To Be Or Not To Be?

/85 Comments/in /by

That is the question…

.

SPX –  I’m Still expecting higher prices in the near term, with a DCL likely in place.

 

SPX 5-9

.

Sidenote: To get this report out at 7:30 Eastern time, I cannot proof read it, thanks for ignoring typos going forward  🙂

.

 

USD – The dollar has started the expected move off of the lows , and the dollar has reacted to the downside.

USD 5-9

.

$WTIC – On May 6 I posted this Oil chart. The MACD weakness was a concern so I drew a possible drop in Oil before a move higher.  A 1/2 cycle low possible.

WTIC D 5-7

Oil did take a quick drop yesterday and the MACD still concerns me. It shows a lack of strength and Oil is just moving sideways. The stochastics is at a 1/2 way point, but can turn up from here if Oil turns higher.

WTIC 5-9

 

The CRB  – Our commodity stocks took a hit again, and I will discuss this at the end of the report. Right now the CRB is still lingering or actually pinched between the 200 sma and the 50sma. We see a MACD cross.  Will it hold up?

.

CRB#1 –  I drew this as though the April dip below the 50sma was a shake out.  You can see that this view puts the CRB at the trend line for possible support, but…

CRB 5-9

 

CRB #2 –  It can also be drawn this way using that shake out in April as a lower trend line.  This makes the CRB look more like a small H&S.

CRB 2

 .

 

This was the main head line in a few areas this morning.  

NEWS

GOLD –

NOTICE THAT THE MARKETS OBVIOUSLY READ DATA AHEAD OF THE REST OF US. I was taught that the markets are 6 months ahead of the news.  Why? Even though actual “inside Trading” is illegal, it is obvious that  someone always knows something ahead of the average investors.

GOLD 5-9

GDX –  I recall reading that many people said, “There is NO fundamental reason for Precious metals to rise, this is a dead cat bounce!” back in January.  Each leg higher , they’d say it again, “There is no fundamental reason for Miners to go higher. They will all go bankrupt”.  Here we are much higher, fundamentals improving.  As Gold goes higher, so do their fundamentals.

GDX 5-9

IF THE ANTICIPATED CORRECTION TAKES PLACE IN GOLD & MINERS – Now that inflation is being noticed  (The news is out) you would think everyone will buy Gold today, right?  No.   It may become a ‘sell the news’ event rather than a move into Gold, since Gold is due for a correction.  The news is often reported after the move.  So a correction can still take place as we hear thoughts that ‘the FED will control inflation’ and ‘Miners are over priced’. Then when we hear that, it will be time to buy again.  Just a guess at how things could take place.

 

COMMODITY STOCKS – To Be, Or Not To Be?

.

So we had some deep drops below support in out Commodities and the first thing in my mind was  …To Be Or Not To Be?  Is the Rally over for good?  Are these breaking down , even longer term?  I saw the 50sma broken on some , and trend lines were broken too. It was time to go back and see if anything like this happened coming out of the 2008 sell off and recovery. IF SO ,  how did it play out?

.

VALE – Notice VALE as it moved out of the sell off lows in November and December.  It had a lot of volatility, but moved roughly $6 to $13.   It had 3 or 4 solid drives higher and then it did break down.  Notice that it even  Gapped below the trend line, and that put it under the 50sma for  couple of weeks in February. Then it still ran from $9 to $24.

VALE 2009

 

CLF 2009 – It ran from $10.34 to $28.16 in a shaky run, then it also dropped below the 50sma, but still made a run to $67.23 in a year.  So long term ( a year) it did great, but this was not a fun looking ride either.

CLF 2009

 

FCX 2009 –  All you have to do is look at 2 things

  1. Look at Dec 2009  to Oct 2010 and you can see that it ran from $7 to $33.25

  2. Then look at how it got there. Up / Down / Up / Down – even losing the 50sma in a couple of steep sell offs

FCX 5-9

 

CLF 2016 – And then we look at CLF today and it does fit the above pattern,  but this is NOT a fun ride. CLF today has lost the 50sma and the trend line, but remains above the 200sma. It is outside of the lower B.B. ( not shown)  So it should bounce or recover. It reached oversold too on the stochastics.  I had to sell mine due to my entry being just under $5, but I do expect a bounce,  and it might be a nice one.

