There It Is Again

Well, after several weeks of good trading , it appears again.  Yes, I’m taking about that Elephant in the room – only this time things He’s levitating as we head into the Fed Mtg this Wednesday. Lets take a look at our markets, keeping in mind that we do have a Fed Meeting this week.

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SPX – I see a rising wedge and on day 20, we could drop to a 1/2 cycle low.  So we could drop heading into the Fed Wednesday or possibly see a drop after?

I mentioned something important last week and I want to remind friends of that here…

This is very early in a new intermediate cycle for the SPX.  Too early to go short longer term, and with day 20 as a new high, this could be Right Translated.   We would expect new highs again after a dip into a dcl. This all could takes weeks. 

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Reminder & Update :

 Last year I had felt that we are witnessing the markets topping.  I called for the initial drops and we have had them.  I have posted these charts in prior reports to show what I would watch for next for the bigger Picture. Click on the charts to expand.

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SPX QUARTERLY –  This will be important at the end of March (1st quarter). I am watching that moving average that was never recovered in prior bear drops.

SPX MONTHLY ‘TESTS’ Chart Feb.  Because the SPX is now at 2000+ – this is important.

Moving forward  WITHOUT BIAS means we now approach this bounce from a neutral view and wait for evidence to see if it is just a bounce (Shortable)  or a recovery.  Lets look at more points of interest.

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SPX MONTHLY – I expected at least a drop to test our break out near 1600. The 10 moving average shown was not recovered ( on a Closing basis ) in past major tops.  Lets zoom in.

ZOOMING IN–  We are breaking above that M.A. now.    That could actually be bullish if we close the month above it.

SPX Daily.  Yes, it is breaking above the 200sma, but notice that it did that in Oct too, and still rolled over.  In fact, It sucked in Long Bulls at that point several times in Oct, Nov, and Dec and still dropped to new lows.    Currently, I expect a tag of the blue or red line.  How might it play out?

1. After the Fed, a quick pop this week the the overhead line??

2. After a 1/2 cycle drop heading into the Fed Wednesday, then finish the 1st daily cycle at those lines.

SPX WKLY –  And this is a visual aid going forward. A possible round top.

In prior reports I also mentioned that weakness in Banking was a concern of mine. BKX with  BAC, JPM, GS, MS, etc struggled.  They were not recovering and looked down right ugly, as shown here on Feb 3.   BKX above $66 would help.

BKX–  It’s not above $66 yet, but it looks bullish and may be ready to move higher  ( Individual Bank stocks too). This improvement needs to be noted and watched.

GS–  Similar, but still lingering at lows.

 SUMMARY: Along with the changes in Banking, I see improvement in other areas that I use to gauge Bullishness and bearishness. For Now I think we Might get a dip into a 1/2 cycle low. Then I want to see how the DCL forms. I’ll be watching many things between now & then.  I saw a lot of negative changes in Dec and called for a drop. Then I thought we’d get this rally/ bounce  to change sentiment back to bullish and drop again.   With the above improvements in banking and other areas, I am fairly neutral,  but still expect the continued drop for now. 

 

The USD WKLY – It has dropped at the last 2 Fed weeks (red arrows) .  Last week started a drop, we’ll see if the Fed finishes it. If the USD Drops & then Pops- Does Gold POP  and then Drop?

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NATGAS– I have been mentioning that I think lows are in. Read the chart.

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WTIC – We caught the lows in Oil and this weekly chart looks great. There looks to be plenty of upside. 

WTIC DAILY –  Shorter term , I do think that we’ll struggle at this horizontal line.  Oil is on day 20 and Daily Cycles for Oil can last 30+ to  40 days from low to low.

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GOLD & MINERS

My goodness, what else can I say about Gold & Miners?  I feel like I’ve said it all  🙂    They are the elephant in the room that everyone is staring at , levitating around , defying gravity. Lets take ANOTHER look.

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To start –  These are the various phases that a BULL to Top to Drop to Bear MKT to Bear Mkt Lows takes one through.  See if you can recall this ride in Precious Metals, and where would you say we are right now?

To the charts…

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GOLD –  It has to pull back sooner or later, but so far it is very strong.   Notice that it never closed below the 13 ema since January ( Or Red dotted trend line since forming the triangle).

