Slight Variations

Did you read my Tuesday report and the Wednesday report? Not much has changed in the way of expectations really.  We could say that we are  just seeing a slight variation of the same theme.

Wednesday morning I pointed out the resistance above at the close on Tuesday for the   NASDAQ, SPX, IWM, etc.   Even though the Futures were Green, I thought that we would drop later in the day.

NASDAQ Tuesday OCT 20

SPX  OCT 21 –  There was no follow through to the green futures, the SPX began selling off to the 9 EMA.  Thursday will tell us if it will hold or continue selling down. Again, I think we will see more selling for now.

IWM – Notice the negative divergence.

The VIX  looks like it may have reached support in an oversold area.

TZA ( See also SQQQ, SDS, DXD, SOXS, etc)-  these are vehicles to short the market and they look quite bullish.

Based on what I pointed out in my last 2 reports, and then add todays reversal after opening up green and the Vix pop,  I think the markets are going to start/ continue  heading lower.  At this point we cant tell if this will sell off deeply or just drop and re-charge for another attempt at the break higher.  

USD – The Dollar had some upside follow through today, but I do not expect this to amount to much. Notice that the 1st daily cycle peaked on day 8, then next on day 5. These are weaker left translated daily cycles and this next one should be weak too.  As the dollar rises,  Gold / Miners should drop to a dcl (Daily Cycle Low) .

WTIC – not much change here. Oil daily cycles can last up to 50 days! We are close to making a low. If OIL drops below the blue line, it is probably a stop run ( I’d expect it to reverse higher).

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I wanted to look at GOLD this way . With the dollar rising, it is likely dropping to find a daily cycle low too.  As I have mentioned for weeks, this will be the real test. Will the next daily cycle make a higher high and a higher low too? If the Dollar looks weak  ( it does) , there is a pretty good chance.

If Gold is dropping,  I would expect GDX to drop too, but I wanted to point out something interesting that I found in my personal research.

This is a chart of GDX CURRENTLY –  I am pointing out…

1. THE lowest point on Sept 11 and then a run higher for 1.5 months to a peak. 

2. Then we dropped to a supporting moving average , but most expect a break down next. 

I looked at 2008 lows ( Because GDX was emerging from a bear market beating) and GDX actually did the same thing that GDX is doing now .

1. A run higher for 1.5 months out of OCT lows

2. Dropped to the supporting moving averages  ( Green arrow) .

Then it did NOT break down here.  It did a final jump higher from the moving average, and then only dropped to the 50sma for its dcl.

If we did something similar now,  it could look like this.  That still gives us the 1-2-3-4-5 wave that we were discussing, but if GDX breaks todays lows,  we will probably just keep dropping into a dcl as the dollar finds its high.

  SO there are no new trade ideas in todays report.  I’m watching to see if the markets roll over and then SQQQ, TZA, SDS, etc may be a buy.  A stop would go below Wednesdays lows on  SQQQ, TZA, SOXS, etc.  I also listed a few energy charts in yesterdays report and Fridays, to point out some possible set ups to keep an eye on as OIL drops into its Daily Cycle low.  I like CJES, CRK, and several others.   Take a look at  HAL,  that looks bullish as OIL continues to drop.  Keeping a watch-list in expectation of Oils lows is a good idea.

~ALEX