‘ Who’ Cares- Another Fed Week
I’m not one to blame news events or market manipulation for all of the moves that the market makes, but this Fed decision is likely already one that is affecting the markets. The charts are showing signs of change, so lets dig deep and see what we can find.
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SPX WKLY– DO you see weakness in recent weeks in our ‘Bull market’?
Pullbacks of 10 % can be healthy in a bull market, but lets take a deeper look…
SPX DAILY – In prior 2014 dips where we made double lows ( shake outs) , we saw Megaphone patterns and strong rallies followed. Currently these are not megaphone patterns and what I am seeing could be quite bearish. I recommend extreme caution ( like maybe cash) until we see what happens post fed. Many expect the typical “Santa Clause Rally”. I’m not so sure, but if we get one, the blue channel line would likely cap it. This could actually fall apart quickly with cycle timing as it is.
DJIA WKLY – Fed Week or Fed Weak?
DJIA – Break down Friday and lost the 50sma.
NAZ – Dec 8 – I saw bearishness in the indicators
NAZ – Double top so far. High volume break down Friday.
XLF – In last weeks reports I showed a variety of sectors and it appeared that weakness was becoming contagious. That continues so far.
The Big clue was this one pointed out on Dec 9. Follow through would sink markets.
$USD – The USD was bullish in 2014 into 2015 and so where the Markets. The markets look to be struggling and breaking down. What about the USD? The MACD is not very healthy looking , even on a wkly basis now.
I actually did a lengthy study a year ago, and I may share that study here in the future. In this study I am watching the YEN. I watched its relationship with the SPX, the USD, and GOLD. When the Yen bottomed, Gold would often bottomed too, and the USD & SPX would temporarily top.
So with that said – I charted this Dec 2014 to show that inverse relationship.
XJY – This shows its relationship with the SPX. Yen up, SPX down. So ff the YEN bottoms now, The Markets will probably top.
I was going to put this in a prior report in November to explain this, but I felt that it was premature. Now I like what I saw this week, So lets see….Was the YEN bottoming here?
UPDATED XJY WKLY – It broke higher this week ( As markets & the Dollar broke down) . The YEN looks to be bottoming, and often the SPX topped when it did.
SO CHECK OUT THE USD VS XJY WKLY CHART. Weaker $USD & stronger $XJY. And again Gold usually bottoms.
We’ll discuss more with Gold in a bit
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WTIC Dec 4 Review– OIL was on DAY 27 – it still had too many days to go to be bottoming. I drew a possible wedge lower.
WTIC TODAY – Now day 33 and an A-B-C-D daily target fulfilled, we may see a DCL soon. They have gone 40+ days, so be cautious of only a bounce. I wont play this to the long side, but it may have another daily cycle lower and a bounce “Might” be a good short.
Caution because Recall my original target on the weekly A-B-C from Nov 13 was $26.09. Another daily cycle could produce this after a bounce.
GUESS WHAT? I think NATGAS may finally be close to a low! WOW. Timing is right and the slope and capitulation is steep. I am watching for a close above the 8 sma daily chart. Traders could buy that with a tight stop. I am only able to underline that word 1 time, please underline it twice when you read it.
GOLD –
I’m re-posting this $GOLD/ $USD chart to show that it looks like GOLD has put in an ICL, and it is just starting. ( Fed contributing to it possibly).
GOLD DEC 10 – I said that I wouldn’t have minded Gold dropping into the fed meeting, and then rallying after
Instead, GOLD did both on Friday alone. It dropped below and recovered both the 10 & 20sma. Now I’d like to see a break above this blue dotted line.
Now Silver did something unexpected, but looking back, I think I can explain it. SILVER dropped to NEW LOWS when Gold dropped and recovered.
SILVER –
To help us view Silver unemotionally and not get overly excited since Silver just hit new lows, let me point out that GOLD bottomed JULY 27. Remember JULY 27 – The lows were in, what did Silver do?
SILVER – Gold lows July 27, Silver lows Mid august. We just saw this in the summer, but it didnt hurt the coming rally.
We may have a weekly engulfing here, we’ll see what the FED can do for Silver this week.
GDX has ( Amazingly) stayed right on track. Silver breaks to new lows, and MINERS move higher?? Wake me up, I must be dreaming! 
GDX – The Daily count at day 16 is semi long. A DCL could come day 20 ( soon) or after a run higher, lets say day 25- 30. So the Fed possibilities are a run higher into the Fed and a false break down Post fed into a daily cycle low. Or a Fed Rally, but Miners look bullish as they ignore the metals repeatedly.
GDX & GOLD – Upper box – GDX looks lined up to RALLY based on past consolidations as gold bottomed. (As long as this is not a rising wedge in GDX).
DEC 8 – This is my GDX sell signal and look how close it was getting as Gold & Silver are at lows.
Then SILVER breaks to new 6 yr lows and ….WHAT? Miners turned higher just in time.
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One last chart – This is SPX & GOLD. The Upper Box is GOLD, the Lower box is the SPX. The SPX is at lows often when the GDX is at T – when it tops. GDX at the ICL has been lining up with T – tops in the SPX. GDX looks to be at an ICL, and the SPX is at a ????
So in conclusion: I wouldn’t be long the markets right now, unless you are a short term trader with some set ups, but even that could be risky this week. Most of my set ups mentioned here DANG, GDDY, FNSR and a few others are still OK, but behind the beauty cracks appear. I am still only riding / Trading miners.
Some set ups failed – See YHOO & CIEN. This set up FNSR did a quick shake out and then Popped. SO its getting very selective in the stock market these days. YHOO was a decent set up & it failed. CIEN was a decent set up & Got crushed.
FNSR 12-11 – Has a shake out and a POP.
Please read this report more than once, digest it, and keep in the back of your mind that Tuesday the Fed Meets and Wednesday they release their decision. Do you want to be invested, or step aside and wait to see what happens? If their decision is already baked into the cake, then the above report is seeing the direction that is taking hold as being a low in Precious metals and the YEN / XEU , etc. The Dollar would be topping with the Markets. These big ships take a long time to turn around, so I have been pointing this change out for almost a year now. It looks like a rounding top on the SPX so far and a Long Top on the Dollar if these are tops. This is a process, but it continues to look to be playing out. This should be another exciting week, and 2016 may get VERY exciting and profitable if this plays out! 🙂
Thanks again for being here, and please have a plan. You may loosed stops a bit to avoid a shake out, but definitely Honor stops for the week ahead, or sell and watch the fireworks by Wednesday.
~ALEX
