Tuesdays Tremors

The Markets are basically all over the place since the Fed Rate Hike and Tuesdays drop in some sectors seemed to come out of nowhere.  At this point in time, I want to review expectations past and expectations now.

 SPX – On March 7th,  We were looking at a drop into a dcl.  I expected it to possibly tag the 50sma and slightly break the trend line, as shown in this chart.

SPX –  1 week later we had a bounce and it looked like the dcl came in and we got our swing low. I still hold to this idea, but when you get a daily cycle as right translated as the last one was, you look for a POP to new highs and then it can roll over.  See what I wrote on this chart.

So after a bounce to new highs, we would look for the markets to roll over into an ICL .

SPX MARCH 21- We did not get our push to new highs before the markets just took a sudden plunge.  This looks like a drop into an Intermediate cycle low  (ICL) has started, the multi-month trend line has been broken. The low that I labelled as a dcl has been broken. It would be best to watch how this drops and see if the next swing low sets up a BUYING opportunity.

Lets look at a few other things in this area…

SPX POSSIBLE TARGETS – short term for a bounce

An ICL could hit one of the levels shown here.

NASDAQ–  I just wanted to point out that not only did the SPX drop, but the NASDAQ , which was holding up better, dropped quickly too. RUT, IWM, ETC ETC are similar set ups.

XLF – And the Financials gave it up.

SIDENOTE: Look at March 9 on the XLF chart above.  SOME SECTORS like XLF do not really show a MARCH 9th dip into a dcl like we pointed out on SPX & NASDAQ.   This raises a question, WAS it the dcl, or is this the real drop into a 2nd  dcl?  If this is the dcl from Feb 18th to now, the peak was day 29 and this is around day 44, so it could still be a r.t. daily cycle. In all honesty, that really looked like a mild dcl on march 19th in the SPX & NASDAQ, etc.

BAC – Banks like BAC, JPM, GS, and many more individual charts looks pretty serious too.

THOUGHT FOR THE DAY:  You have to admit that this type of swift market action since Fed Wednesday has been a bit unpredictable, and I don’t know of any of many that are consistently getting these market moves correct in advance.  Moves that I would expect to happen over a few days when the markets roll over are happening in a  single afternoon.  That alone makes this a VERY difficult environment to trade in with confidence.  It really needs to settle down a bit for trade set ups to stabilize.  Stops and Honoring stops on any positions is vital to protect funds.   I have also been encouraging being LIGHTLY invested, saying that I was mostly in Cash and just trading a few set ups here and there.  Golds ICL is the place to go all in.  so Position size and stop are a protection in volatile markets.   Let’s continue on…

USD – We had a solid reversal in the USD Monday, and the timing is late for a dcl in the USD, but it dropped further on Tuesday too.  We are overdue for a DCL.  It is also VERY close to breaking the prior dcl, which would be quite bearish for the USD longer term ( And likely Bullish for GOLD).  Watch the 99.19 area.

WTIC REVIEW CHART #1–  MARCH 17 OIL had plunged lower and was bouncing. I thought that OIL could back test the break down at ‘B’, and I wanted to short it there, because I do NOT think OIL has put in an ICL on this drop.

CHART #2 – I also mentioned on March 17th that this is POSSIBLY the extent of the bounce and we could get an a-b-c- type move lower. This is seeming to be the most likely scenario, because Oil looks weak.

CHART #3 – Tuesday I pointed out that that 10sma is acting as resistance and Oil remains weak.

CHART #4– One way or the other, I expect OIL to drop to the lower 40’s.  If the ‘DCL’ lows are taken out under 47, I will just have to jump on a short position then.  If we get the bounce ( green line), I’ll get a MUCH better entry, but I view this as less likely.  ( DUG is an ultra short etf, DWT is a 3x etf short Oil, Drip & ERY cover energy )

NATGAS –   I am in a long natgas position for a while now and added on a recent dip that I think was a dcl.   This one is playing out as expected so far and I do expect it to continue higher, but back tests of the 50sma or 200sma are possible. INVENTORY REPORTS ARE RELEASED ON THURSDAY, I WILL LIKELY STOP OUT UNDER THE 200sma or MAYBE NATGAS under the recent dcl.

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GOLD – This is actually playing out as expected, the problem is that we ( Or I ) am having trouble trusting it day by day with a low due in the USD. I have mentioned repeatedly that GOLD has 2 R.T. daily cycles and expectations are that it should get up to the 200sma.  SO far, it is still working its way up there.

XJY –  I did a report months ago on the strong correlation of GOLD & the YEN throughout the years.  The YEN is back at the February highs, so this may be telling us that GOLD will follow its lead.

