Wednesday February 26th – Time For A Reversal?

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SPX – The selling continued for the 4th straight day yesterday, and then we started to see a bounce into the end of the day.  That left us a reversal candle. It is possible to get an early dcl, but I would have to expect more time, so we may just see a bounce and maybe one more leg down to get us closer to 34 days or so.

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NASDAQ is dangerously close to the lows, so I really do hope that we get that bounce immediately.

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THE DOW JONES actually did drop and reversed to green by the close.  I was running through some stocks to see what I could find that might be bullish in these markets and I found some food, staples, travel companies were able to resist.  For example…

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I found some food, staples, travel companies were able to resist.  For example…

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Coca Cola (KO), KHC, DPZ (dominoes just reports and is up), and several other consumer favorites released earnungs and has actually rallied out of the lows as the markets sold off. I’m going to try to look up  few more of these companies when I get time. In the past I’d see WALMART, UBER, GRPN, RCL, etc also do well. 

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In the past I’d see WALMART, UBER, GRPN, RCL, etc also do well. I also noticed that all of my ‘Housing stocks’ were green all day yesterday ( See TOL, MTH, LEN, NAIL, RDFN, for example).

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Take a look at Walmart and we see that it gapped down and sold off, but yesterday it tried to recover the 50sma while the markets continued lower, so retail may be bullish when the selling lets up.

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WTIC – Oil plunged 2.5% and this may be breaking down. I say that because we are quite overdue for a dcl, and I thought that we might have even had one, but it rolled over and has chopped lower.

 

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THE USD may now have a bullish descending wedge and a dcl is coming due, so we may see the USD start to break higher too. Throughout all of its past rally out of the ICL, that did not hinder Gold.  We’ll see how Gold reacts if the USD bounces again.

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GOLD dropped rather sharply, but it bounced off of the 20 ema. We have not had a good visible sell off to give us a visible dcl and this really isn’t one either. Will the bounce hold up and the rally continues? Maybe, but it is also possible that we chop along here and give Gold a rest (consolidation).

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GOLD – This was the first obvious break of the 10sma and the MACD is starting to curl under. This rally started in November at the deepest low. I want to keep in mind that we are also 3 months into this move out of the lows, and quite often we’ll see a bigger dip in month 5 & 6.  I was looking for Gold $3040 and would like to see that in March as a peak to the rally. We’ll see.

 

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After selling off fairly sharply, SILVER bounced off of the 34 sma yesterday. I wrote 20 ema, but forgot that I had changed that on the chart.  This is the 34 sma, and I use the 10, 20, 34, and 50 sma often in daily cycles. Notice that Silver did not actually reach the lower trendline. It could drop a little more.

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GDX reversed on day 37 out of the lows.  We could be seeing the formation of a dcl.

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I was watching the stronger Miners that Popped after releasing earnings rather than drop.

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I pointed out BTG recently, so when it dropped again to the 200sma, I mentioned it as being at support again.

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BTG bounced back again.  It could churn sideways until the 20 ema catches up, rather than break down to that 20ema. It showed strength during a time of selling.

 

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KGC did drop down to the 50sma and bounced. Hopefully, that is where the selling stops (or holds if it drops again).

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So on Tuesday we saw a continuation of the selling, but as the day went on, buyers stepped in and we ended the day with many reversal candles. That COULD give us a bounce or push higher today, it may even leave a dcl behind with the Miners. Reversals can be bought with a tight stop as a low-risk entry, or some wait until price gets back above the 10sma. I have pointed out a few Miners that have resisted the selling to a degree, and they are in yesterdays report if you need a refresher.  If the markets sell off this morning and then rally upward again, that may be telling us that the selling is drying up and buyers are stepping in, so that is another thing to look for if you are looking to buy the reversal. I did some buying yesterday near the lows. I have a dental cleaning at 8 a.m., so I will miss some of the morning trading today. Enjoy your Wednesday trading!

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~ALEX

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Yesterday I pointed out that…

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Overnight BITCOIN lost not only that triangle, but the lows of this consolidation were taken out on day 43. That could give us a lot of time to chop & drop further. We are already reaching $87,000. Now this clearly looks like a double top, at least in the short term.

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BITCOIN can bounce from here, but just based on what I see here, I have to expect another drop after a bounce. We usually have 60 day cycles and we lost the lows at day 43. That gives us 14 days to get to 60, or 2 weeks, so that might give us an ICL, but I honestly have to view this selling as incomplete.  Can you buy a reversal low? Yes, but it may be better to view it as a short-term trade and keep an active eye on it.

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RIOT released earnings yesterday and to be honest, closing down only 6% during a sell off is not that bad for a crypto stock. It may bounce 10-30% if Bitcoin bounces, so that’s a trade idea for day traders or short-term buyers. For example, a bounce to the 50sma is almost 30%,but there is risk involved.