Winds Of Change

The Markets always have that Ebb and Flow action where they pull back and push forward.  We have been in the timing for some change as mentioned in the weekend report, and today we did get those winds of change blowing through.  lets take a look…

In the weekend report the SPX chart pointed out possible turning points, seen here.

Here I am pointing out the action in the SPY, the day ended with  117  million.  We are in the timing for a DCL  (Daily Cycle Low, so I do believe that today was a DCL.  If this pop drops  ( to the 50sma?), I think support will hold. This is a buy with a stop below the 50 sma.

The USD moved higher today, but that did not stop many other sectors from rising.

With dollar moving  higher   The CRB pulled a reversal . This looks bullish, but I would keep track of what constitutes a down trend in case one develops.  Watch for Lower Low and lower Highs  –  Or a change from that.

WTIC –  Oil also put in a reversal today with the dollar higher.  There were reports of  “Oil trucks and Oil targets being targeted  today” in response to the terrorist attack on France.  This would be to target money making OIL funds that benefit terrorists  ( Think  “kill supply”) .   Will that prop Oil up if the continue to bomb Oil sources?  Maybe … I do not know, but please be reminded that OIL is currently making lower Highs and Lower lows.   Watch the Magenta line in the chart below.    MANY OIL STOCKS looked like excellent trades today,  but caution is still warranted and short term thinking is best at this point.  Be safe.  ( See ECA, ERF, CJES, BBG, BTE, LGCY)  Very bullish looking, and the XLE remained healthy.

XLE – The XLE did not look like it would stay above the 50sma last Thursday. Now we see a nice reversal today .  ( I allowed myself to sell some Energy positions and get stopped out of other, since OIL was making lower lows and broke  below the last DCL.   Today the stocks I sold are higher).   🙁   That happens, what can you do?  Regroup and be ready.

In the weekend report I said that it was a bit confusing.  It is almost as though Miners bottomed before Gold in the past, and possibly the Energy / Oil stocks are bottoming now , despite Oils recent weakness. This chart of the XLE remains bullish in nature.

NATGAS –  Natgas turned Bullish last week, but was rejected at resistance today.  It still can be considered Bullish –  So I will draw it as a Bullish pull back.

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GOLD stormed higher Sunday night and I actually thought that it may have put in a DCL and was about to break out with follow through.

   Then we got the reversal at the 10 EMA.   🙂    Fickle Gold, but it did put in a swing low. It looks very similar to July Lows if you ask me.  Just wearing people out with head fakes for now. The break above the 10 EMA may be more trustworthy to ride a long position. ( I use 10 EMA on Gold, but I use the 8 Ema on Miners).

GDX –  The Miners are in the timing for a daily cycle low  (DCL) .  GDX did put in a swing low, but I also use the 8 or 9 Ema and it was halted there.  I still think the Miners are putting in a low here, but I cannot say if it is a longer term low, or a short bounce and then a 4th daily cycle that breaks current lows.  That said, I am going to post 2 charts of GDX.  Both Bullish in different ways. 

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GDX –  A bit complex, but I am basically trying to show that just because the GDX didn’t take off higher,  it isn’t bearish.  We did the same thing in July for DAYS & DAYS and even made new lows intraday.   ( UGH)

GDX–  So here we see using technical analysis, a break out from a wedge.  A break from a wedge can back test, but it often a valid move higher. Every other break from a wedge in the past 3 months moved higher eventually, once it was above the 9 Ema. 

So what am I thinking? 

 Many things.  Energy stocks look excellent with todays reversals , but with OIL breaking down last week and making lower highs and lower lows,  I need to plead caution.  I repeat: Please see my OIL chart above again and the MAGENTA line .  Then see also    ECA, ERF, CJES, BBG, BTE, LGCY   –  Those charts and many more  look excellent.

ERF – For example: ERF moved higher Friday with OIL down and continued above the 50sma today.  I owned this and sold it a few days ago  🙂

SO I guess that non-traders need to be patient if they cant trade quickly, but traders can trade these set ups.  Be cautious and nimble.  I think Miners will move higher soon and Energy stocks are set up correctly, but Oil is setting up as lower highs and lower lows.  Look again at my oil chart and trade accordingly.   IF GEOPOLITICAL changes occur where a coalition begins attacking OIL targets, could that disrupt supply and change things?  That will manifest itself in time, for now we have to view oil as falling.     What about the markets?  They look like they want to move higher and could do so for  a couple of weeks if they remain strong. 

  I  W-A-S Surprised at CSCO today,  and I think that MSFT looks very good long term.    AAPL  put in a bullish reversal.     So 1 day does not a market make, but the timing is right,  and some charts are shaping up in the equity markets too.   We’ll stay alert for the possibilities.  The winds of change are blowing through   and lows may be forming in a the sectors mentioned above, but how long will they  last remains to be seem.  I hope this at least shapes your view of the markets in the short term.  Best wishes and happy trading!

~ALEX