Post Fed Explosions

We got a Fed rate decision, and we got some Fed Decision follow through. It clears things up in the short tern time frame and makes it easier to see what is going on,. Let’s see what Wednesday brought our way.

SPX  March 9 –  I was looking for a shallow DCL The RSI started curling upward while price was dropping…

SPX MARCH 10 – A swing formed and the dcl was due and likely in place.

Now we have a confirmed DCL, as seen here

SPX WEDNESDAY MARCH 15th – I expect this to be a left translated daily cycle, so it could peak in 2 weeks or so, so be aware of that if you went long ( Some trade TQQQ, UPRO, or other leveraged vehicles, and I don’t consider them all that risky, since their movement is limited daily). $2500?

USD MARCH 10th  – Expecting a drop to a dcl, and then a good bounce, I drew this for the weekend report.

USD FED WEDNESDAY – The USD is due for a dcl, but that wasn’t one that started on Monday.  The FED rate hike did not provide a confirmed swing low with follow through from Monday and Tuesdays move higher. The USD lost the 50sma.

NOTE ON THE USD:

USD – The usd usually bottoms by now, so should I be open to the idea that MAYBE the USD was putting in the dcl at day 26 and the Fed crushed it?  When I looked at this I started thinking “what if..?”, but if this is GOLDs  3rd daily cycle, it should drop into an ICL in the next month or two.  If this Dollar did put in a dcl it would be on day 3 of a 20+ day drop, and Golds 3rd daily cycle seems like it would be extra strong, so I tend to doubt it.   More in the weekend report.   Gold was also in the timing for a dcl, it would be on day 3 of a new 3rd daily cycle that should top in roughly 2 weeks.

NOTE: I do NOT like to ‘guess’ and ‘hope’ and ‘form a bias’ in any way when I am considering future action in the markets, but I will entertain a plausible idea and keep an open mind and a cautious eye on a possible  rapid change like that.  I have been saying since before the Dec lows that I thought the USD would eventually roll over in 2017 and Gold would rally strongly , so we just need to see how things play out with this interest rate hike .

WTIC – My MARCH 13 chart – I pointed to a possible shake out and a low in Oil? We have seen that in the last 2 lows.

WTIC – recovered the 200sma.  I have not changed my mind on Oil howver, and that was…

 This could be a short-able bounce. I will explain more in the weekend report, but I actually already have explained this in prior reports.  I’m saying this again because I have had readers tell me that they think these are THE LOWS for OIL and want to go long until Oil hits $70.  I disagree, but that is perfectly fine, you can go long if you honor stops.

NATGAS – I mentioned that I liked the set up in Natgas at the lows in late Feb and mentioned on March 10 that a stop would help.

NATGAS –  Wow, Natty almost hit that $2.80 area ( my stop above), but then reversed higher.  I hope to see immediate follow through after this dip.

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GOLD & MINERS

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This was the intraday action after the Fed Interest rate hike.

GOLD – This was Golds reaction on a daily chart, and this would be day 3 of a new daily cycle. If Thursday is RED, is it a bad sign? A sign of weakness?  A head fake? Or normal profit taking?…

Notice that sometimes a strong day is followed by a red day but price can still go higher over time.  If Gold sold down Thursday, it could be normal profit taking early in a new daily cycle.

GOLD – I will need to discuss this in the weekend report, but this is to attempt to remember short term & longer term expectations .

I had to draw the surge in price on this next chart below, because Stockcharts was showing that Gold closed down $1.90?  This chart shows the continuing process of this intermediate cycle, and can keep up from getting TOO bullish until we see this play out.  REMEBER that I am expecting an ICL in April or May, and this seems too early to be an ICL  ( But a FED HIKE might shake things up- time is the best story teller).  Let’s look at reminders:

1. We know that Miners sold off hard and formed a left translated 2nd daily cycle, so we would expect a downtrend in miners. Miners should not make new highs.

2.  Gold did not do that, and that has been the conundrum. Let’s discuss what Gold and Silver have done and what expectations could be.

GOLD – Gold itself has 2 right translated daily cycles, so with that, you would expect the 3rd daily cycle to break to new highs.  Will Gold break the 200sma? Miners were weak through February and the USD was strong, so this added to the puzzle.  This drop below the 50 sma started following the ugliness of the Miners and the USD was looking strong.  Now the USD took a hit, and Gold surged.  At the start of a new daily cycle under these conditions, I would still take a position and watch how this plays out, WITH A SHORT TERM TRADE IN VIEW. SOME may want to wait for an ICL later this spring, I THINK that this is too early for an ICL in Miners.

