Balancing Risks

With the recent volatility in the markets, we have seen the equity markets sell off, Banking and the XLF were hit hard, Oil & Energy stocks sold down, NATGAS bottomed , and The Miners and Metals have been volatile in their own way.  In this environment, we had to try to find a few trades while balancing the risk.  There are times that trade set ups are everywhere, yet at other times, like during these choppy volatile markets, it may be best to take it slow, keep position size smaller, and for some it is even best to just wait. This choppy market action eventually sets up the next series of trades.

Despite the choppiness, we still found a few bullish trade set ups and some have already been really rewarding. I want to point out a few more of these trade set ups after we review the market activity for Monday.

SPX – The General markets gapped down and then put in a reversal around the 50sma. You could buy this with a stop below the 50sma, but it is hard to tell if all of the selling is really done without some follow through. The ‘safer’ buy is still ahead. We’ll see what Tuesday brings.

Note: As convincing as that reversal looks, I still see signs of weakness in the General Markets.  A little follow through on the upside may help to alleviate that, and there will be plenty of time left if the lows are in place.

USD – We have been looking for a swing low in the USD sell off.  The USD broke below the prior dcl and then put in reversal.  This could be a shake out and if the USD is ready to put in that dcl here, Golds run higher could be finished.

WTIC – Oil put in a reversal weeks ago, and then dropped and made a lower low last week with another reversal. We saw a reversal Monday too. It hasn’t been able to get back above the 10sma yet.  Reversals are nice, but I’d like to see a sign of strength to get back above the 200sma. Notice that each swing low recently was not a good trade set up and that gets frustrating.

NATGAS – Sill acting correctly above the 50 and 200sma. We should see $3 hold.

GOLD – So far Gold is acting exactly as expected. It was bullish with 2 R.T. Daily cycles, so I expected it to reach the 200sma and stall there. So far we have no break of the Feb highs yet and if the USD bottomed, Gold may roll over from here.

This shows how GOLD ran right to that 200sma and just gave it up.

SILVER – Silver did exactly as expected too, but this one actually looks like it wants to break out.  We’ll see.

As expected

GDX – The reversal in the USD had me wanting to short GDX here, but the 10sma is pinching in now.  I shorted it last Wednesday, thinking that it could drop to the 10sma, and that gave me a $1+ trade in a 3x etf  ( and maybe more if it continued down).  Now I want to see if GDX breaks up or down from here.  It is day 11 for Gold and I’ve been expecting a possible top to come between day 8-12.  It CAN go a few more days and still roll over, but that is the average.

LET’S DISCUSS SOME OTHER TRADES

CGIX – what a beauty this turned out to be. Once it got going, I mentioned that this reminded me of the NAK set up. I sold out on todays run higher, some of it at nearly 100% gains. I hope to get a pull back for re-entry.  The weekly chart scares me because it looks like it could just keep going higher.  With NAK I never sold my entire position as long as it acted correctly….

CGIX – This is now hit $5.30 and doesn’t it look like it could just keep running. Yes it does.

OVAS –  OVAS popped today too, so here is hoping that OVAS does what CGIX did.  It was up 11.7 % –  you know I love that base  🙂  I may even add if it pulls back on lighter volume.

OVAS WKLY

MACK  is the next one on my radar. With a sign of strength, I will likely take a position  ( Above the 50sma & 10sma, both are at $3.12).

SWN – I bought SWN today, I have been watching it struggle at the 20sma for months.  It put in a small base recently, and I think it is going to break out higher soon  ( NATGAS).

I posted this in the comments section today and also mentioned that I bought it.

SWN WEEKLY – A break above $8.19 could trigger buying , since technicians look for a break above the weekly 10ma.

CRK WEEKLY – WOW WHAT A BASE, let’s zoom in…

CRK – Earnings were released 1 month ago. This is also Oil and GAS. Rounding bottom with a proper MACD set up.

OAS –  This is an old favorite here, we traded this last January onward and doubled and tripled our money.  I want you to notice that OAS NEVER looked bearish since then. With all of the Energy stocks selling off, OAS ran from $4 to $17 in 2016 and has only gradually drifted down to $12.  THAT SAYS A LOT.  Oversold and near the weekly 50ma, OAS tagged the 200sma on the daily chart today. I believe that this is still a buy, since it returned to the 200sma and held up.

CLF is also ta the 200sma with the market sell off

CLF WKLY

AKS AT THE 200 SMA –  Acting as possible support, a reversal and swing low could be bought with a stop.

NAK –  NAK got moving off of that 10sma today, up 6%

RIG – Also sitting on the 200sma and bounced off of it a few times. If Oil bottoms with a dcl this could at least bounce to the 50sma  ( 38%).

SO we see things falling in place with our expectations.  NATGAS has been bullish, The USD is possibly about to put in a swing low and GOLD & MINERS could be topping. I’d like to see a little follow through in other areas for clarity, but things are shaping up!   Also the Biotech stocks that were beaten down and have been base building are  exploding and running higher despite the market selling off.  CGIX and OVAS have made great gains even with the markets selling off.  Patience is paying off. Lets see what our Tuesday trading brings our way. 🙂

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~ALEX

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VTSM was mentioned via email to me by a reader  ( Thanks Chuck!) , and it is also running higher against a market sell off.   On the daily, however,  it is a bit too extended to offer  a safe low risk entry.  The weekly chart is another good looking base,  so put this on your watch-list and it may become a good buy candidate on a pull back. It also has a huge gap overhead.