CLF 5-9

I went back to the CRB 2009 again. I have posted this chart in prior reports,   just to show that a recovery is a recovery and lows are in place,  but there was a lot of volatility and sideways movement too.  We have to expect that slightly unpleasant possibility in 2016 too.

CRB 2008 b

So Monday was a rough start to the week for many positions in Commodities and even some Miners were down quite a bit.  As mentioned,  in 2009s recovery, there was a lot of volatility and sideways movement in Commodities and Miners and Energy.  We have to expect that slightly unpleasant possibility in 2016 too. 

.

Many have said that they just rode this drop out with a longer term view.  I was pleasantly surprised to hear that some readers actually bought the first recommendations in January or February in Miners and commodities and held from long ago lows. They  weren’t overly affected and are looking for long term gains ( FCX at $5 for example,  it ran to $14 , but is still at $10).  So even though each one has to determine who they will be ( investor long term or short term trader) in these volatile sectors of Miners and Commodities,  both will have to deal with and try to understand volatility as these are coming out of the lows. I hate giving back a portion of my gains,  that is why I try to lighten up  on a run higher, and then re-enter on the dips.  THIS TIME – I re-entered a couple of stocks on a dip that lost support and went deeper than expected.  That is going to happen in volatile markets.  For the year,  many are still a lot higher and I am wanting to use these gains to own more Miners if a deeper pullback materializes.   For now,  all things seem to be moving along as expected in the bigger picture. The trading can get tricky,  keep it light if the volatility makes you sick. 

.

As for the Big Picture so far?  ‘To Be Or Not To Be?’ It still looks ,  ‘To Be’  –  A recovery in progress.  Lets see what Tuesday brings,  it looks to be a bounce with futures green in the general markets , Energy, and Commodities , so far. Thanks for being here at Charfreak!

.

~ALEX

 

 

85 replies
  1. chartfreak1
    chartfreak1 says:

    Interesting ( And volatile ) looking energy stock ( But it is wireless charging, not oil) . It is almost at former highs, so there is no overhead resistance above $16.

    Oddly, their Earnings release is at 1:30 P.T. Today ( Mid day) .

    Ticker WATT

  2. CS
    CS says:

    Good report Alex. I have minor positions in VALE and CLF and took half profits on my VALE position after the last runup a couple of weeks ago. What I have I think I’ll hold Old Turkey, it’s not a huge position, which makes patience a lot easier than holding a big position through a major correction. The dividend yield on VALE also helps when holding Old Turkey.

    • chartfreak1
      chartfreak1 says:

      I dont think that I knew VALE kept their dividend, good to know – I’ll have to go back and look at that. I sold mine. I had really good gains on the first 2 runs higher, small loss on that last entry.

      Could get a bounce today in the commodity area

  4. Peter Castillo
    Peter Castillo says:

    Good morning everyone!!! Great perspective Alex, as always!!!! I, personally, am maintaining more of a longer term view on the stocks I currently own, and will look to add my miners back. Only kept ERX, which I hold for days/weeks at a time, in energy. Other than that, own and see great potential ahead for CENX, VALE, CLF, and possibly HBM, AKS, and BCEI, but only holding HBM out of those last. BAA has insane potential if the gold bull.is back, and so does MGH. Holding both. Lots of cash in reserve waiting for AUY, KGC, EXK, and GDXJ to come back down some. After that, time to sit on my hands and go away, and let the bull do its thing. Have a great day boss man!!!

  5. Markm
    Markm says:

    Alex, Knowing you sold your CLF yesterday – as did I – what do you look for now to add the position back? A break and hold above the BB? A test of the 200 day MA? Thanks.

