May 3 – Baskets

I dont know about you, but trading on Tuesday had me feeling like my basket had some dogs in it. Is that truly the case?  Lets take a look…

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SPX– CNBC was very concerned about the markets selling down today, but this chart is not bearish at this point.It keeps selling down and then being bought back, and that leads to a sideways move so far.

Other areas are getting a bit less bullish and more neutral. 

The NASDAQ closed below the 50 sma and 200sma, but it is oversold. I’m looking to see if it can recover .

IBB –  This has been a dead trade after breaking out from that base and bouncing around sideways.   Ibb is also pushing to get back down into the base area.  It closed slightly below the 50sma, we want to see this break higher now. I drew a bullish back test,  but we need to see the IBB move higher now.

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USD – We got our reversal in the $USD. I think we saw a false break down, and now that everyone is bearish the dollar,  it should rally.  THIS COULD FINALLY DROP GOLD & MINERS.

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WTIC –  Oils daily cycles can last 30 -50 trading days  ( That is 2 months).  It bottomed in April, so we could still run higher before a drop into a DCL.  We could put in a 1/2 cycle dip at the 200sma and then rally to the top of the channel. The MACD looks a bit weak though, and I have to wonder if OIL is going to meander along instead?

The OIL reports are released on Wednesdays,  so maybe we’ll  break up or down after that.

This is what I was actually picturing.  The first daily cycle was strong. This one still has time to prove itself. 

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XLE –  The XLE still looks bullish, with a normal pull back taking place. A drop to 64 looks likely, so maybe OIL is going to drop a bit more.

CRB –   The CRB broke below the 10sma today ( Not shown). It also lost the 200sma, so it may visit the bottom of this channel and tag the 50sma again, or crawl along the 200 sma and break back above it later.  I will discuss commodity stocks  at the end of the report. 

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NATGAS –  Thursday ais the NATGAS report,  and that may be what it takes to move this . It is in the middle of the 50sma and 200sma, so it may drop or pop. 

Gold & Silver remain the same, but the &USD is setting up to rally. That may drop Precious Metals.

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GDX–  Read the chart.  Of course we have been expecting a drop for a while. Did it start today? Time will tell , but I had a target that is still a bit higher in the $27 area.    A Rally in the USD may drop Miners ( Finally) .

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So yesterdays lesson on pull backs seems to have been great timing,  but if you were invested as heavily as I was in Commodities and Miners,  then you felt the pain of those pullbacks.     We got in at lower price and should have great gains, but I did lso add on the way up .  Now watching gains slowly leak out is difficult.   I am 35% cash, and the rest is in Commodities, Miners,  and Energy.  Some were down 7-12% ,  so I feel your pain.   I wanted to discuss that area again.  Lets review. 

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HBM – yesterday I put this in the report. I wanted to show that HBM can drop right down to $4.00 and be fine. ( To the Blue trend Line). Normal consolidation like we saw in CLF & VALE.

HBM – Tuesday it dropped quickly to $4.37.  I own a lot of HBM shares, and  this felt really bad, so I look at the chart for danger or normalcy.  The chart looks normal. There is a lot of support in the $4 area ( 200sma, 50sma rising, trend lines, etc). Volume was 1/2 of what it was when it surged higher for the past 2 days.   Still, a drop to $4 is more pain ahead.

HBM Basic inverse H&S back test. If you own this and it is at $10 this fall, you wont remember today.

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VALE – I drew this for yesterdays report as a possible drop. It shows a normal drop to about $5 , where the Blue line is. It looks normal when I draw it like this, but…

VALE Tuesday mid day – I drew this and posted it in the comments section. It has been a consistent buy at 22 sma, but I did not add today.  I want to see a reversal first. Proof that support will hold and buyers are there. 

VALE TUESDAYS CLOSE –  It closed right above the 22sma. Was that the buy?  Let me draw an idea for you…

Look at the chart above, and then flip to this one quickly. This is what we saw in March.  It is possible. So todays 8% drop wasn’t ugly,  unless you owned it. 