TLT – I never took or recommended the TLT trade, because I did not like the overall chart set up, but some think that it is similar to Gold at times too, so lets take a fresh look.  Recently it dropped back to the lows of December, and NOW it looks more healthy to me, with that MACD divergence and other factors.  TLT now looks like a proper double bottom.  If the YEN breaks out from here, and the TLT breaks out from here,  I dont see why GOLD wouldn’t,  BUT….   We may need to see the USD put in a dcl  first and then run up as these pull back & consolidate further.  When the USD rolls over, these can run.

 GDX – My thinking on Monday was a possible mini bull flag worth a quick trade.  If Gold was to continue higher, this could follow in my opinion.

GDX – So while GOLD did move higher and is nearing the FEB highs,  GDX & GDXJ are struggling at the 50sma.   I had mentioned taking a leveraged risky trade at the FED POP and seeing how it played out. Then on Monday I mentioned that I added to my risky trade when I saw a bull flag form. Maybe I became leveraged a bit too heavy for comfort, even though the trade was working out, because Miners were stalling at the 50sma.

GDX & GDXJ again are still finding resistance at the 50sma while GOLD kept rising to the 200sma. What should I do? I mentioned in the comments section Tuesday morning that I was going to look at things into the close and may sell 1/2 of that position to lock in profit.  I posted that I was selling into the close at around 3:45 and sold 1/2.  If Gold rises further today and Miners continue to struggle, I am selling the whole position. I even thought of selling it pre-market simply because the USD is due for a low. Honestly, if I was not looking at the USD and I was just looking at this chart,  I would think that it could break out higher.

THIS MAY SURPRISE YOU:  I have another troubling point.

1.Some MINERS look ‘O.K.’, similar to GDX & GDXJ. 

2. Some Miners look weak and are still near their lows.

3.Yet some look quite bullish, and that is just adding to the mixed signals that are EVERYWHERE in the markets today.  Let’s take a look at Bullish Miners…

AAU – This was not only a 10.68% POP with good volume today, but it closed near the highs too. So while GDX & GDXJ  sold off into the close, AAU was up 10.68%.

SA–  SA is actually breaking the Feb highs and it is acting the way that I expected GOLD itself to.  SA Shows 2 daily cycles R.T., and a new high for the 3rd daily cycle.  THIS IS WHAT WE EXPECTED GOLD & THE  MINERS SECTOR TO DO BACK AT THE DEC LOWS.  You buy the ICL ( Dec lows)  And sell into the 3rd daily cycle Peak.  This was $7.40 to wherever it peaks, but it could be 70-100% by then. SA is playing out exactly the way GOLD & MINERS were supposed to.

SBGL – This is also looking more bullish than bearish, and looks like it wants to break out too.  SBGL is acting correctly with GOLD too.

SGSVF–  Where did this volume come from? If SGSVF has follow through and continues higher, it is also acting the way we expected MINERS to move coming out of the ICL.  SGSVF has 2 daily cycles Right Translated,  and the 3rd daily cycle should break to new highs.  This one actually ran up 100% from Dec lows to Feb highs.

XRA is another Miner that is near recent highs, but I can’t ‘recommend’ buying the above 4 Miners with their bullish set ups, because the entire sector looks ‘average’ to ‘weak’.  It is likely that these will also roll over soon, into the Miners ICL this spring, and THAT will be the next great buying opportunity.

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So that is the continuing conundrum my friends, Mixed signals in almost every sector.  I have to tell you that in the years that I have been doing this, I do not recall seeing this many MIXED SIGNALS in so many different ways and in one sector after another sector, like we are seeing right now.  What is causing this mixed action? Could it be the recent TRUMP changes & policies?  The RATE HIKE and possibly more this year sinking in?  Whatever it is, the uncertainty will shake its way out over time and set ups will become solid again.  Right now ‘Volatility’ and ‘Choppiness’ are inside the day to day action. I understand that people want to trade, and some like to trade daily, but please understand the risks in a choppy volatile  market.  Some trades are winning short term and others are failing or just churning sideways.  SMALL POSITIONS AND WILLINGNESS TO HONOR STOPS is importnt in this environment.  PATIENCE may also be the best course of action for some.   Waiting the for the ‘fat pitch’  ICL  in Miners,  OIL,  or even the General Markets may be the safest way to play this for the conservative ones, but it takes a little time as we monitor the progress of the sell offs. Those ICL trades make very big % gains, even in simple Bear market bounces. Until then, we can just keep watching how these markets play out and wait for some safer set ups to present themselves.

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~ALEX

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TRADE UPDATE:  I will continue to ride NAK, even though I mentioned selling my leveraged miners positions.

NAK –  At 10:30 Tuesday morning , when NAK dropped, I just wanted to point out in the comments area that this drop is not necessarily something to fear.  It could be a normal dip to the 10sma in a 1-2-3-4-5 move higher.

UUUU – This has support at the blue trend line and the 200sma, but some of the other Uranium stocks look like they have more downside, including the Uranium ETF  URA, so a warning that these could sell don further.