Calculated Risks

Nobody wants to take unnecessary risks in the market, but the saying “Nothing ventured, nothing gained” applies too.  So you have heard me mention looking for “Low risk entries”,  but what is that? It is timing an entry where the risk to the downside is minimal, and the gain on the upside outweighs it. We will discus that further later in this report.

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SPX -Friday is Quad witching. The Fed didn’t kill the markets this time, but that wasn’t a very convincing push either, was it?

I still see the rising bearish wedge for the general markets.

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 So, lets take a look at PRE-FED and POST FED results.  Looking at the following 2 snapshots gives you a visual of how things were affected by the Fed decision. For example The SPX was down a little  before and up a little after.  The USD from Green to RED.  Commodities REALLY GLOWED after the Fed.

PRE- FED almost 2 P.M. Eastern

POST FED –

SO lets look at the USD.  I said this weekend that the FED has been knocking the dollar down . I posted this chart of the Dollar from last week, expecting the same drop this week, as drawn.

This is the DOLLAR tonight, with the Fed drop.

Crude in this chart this morning looked to be on support.

WTIC – Oil moved and closed higher today. Overbought, but that can stay that way.  I mentioned that we may have seen a 1/2 cycle low and that may have been what we got. 

CRB –  The commodities chart looks bullish after consolidating for a week.This can run higher now.

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SO if commodities have consolidated for a week or so, and the POST FED REACTION  was a lot of green for commodities, maybe they become a less risky trade to enter.     More on that later.

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GOLD –  I’ve been  expecting a pull back in GOLD & MINERS to a Daily Cycle Low , after the recent steady run higher.  There was a possibility that the fed would be Bullish for Gold, because it was on the last 2 mtgs  (Dollar drop, Gold bullish).   SO I did throw this wkly chart in to show a FED POP and a drop later. 

GOLD  3-16 –  Quite the reversal.  Likely DAY 1 of a new daily cycle.  So this could run higher to that $1310 area and then drop to it’s dcl.  CRAZY stuff  🙂

GDX –  What a strong surge higher.  Shorts got crushed again.  I may have recommended selling miners on the way up, but I didn’t recommend DUST under these conditions. Dust buyers beware, right?    Surprises to the upside again and again.   The low 4 days ago was likley a DCL.  This also has been range bound in what is known as a running correction.  SO now Miners can run higher, but they are a bit more risky in my opinion,   timing wise.  Lets discuss that…

 Lets Talk:   TRADERS WITH SHORT TERM IDEAS. It becomes difficult for me to recommend buying extended stocks. A PULLBACK INTO THE NEXT ICL WILL BE A GREAT BUY!!   Buying now can be risky , because  Pull backs can come out of nowhere,  but I seeing signs that we just saw a stealth daily cycle low.  Even a left translated daily cycle can go higher to day 5-8 or so, and then roll over.  SO Gold can run higher for a week or more, and I took a look at Miners individually.   I found some that as a trader – strictly using technical analysis,  I would buy for a quick multi-day trade  WITH A STOP.

  Examples:

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GFI–  This is not extended. It has consolidated. This can run higher if Gold moves higher.  And if GOLD goes higher and spends days at the top ‘topping out ‘, this can keep running. 

AUY –  Was extended, but look at the stochastics. The consolidation worked off over bought conditions.  I also pointed out that at prior tops, we saw that dreaded  ” POP to new highs, and roll over”.  WATCH OUT FOR THAT.

HL –  Stochastics no longer overbought

SO there were many Miners that went sideways recently and took off the overbought conditions. They are a tad risky, but entries here for traders may pay off in a 5 day trade or so.

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Lets also discuss that GREEN area that was Commodities / Oil .  We may be seeing continuations in this area too.

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How long have I been discussing VALE?  Well, I’m not going to stop now  🙂   It is a good example of how you want something to act when it’s pulling back from a nice run higher.

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VALE –  Vale pulled right back to the $3.50 area as hoped for. Today it took off after the Fed Decision. I captured this chart at 3:30, but it closed even higher at $3.99.  So you see that it was a low risk entry, and this could be too.  We may get a pullback in the morning, because many got overbought on the 5,10,15 minute charts.  

REMINDER CHART –  This may or may not go right back up to the highs. It could play out in a consolidation manner as shown, but that was a nice reversal Wednesday.

CLF –  CLF  reversed and popped higher Monday off of the 20sma.   Similar to Vale. Did you miss the move?  Guess what?   It dropped Tuesday…

CLF   gave it up Tuesday,  reversed again with the Fed.  You have a 2nd chance.  THIS is why I didnt instantly write an “ALERT” after the Fed Speech .  They POP and they can drop.   There may be further consolidation or a little drop tomorrow a.m., but these are good entry points for starter entry points.  I bought this reversal today.

So we actually saw STEEL stocks move higher again last week and this week. Others like Aluminum, Copper, Iron Ore, etc consolidating , but now reacting are as follows  ( There are many more, these are examples for you to know what to look for).

AA – slides on support, moves off of the 20ma.

CENX – similar set up 

FCX – Run / consolidate / run / consolidate , etc at the 13 ma

So did you buy when VALE dropped to support?  Did you want to wait until after the  Fed?  That’s O.K.  

   I’m thinking that maybe Thursday morning Some of these “POPS” could drop back in the morning from becoming overbought shorter term.  Others may GAP OPEN,  and drop into noon time to close the gap, etc etc.   The scenarios are endless,  but the point is, the FED Decision seems to be favorable for a continued run in Commodity stocks and they present low risk opportunities of you honor your stops.   Many have pulled back and consolidated going into the Fed Mtg as shown.  Now they may be at a lower risk entry point.   OIL moved higher too, so we’ll see if some more of these Energy stocks can tack on some gains. They have pulled back too. If you didnt buy the pullbacks in commodities yet, this may be your day.  Miners are for traders with a shorter term outlook, and Energy is setting up too.  Happy trading!

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~ALEX

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BY request.  Are these stocks still  “O.K.” Here.

BBEP –  So far, Yes

WKLY FROM March 7

LGCY  3-16 …Yes, it is still acting correctly consolidating that blast higher.  I’d like to see a repeat of that orange box. 

REXX –  This one? I dont know.  It looks like a bearish engulfing candle today. 6 days ago when it dropped like that, it dropped for 2 more days and then recovered. I wouldn’t buy it here yet, watch it at that 13 sma.