Bullish Changes

Today is Wednesday and the last full day of trading this week for the markets in the U.S.  There were some bullish looking moves yesterday, some expected and another was a little surprising. Lets review. 

SPX –  I expected a little drop, likely to the 10sma, and a BUY opportunity for UPRO, TQQQ, or another long vehicle that you may trade.

I posted this chart of UPRO yesterday, using the 10sma as a guide. The 2nd one was at the close.

That was a perfect “Buy” opportunity, but It could still be bought here if you missed it.

USD – This should still be viewed as bullish, but the steep rise has broken down and this could tag 100. 20ish and drop again.  I see divergence in the RSI and the MACD is beginning to slope  downward.  (That can change with a strong thrust higher, so we view it as bullish unless it really rolls over)

I’m changing the usual order here ,  I will cover energy last.

GOLD – Gold price action doesn’t look like that much, but I believe that we saw a DCL  ( possible ICL). Miners are possibly leading .

GDX – GDX is showing signs of strength and moved above the 10 & 13 sma.  By Friday I would like to see GDX close above the high 2 days ago at $14.07, because that would change the weekly chart to a weekly swing low. 

Some MINERS really looked nice yesterday, and I am cautiously bullish. I feel that we could have just seen an ICL in GOLD and Miners did NOT break their Sept 11 lows. Charts of AUY and KGC were encouraging yesterday. They now have weekly swings in place.

SO now comes OIL & ENERGY. 

Yesterday I mentioned a Saudi statement that was Bullish for OIL caused a slight change in Oils appearance. Oil is starting to look more bullish again, but it is at a point of resistance. Let me review something here.

Using cycles – OIL failed by breaking prior October lows and that is to be viewed as calling for lower prices in a long daily cycle ( 2 more weeks). With that in mind I called for caution ( even possibly shorting a bounce), and I got stopped out of any energy stocks that broke their 50sma and I also sold 2 stocks before they got the 50sma to lock in ‘small’ gains.

  This is OIL now. At resistance, below the 50sma, but appearing a tad more Bullish looking. I have to remain cautious, however…

Honestly I have been really bullish longer term on Energy stocks, but I have been stopped out for the most part 2 separate times when the ones I owned began to break their 50sma. Frustrating.   They still look very bullish longer term and have some sweet looking bases forming.  There is  a lot of upside if & when they recover.

This is what I was thinking to myself when I saw the energy stocks breaking out yesterday.

MANY MANY Oil / Energy Stocks took on a very bullish appearance yesterday and the XLE Again held the 50sma and turned higher.  Many Energy stocks look nothing like OIL.  Lets take a look.

XLE – I meant to say H&S on the chart.

My thinking is this…

Many healthier looking energy stocks may continue to simply build constructive bases until OIL is ready to break higher.  Then they will break from these bases with vigor. Opportunity has not been lost,  just delayed.  SOME may lead the way and break or climb higher now, others  ( Like we just saw with REXX for example) , will base out and even break down, recovering later.  Lets look at a few charts.

XCO  – There is no doubt that this is bullishly recovering with OIL & NATGAS breaking down. That slight break below the 50sma looked like a H&S drop coming.

SGY – This is one that I sold. It has slightly broken the 50sma 3x.  I know feel that the 50sma is NOT a place to put a tight stop. 

CJES –  I have repeatedly mentioned this one and I also bought and sold this 2x. 1 win, 1 loss = break even pretty much . Some of these energy stocks move a lot %-wise , and that makes them difficult to buy & hold . This dropped to $4.15 and shot up to $5.80 in a week.  THAT is why I believe that when it breaks upward and recovers , it has huge potential. In reality, it has gone from near $3 in August to $6+ in November ( 100%+), but it’s hard to buy & hold.

What I wrote for CJES stands true for quite a few Energy stocks. Some that were bought in the Summer could be good %-Gainers even now 50-100%, others are still near lows, so I think bases are being built.  Lets just look at a few more.

QEP – Mentioned here in past reports, Not easy to hold, but apparently can be bought at the 50sma.

Another way to look at SGY is $3.74 to almost $10.  I bought and sold the 2nd time for break even. 🙁

These next 2 charts are especially bullish looking.

BCEI  –  I love this base, in time this could run back to $22.  These were huge gains already really, but I did get stopped out at the 50sma, right before the run to $9+.  I am looking at these differently now – not all stops at the 50sma are working to my benefit.

BBG –  Not breaking down. Up over 150% in just over a month. $2.75 to $7.04-  You can see why I like this sector for a recovery opportunity.

But then you have this, which is why I advised caution

SO in conclusion I just want to say that we have focused on Energy at times, and rightly so.  The %-Gains have been great, but hard to hold on to. These move so swiftly in these bases that at times I am getting stopped out with losses and meager gains around the 50sma. You can see that these are building bases and as I mentioned,  If & When this sector recovers, some huge %-Gains are the opportunity.  What to do?

I am going to study this area a bit more.  I do believe that constructive bases are being built and I want to be able to take advantage of this opportunity in the future. It may require a slightly altered approach and I also still want to see what OIL does.  If OIL drops to new lows, these may pull back to higher lows within their bases.

If you have time, check out charts of BTE, BBG, BAS, EXXI, ANW, RES, EPE, WLL, LPI, PBR just to name a few. Some are breaking out, others are basing out.

Conclusion – In the US, trading will likely really slow down after  mid day.  People start to prepare to travel  and shut things down. I expect LIGHT TRADING for the 1/2 day Friday.   I like the way Miners moved Tuesday and even though Gold is down pre-market, I hope to see some follow through higher today or Friday.  Past reports mentioned the difference between a possible ICL  or 4th DCL, so I would sell if Miners break down below recent lows.   Best wishes!

~ALEX