March 9th – Oil Rolled Over Too

The pullback in the general markets remains orderly and rather mild. We are deep in the timing for a swing low dcl.

The general markets are in a strong move higher and it can turn into a bullish blow off move.  These types of moves are very strong and pullbacks can be shallow. I expect a trendline break as shown yesterday, but in a real blow off move they dont always happen. Instead the trend line can be drawn from the more vertical area, like this. I am going to do further research in this area .

USD – I still expect a dip into a dcl.

WTIC –  FINALLY we get that strong move out of this consolidation!  I wanted to play whichever direction this went to, but such a strong move is hard to just jump right into, because often you get a quick counter move too. so…

IF Oil bounces here for a quick back test, I will possible take a position in DRIP ( Energy stocks bear)  or DWT.  I was watching DWT and expected to take a position as soon as Oil broke, but there have been SO MANY false moves lately that I missed a good entry.  And…

There are times when Oil just gets selling and really accelerates into the lows. This could cascade down after that long consolidation.

NATGAS – I took a big picture look and got a little concerned about this break down. Why? Mixed signals.  I thought that November broke a prior daily cycle low and then formed an ICL . Price then  rocketed to new highs in December, but now this dip came all the way back to the lows 3 or 4 months later. ARe we due for another ICL and if so, was this it or could it come at a lower point?  I want to see this recover this trend line soon, or I will be concerned about another low coming in.

GOLD – Now even Gold is changing to ugly. Look at that RSI. Price put in a higher low than January, but the relative strength is very low. I see other concerns too, so even though we are due for a dcl any day now, I may take a trade when a low is in place for no more than 8 days, because  I expect just a bounce – maybe to the magenta line.( Yes, a lower high  🙁

It could look like this

GDX – In the bearish sell off last autumn we got daily cycle lows and a bounce to the 50sma, so that is about all that I am looking for. Experienced traders are eager to play this using NUGT and JNUG- Please know that this bounce could top in 8-12 days.

So let’s talk for a minute :  I go back to the Bull market in 2002. This was no doubt frustrating, and maybe even puzzling, and so is the Precious metals set up right now, right?  Disappointing, and I’m sure that this was too. Look at the Magenta arrows( ICLs). The last November 2001 ICL undercut the prior August 2001 ICL, and that would be like saying that our next ICL could undercut Decembers lows.   EVERYONE would be bearish, but then look how it took off higher. Stay with me and we will monitor the Precious Metals and we will get through this and make good money again…

Again the next ICL is going to be very trade-able, whether it is a bull or bear market.  Even the Bear Market ICLs  rally for weeks ( roughly 2 months), as shown here. Below is an OLD chart in 2014 BEAR MARKET( You can ignore my writing) .  Just take a look at each ICL and notice that it rallies for weeks, very believable and then rolls over into an ICL.  SO did we just get a bear market Rally in Dec for 2 months? Or do we have what we saw in 2002 in a BULL market? Again, stay with me and we will monitor all of the clues and we will also make very good money for 2 months out of the next ICL.   For now…

You and I both know that after a strong run we can get a consolidation that forms a cup & handle or a “W” pattern, so this can still be a bull run, we need to see it through. It will play out and we need to respect and observe how things play out.

But honestly,  I hate to say it, this looks like it may be the next best play after a bounce in the Miners.  This would ONLY be for experienced day traders, in front of the screen.  These 3x ETFs are SO tricky and difficult.  Look at this recent move and it looks easy to ride, right? No,  each red day is a day full of doubt, and they came OFTEN.  I’m just saying that after this next bounce in Miners, I do expect a sell down into an ICL over time.

SO I Know that many are frustrated with Miners and the Precious Metals action, I am too.  We expected a 3 daily cycle run higher into March and inflation and rate hikes to keep this bull running strong.  Unfortunately as I have repeatedly shown here, Bull markets also consolidate , throw people off, and they do what they want, not always what we want. I do not see a lot of upside with the current set up, until we get a drop into another ICL.  This puzzles me a bit, since I expected a rate hike and some upside after March 15th.  Other decent trade ‘set ups’ like CLF and VALE at the 50sma ended up breaking through that 50sma during this market pullback.  They may recover when the markets put in a dcl, but so far many ‘set ups’ are not getting immediate follow through.

It is not good to feel that we have to have a bunch of trades on everyday. When the markets are correcting and consolidating, it gets difficult.  There are times when everything runs like clock work, and other times when we experience pullbacks, consolidations, and in times like that , patience pays off.  Solid trade set ups can occur in pull backs if we’re patient. Currently I’m holding a lot of cash and am watching for a dcl in precious metals , a dcl in the general markets, and a drop in OIL which I would like to trade. I will continue to look for trade set ups, but we may need dcls in place first. We just need to be patient at this time of selling.  Let’s see what Thursday brings our way.

~ALEX