Fed Mtg seems to be nicely aligned with normal cycle timing. Silver is oversold, but it can drop a little further with that Fed Mtg just ahead …
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Silver is oversold at day 30 and Gold is on day 33, so if I didn’t own any Miners at all, it seems like it would be safe enough risk/reward wise to start a small basket as long as you can handle some volatility. Some may prefer to just wait and see what happens at the close on Wednesday or even Thursday though.
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THE GDX is a little shy of the normal timing for a dcl, but it is at the 50sma and should form a dcl somewhere in this area soon. One more drop into the Fed meeting would actually be perfect, if we get that.
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So that is how the charts are set up as we head into the Fed Mtg after today and most of tomorrows trading. The Precious Metals Sector actually looks to be set up nicely, with that 30 day plus timing in the daily cycles being attained right on time for the Fed Decision and Speech. You can now position yourself as you best see fit, knowing that Wednesday is often very volatile, but we are within the timing for a low to form. Some may want to watch from the sidelines with less stress, others may want to have a basket of Miners with the idea of adding to it later. Enjoy your Tuesday trading!
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~ALEX
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I have mentioned recently that Bitcoin is bullish and looks very good, but crypto stocks need monitoring-they have not fully participated in the Bitcoin run yet.
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Premarket on Monday I grabbed this chart of BITCOIN and proposed that we might tag that trendline as resistance at $70,000-$71,000 and start to drop. We were on day 24 and we often dip down into roughly day 30ish. How deep of a drop that may be would remain to be seen, but the Crypto stocks are still not following Bitcoin, so MAYBE a pullback into day 30 and then a breakout to new highs would get them involved? I am still watching for clues.
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BITCOIN didn’t quite make it to the $71,000 that I was looking for at that line, but it did tag the lower target of $70,000 (round numbers often do cause selling) and then started that sell off. We’ll see if this continues to pull back into the Fed Mtg around day 27 and then start higher from there. Bitcoin CAN bottom sooner, since that day 30 is plus or minus a few days.
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BITCOIN WEEKLY – I also grabbed this chart before the pullback started yesterday, because I just wanted to show an idea where the dip into day 30, if it goes deep enough, could form an inverse H&S. THAT would be a nice set up for the run higher with the full 60 day daily cycle, but we would need a dip to that $60,000 – $65,000 area.
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BITCOIN This is Bitcoin on Tuesday morning and I see a tiny reversal trying to form after dipping to the $65,000 area overnight. Is that it for the dip around the day 30 area? Maybe or maybe not. I would have expected a dip down to that day 20 area, but this may just chop around until after the fed mtg too. For now, it has become choppy up near the upper down trend line, and that was to be expected as the day 30 time period approached. Crypto Stocks remain lack luster (for now). Maybe they’ll run after a breakout to new highs.
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I CANNOT RULE THIS OUT:
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BITCOIN Are the Crypto Stocks just choppy and lack-luster because they know that this consolidation is not ready to breakout yet? I cannot rule this out, and we have seen this happen with Gold & Silver Miners when Gold wasn’t quite ready to breakout yet. If this longer consolidation is what we are going to see, I still think that this will break out and run into the end of 2024, possibly after the September Rate Cut.