    • chartfreak1
      chartfreak1 says:

      If I had bought it for a long term trade, I would have held, but as a trade, I actually broke my own rules on that one, so I sold it as a loss. I sold simply because I was breaking rules and I dont like to be in the habit of that. I bought gap open and didnt honor my stop. 2 rules broken.

      I usually try not to jump right back in a stock that I sold, even though it looks ready to bounce and actually could have a very nice bounce. . Its a personal thing for me, to move on and come back later. I may buy another set up if I see one that presents an opportunity, but I’ll just watch how CLF plays out for now and possibly add later , even if it means adding higher.

      For someone else looking to get in, the buy could be the 200 sma for a quick bounce from $2.75 to $4 possibly, as a trader. IT may not get to the 200sma, since it is outside of its B.B. & support on the left looks pretty solid. That may have been the buy for a trader.

  6. Shermo
    Shermo says:

    for anyone interested in a small bio co. with no debt and unknown at this point ktov 9-10 target next news item may do it

  7. Siva
    Siva says:

    Dear Alex, really nice/pleasant to read/view the old charts of CLF and understood ups & downs are part of long run. Also, quite promising if you entered in initial low from Jan/Feb.

    i already exit positions GASL, LGCY & AREX nearing peak. Also bought small positions during the last week dip. I will plan to add during weekness.

    I want your take on IBB (LABU), last time you mentioned “LABU will decay during the consolidation” for someone’s query. I was just following LABU and recently accumulated between $24 – $25 range.

    • chartfreak1
      chartfreak1 says:

      I am watching for signs of strength in IBB and I did expect it to go higher with the markets here.

      I think you bought LABU at a good entry and should be able to ride out any fluxuations. Just keep an eye on it, the 3x ETFs can be fast moving in both directions.

      I will try to remember to put IBB and NATGAS in the next reports, I skipped them last night, because I was just more focused on Commodities due to their recent activity.

      • Cason
        Cason says:

        That would be grand. As much as we like to cover everything for everyone, the special issues like today when you have such a big move in areas we are likely heavily invested in makes sense. In other words, keep it up!

  9. chartfreak1
    chartfreak1 says:

    MARKM

    So I’m watching CLF on intrady charts and see it popped up and dropped to do a gap fill. VERY light volume for CLF, where yesterday it slammed down on HUGE volume. SO one could view that as a capitulation low yesterday, possible test on lighter volume, running out of sellers.

    That can be considered a BUY as a trader and just watch it, maybe a stop a little below yesterdays low.

        • chartfreak1
          chartfreak1 says:

          Ur welcome. The selling seems to be drying up, but it can still base out or go sideways even if this becomes the future lows. I have also seen in this situation a bounce, and then another drop to new lows on lighter volume days later , and that is the ‘test’ of yesterdays lows.

          To picture that , picture a bounce for 2 days and then a selling again at the 200sma after the bounce, but on 1/2 the volume of yesterday . I might consider re-entering if I see that, because it might be a solid low – but again, I watch the volume on the test of the recent lows , and I tend to do so on 15 minute chart, 30 minute, or hourly charts too.

          – By the way, Thats why I often disappear from comments section. I am usually charting many things in various time frames…or having lunch 🙂

    • Bill
      Bill says:

      Someone in the office was telling me that some big hedgefund exec died and his estate liquidated his positions. Very heavy into CLF. I heard 3rd hand so I don’t know for sure.

      • Bill
        Bill says:

        Cliffs Natural Resources: Casablanca Capital announces that it sold its stake in CLF as a result of ‘winding down’ its business following the passing of former chairman and co-founder, Donald Drapkin

    • JT
      JT says:

      FWIW, CLF is also at the 61.8% retracement of the entire run from Jan to May. The correction from 3-7 to 3-16 was also a 61.8% retracement of Jan to Mar.