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Gold got ANOTHER higher high Friday.  Each time I show you FIB re-tracements, they are based on pulling back from THE HIGH.  That means we must readjust.

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Unless we hit another higher high, this fib line up actually lines up nicely with support. I would L-O-V-E to see a pull back. Why?  I am almost out of all of my Miners, since we buy the dips & sell the rips.

I’m expecting a cycle low in this entire Trading Cycle to come in a fairly orderly manner,  I see things possibly going something like this time wise.

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The C.O.T. has been steadily rising. 

 Note:  Both Gold & Miners seem ready for a pull back, but I wanted to mention this…

Individual MINERS may kind of do their own thing if Gold has re-entered the Bull Phase.  That is why  companies like  LSG, RIC, NG, Etc bottomed long ago. And now others may get accumulated on the dips and hold up / go sideways a bit while others just pull back swiftly.

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Some have feared that GOLD taking off and SILVER lagging is a sign that the rally is not real. I have been asked to address this.  I have actually  pointed out that in 2001 ,  GOLD bottomed in the Spring and Silver actually made new lows & bottomed in the Fall.  That is a fact.  Gold bottomed first in 2001. Now lets look at 2008.

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2008 Lows.  This shows that though  Silver/ Gold both  bottomed in 2008, Gold broke out from a base ( Magenta line) & ran higher first.  Silver didn’t break out until later.  Conclusion? I’m not worried about Silver holding back yet.

GDX WKLY  – Miners have been strong, but I’d expect that they should pull back soon too. That is why I switched my focus mainly to Energy.  It was earlier in its move out of the lows.

GDX WKLY –  Doji.  Often topping candle after a run. Maybe a wkly topping candle entering the Fed Week.

What can we expect from the pull back in Miners  ( If we ever get one  🙂 )  I will continue to look for opportunity along the way, when we see better how things unfold, but for example:

Maybe you’d get a great stock like FNV at a better price.

I pointed out on the  EXK WKLY  last  week  how a tiny pull back from $2.27 to the $2 area would be nice. But then…

EXK –  Exk just kept climbing last week to $2.85, so again, the drop may present another chance to own it lower. 

We just need to get the pull backs first, to know where a good entry may be.

Picturing Miners working their way back down to the 50sma may seem like they have a long drop ahead of them.  Notice how GPL just went sideways for weeks after leaving its base.  That gave the 50sma a chance to catch up a bit.  We can look for that possibility in some miners too, if things remain bullish.

So that’s the weekly wrap up and expectations going forward. I hope all had a great weekend and we can look forward to seeing how things unfold Monday and Tuesday as we approach another Fed Wednesday. Thanks for being here at Chartfreak!

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ALEX

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I was also thinking of something that I mentioned last week.   In Energy,  some that do not like to buy the lower priced stocks  ( under $1 or for some, even under $5 ) may need a couple more Companies to look at.  We talked about  WG, HK, LGCY, ARP, WTI, BAS, TPLM, SXE, ETC. How about a few more priced over $5.

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COG –

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As a reminder – I did point out OAS as a buy . In 2014 it was a $56 stock, so it has upside potential. 

OAS  ran to $7.77 since I posted, it may pull back short term.

SWN – This is still inside of its base since capitulation last Dec . It has a good set up and could break out higher in time. If I wanted a position in this one, here is how I would play it personally.   I would buy a partial here above the 50sma, and add the rest on a break out. Lets zoom out…

SWN – You can see that the upside potential if this breaks from the base is excellent.

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SM – Nice run up over 100% and now flagging over the 50sma. It may or may not drop there again in this flag.  I’d only buy a small partial position in this area and see if it pulls back some more,  or just wait in case it does.   After an entry, I’d put a stop below the 50sma somewhere close.

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CQP is a different kind of Energy company & is special.  I dont love stocks that go straight up, but they can be strong and just go sideways at resistance.  It went sideways all last week and broke out.  Why is it special though? 

CPQ WKLY – This is almost back to all time highs already? This company is involved in  liquefaction and is not an Oil company. I believe they deal with liquefied natgas ( importing & exporting) , I’m not exactly sure how what part of the process they are involved in.   Due diligence, the chart surely has held up well.