CLF –  Lets review.  Tuesday it dropped 12%!!  If you owned it, that hurts,  looking at this chart if you didnt own it,  you’d be drooling for a gap fill at the 22 sma, and it would look great.  Does the gap need to fill? …

CLF – The Gap can hold as support, since it was a power gap. It could go sideways until the 22 catches up.  It’s an easier buy that way.  So look at March, Look at April.  Not smooth sailing, but higher highs and higher lows and a bullish set up.

Longer term, if you own this at $2, or $3, or $4.50 and ride these bumps,  you may not care at all by the fall, if the lows are in for Commodities.  I think they are.  Look at the ‘wiggles’ in March.  Did you ride those? They look like no big deal now.

CLF

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ERF –  This was ERF. Look at the circled area. $2.50 to $4,  then it dropped to $3.30ish. PAIN, but later it went sideways and ran to  $5.00.  Notice also the RUN UP,  DROP and CONSOLIDATE ,  Run up,  drop and consolidate.   We could be getting that now in commodities.

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LGCY –  Lcgy dropped 20%  ( Again). I sold most of my position when LGCY ran up 400% and paused and then put in a doji. I thought that it could keep going higher, because I have seen a lot of crazy moves lately, but I needed to take some off of the table.  I often mention that I like to let some ride just in case,  go to cash…just in case.   This ran up 400%, so even just a 50% pullback could be big. 

They release earnings after the bell Wednesday  ( Today).   I still own some that was bought just above  $1.00,  and $2 , so I will watch it closely.  If it acts correctly after earnings or even a day or 2 later, I will add.    It MIGHT back test the box or $1.50.  Notice that so far,  GREAT volume up,  LIGHT volume down.  I like that.

BTE  dropped 8% today, but it has run up from $1 to $5.   I owned it, but sold last week because I owned too much Energy and their earnings was to be released Tuesday.

I love this base, and they did release earnings Tuesday after the bell. This is one of the best bases I’ve seen,  I cant wait to see how things play out now that earnings are out.   As of today,  it has dropped down toward the moving averages. I will re-enter if it holds up.

That’s the review .  You can see that if you didn’t own these stocks, the pull backs look great, you’d be looking to enter lower.  If you own them, you feel like maybe you own a basket of Dogs.  Based on the theme picture and some of these charts, some of those puppies in the basket still look pretty cute. 

Unfortunately,  the XLE looks like it could drop further.  Oil and the CRB can drop down a little more.  When GOLD went sideways for weeks,  Miners still progressed higher, it’s possible that some of these stocks can go higher , even if the CRB pulls back.        We are at a consolidation point, and these charts all still look bullish.   I rode CLF ,VALE , CENX, AKS, SID, etc , through the Jan / Feb consolidations,  then the run higher and sold.  I re-entered in March and many here did so too, also riding a long consolidation, and then a great run higher.   We are at a consolidation point again .  They are not easy to ride,  if you need to step off or lighten up until they really break higher,  there is no shame in how you manage your trades.

As long as they remain bullish , I’ll  buy the dips .  As a side point:  AKS is a good example of a stock that I owned that went no where after the initial launch.  This means that some may fail to launch repeatedly  AKS launched from $2 to $4,  then broke out to $5, and dropped back again to $4.  It is stalling,  so I leave it for now  and move on.   AA did something similar at tat $10 zone.

 I’ll discuss in a later report how the later you get into a cycle, the bases that form can be prone to struggle more.  These are 3rd or 4th stage bases. They act differently until they re-set and build energy to run again.

For now , we have a pull back to endure,  to buy the dips,  or lighten up because you do not wish to ride a consolidation. I’m going to ride what I own, unless something happens that proves my stock bearish.  Again,  LGCY has earnings after the bell.  That can go either way,  and BTE already released theirs last night.

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Stay frosty,  and thanks for being here!

~ALEX

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