      • chartfreak1
        chartfreak1 says:

        Didn’t see that one. Probably back to the bottom of the base around $1.75. Then it might base further and try again, unless it was a horrible miss and it just breaks down.

        NOTE: I have been trading MEMP in the base range, it has a rising base. They released earnings this a.m. at 6. I currently have no position, I wanted to see how it reacts to earnings. So far, so good.

        Keeping an eye on it for possible buying to come in.

      • SonOfGud
        SonOfGud says:

        i got in & got spat out around the 2.00 mark.
        thought that mighta been the lows, but obviously not so.
        pure speculation when below all the relevant MAs.
        my specu du jour is with LINE .. coiling in a triangle.. hopefully a break upsside

  11. R Byram
    R Byram says:

    I sat on my miners through this rout, but may not next time – even though the gold bugs think it has to go back over its last highs of 1900/oz, I don’t agree that anything has to do anything. I’ve put gold into a new category called “tulips and trinkets” and can easily make a case that, like the tulip bubble in the 1600’s, there is no absolute need for gold to ever re-visit it’s highs.

    Besides which, even if gold does continue higher, there are lots of other things to invest in that society actually needs, so my days of investing in trinkets are numbered.

  12. Shermo
    Shermo says:

    might hit 30 on xiv today spx may jump at the end of the day…CF pointed out a good swing trade on spx…thanks CF!

  14. chartfreak1
    chartfreak1 says:

    I added to my CLNE position today, I like the way it looks on a weekly chart too.

    As a ‘Trade” – Added IPI as a possible tight base trapped under the 10 MA wkly break out ( That is if it gets over $1.14 – I am jumping the gun) .

  15. miller
    miller says:

    PQ, slow steady climb out the base, low volume, but had bad earnings few days ago, already factored in. Seems to be support at the 30 ma, slow and steady though,

  17. chartfreak1
    chartfreak1 says:

    IPI needed to get over $1.14 for that weekly gain over the 10MA wkly. It just moved higher, but it needs to close over that for the week.

    I tend to think that it will, now that earnings came out

      • chartfreak1
        chartfreak1 says:

        Well, I like the base on a weekly, but buying on a weekly basis can take time to play out. If you look at the weekly chart, it actually looks like it could easily go back to $1.50 or $2.

        I hate to use the term ‘a lottery ticket’, so I will say that I bought it as ‘an educated guess before confirmation’ that this is going higher.

        • chartfreak1
          chartfreak1 says:

          You want to know what really looks good ?

          Daily charts of EXK, HL, AG , etc with the sideways consolidations for 3 weeks, but I cant recommend them as low risk, the weekly is too extended. SO frustrating.

          • chartfreak1
            chartfreak1 says:

            On the weekly , that would be a close above the 10 MA. That can trigger buyers , because it is the first step to a bullish move out of a base.

            But like I said, I am in early before getting a close above that wkly MA, because they had earnings and the response has been good at this point. a bit of a risk that it’ll just go sideways or die on the vine.

            oh yeah, and that sector does seem to be ‘popping’ as you mentioned.

  18. Cason
    Cason says:

    OAS up +8% after earnings last night. Could head back to top end of trading range at 10.5 if oil cooperates.

    Get rid of my CJES today by luck. Can’t believe somebody would buy that dumpster fire off me. It hit my limit when it open sharply higher this morning, actually sold above that, before it promptly took its usual morning dump. Earnings AH tonight, down another 25%. Man, sometimes lucky is better than good b/c I got lucky.

    I know folks have also looked at CRK. Stay away from that and CJES. These are absolute dogs, there is better in energy, don’t settle and just gamble your hard earned funds. I learned so you don’t have to!

  20. miller
    miller says:

    CRC looking good for a bounce here, low risk entry on a decent trade , oversold, sitting on moving average convergence and trendline, but caution, oil/resource companies been getting hammered lately, CLF< DNR< HK , etc. , Market conditions apply also, Tight Stops. They are doing a reverse stock split, 1 for 10, on May 31, 2016,

Comments are closed.