As confusing as the Miners large drop was, look at that surge today with the Fed Rate Hike.

7.6% for GDX with 142 million in volume is huge. It is still oversold, so taking a position in oversold Miners seems fairly safe and we can watch this going forward cautiously.   Tuesdays drop (red arrow)  may have encouraged people to think that Shorting was the next step, see the chart, so part of this could be short covering.

Many expected Miners to just drop, so I posted this chart of JDST and mentioned that this reversal may have looked bullish, but a FED DAY can flip this right around.  Both BULL and Bears needed to be cautious with the recent set up going into the Fed Mtg.

JDST was down 30% at 3:10 p.m. and closed down 34%!  Holding JDST for the last 4 days just about got cut in half.  Another reminder that even bullish looking 3X ETF set ups  are dangerous to buy & hold.

GDXJ – I’m going to add another Cautionary note, even though this looks excellent.  Bear market rallies are often short covering and look excellent too, so going forward I remain alert and cautious.  MY STOP is Fed lows and I will raise it over time.  At this point we see a confirmed swing low in GOLD , SILVER, and MINERS so buying positions is likely a good trade for at least a week or so, but let me point out that bear market rally last September.  3 huge bullish looking days –  Boom Boom Boom out of a dcl and the top was in.   We will watch how this plays out, resistance is shown overhead in the chart.

Obviously, the Rate Hike made clear that the DCL due in Gold & Miners is now in.  Many will not turn extremely bullish and think that the precious metals can run to the moon with Fed Rate hikes. We know that a  3rd daily cycle can peak  L.T. and that could be around day 8-12, so let’s watch how things play out and I’ll cover more in the weekend report ( we have time). Some individual Miners are still near lows and may be worth a scalp. Enjoy your trading Thursday & Friday.

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~ALEX

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NAK-  NAK started breaking higher from that falling wedge that I pointed out, regaining the 200sma.

BTG –  Many individual Miners shot up 10-15%.  They CAN just run higher in a few ‘short covering’ type days in Miners, or you can see a red day, as shown. The trades in Miners are only to be viewed as trades for the next 6- 8 days or so and then we need to really review things .

SAND – At a 3rd DCL, I might take a position and expect only a double top with FEB highs, but it is still a decent quick ‘trade’.

People always ask me,  “DID YOU BUY?”.   It is important to know that I dont just jump in because price pops, I usually am watching many things and one of those things is, “How is it acting on a 5 minute, 15 minute, 30 minute time frame too.” I watch for smaller time signs of strength or a false rally.  This rally  did NOT look false ayt any point after the Fed Rate Hike.  Let’s take a look at JNUG ( GDX< GDXJ< and MANY MINERS Looked this way) for example.

I often show my thinking here on my intra-day charts when I’m look for a possible entry , and this is another example. This is JUNG and it was slowly climbing higher all morning long. I was gone all day helping family, so when I got home at 1 p.m. –  I looked for signs of what the day already showed.   It was a Fed day, so it could end in any direction, but we had an orderly rising channel going into 2 p.m. Price then  broke out higher at 2 p.m.  ( That can be a ‘buy’ with a mental stop at your blue channel in case it was a false pop.  Then it stalled and bull flagged, that can be an easy entry.  BUY The flag, and sell if it breaks down.  GDXJ ( and JNUG) just continued higher until the close.

Then Switching back to the daily chart showed a very strong day on the Fed Rate Hike.  When I say that we could get a pull back today, it can be a back test of that flag believe it or not, so I still watch smaller time frames with my daily chart.  THAT is how I trade short term.

OTHER TRADE POSSIBILITIES

VALE – With the General markets now set to go higher, many of the commodities seemed to have perked up. Some might view these as safer than Miners in a 3rd daily cycle, so the choice is there.  Please read the chart.

TGB – I drew a bottom trend line and price landed on it under the 50sma. I said, “This could be the low, but I have to sell because we are under the 50sma for 2 days”, and yes-  I sold the low on a shake out.  THAT doesn’t stop me from saying,  This could be a good trade over then next week or two. It just went from $1.15 to $1.40.   🙂

HBM –  Buy with a stop at recent lows thinking that it will recover like TGB ( Copper stocks)  OR , wait and buy as it crosses the 200sma.

AKS – good divergence