Wednesday March 29th

Here we are midweek and we have lots of changes to discuss in our review, so let’s get right to it…

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SPX – I was expecting 1 of 2 things, either a deep drop into an ICL, or a shallow drop that may eventually lead to a blow off  parabolic type top later. So far the dip to the 50sma reversed on Monday and Tuesday saw some follow through. That is a swing low in place and it almost closed above the 10sma, so you have an entry and a place to put a stop, even if the selling isn’t really complete.

 Let’s discuss this further…

To be honest, when I saw the Banks ( JPM, GS, BAC, ETC) and the XLF drop in the manner that they did, I thought that the selling would continue, so let’s take a look at the XLF.

XLF – The XLF lost the 50sma on big volume and now we see sort of a back test. It might be about to recover,  but basically this is not out of the woods until it recovers in my book. That doesn’t mean that one cant go long the general markets, you just need to be aware of things like this and use & honor stops.

NASDAQ –  Food for thought.  Some felt that they ‘missed buying the lows’ this week and want to ‘wait for a pullback’.   IF Monday was The Low, then Tuesday was day 1, so a pullback days from now wont be lower than day 1, correct?  Maybe you didn’t catch THE BOTTOM TICK.  You didn’t buy on the 50sma tag.  That is fine, because we always encourage buying after a little confirmation anyway, after a swing low follow through for safety sake.  SO, if you are thinking that the markets are going to just continue higher, and Tuesday was DAY 1 of the next move higher, then today is day 2 if that was a swing low.  See this chart of the NASDAQ. Waiting for a pullback may not make sense, just use a stop in case the selling picks up again.

USD – We’ve been expecting that daily swing low and this reversal at the 200sma gives us our swing low on day 36!   Timing-wise I have been expecting a USD move higher and precious metals drop.

WTIC – Oil is still wrestling with the 200sma. I wouldn’t rule out a bounce to the magenta line or 50sma, but as I have said in the past, I would watch things going forward from there. I’ve been expecting low $40’s for Oil later this spring and that hasn’t changed so far.

XLE – The XLE has been in a long downtrend with bounces along the way. It has been weak to the point that it never tagged the 50sma, so we’ll see if it can run up to the 50sma now.  Then we will see if it can get through it.  At times it is best to just take things one step at a time.   I like several of the OIL & GAS stock set ups as mentioned in yesterdays report, with NATGAS continuing to look bullish.

NATGAS continues to perform as expected, but progress has been slower than I had hoped so far. I’m impatient, but the reason is that I have seen NATGAS take off and run like a gazelle, yet we are in a bit of a slow methodical climb here.  See the chart.

Notice the different ramp ups in NATGAS.  I was hoping for the explosive middle one, but so far we are meandering higher like the summer run up. Above the 200 & 50sma, I am just going to continue the ride for now, raising my stops .

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GOLD – As the USD bottomed, GOLD may have topped. Gold & Silver were up Tuesday morning , but  we got a selling reaction in the Miners right out of the gate. The USD ramped up all day long.

GOLD  on Day 12 – I have been saying that this could top between day 8 -12 and it just night have done that. It CAN still push higher, but that USD looked strong and Gold just ‘gave it up’ mid day, as seen intraday above.

SILVER –  I also said that silver looked stronger yesterday and it still does. It broke the 200sma and could do a double top if it keeps moving higher.  Silver miners were NOT buying this move, so we’ll see what Wednesday brings.

GDX from March 24– The 50sma has been back tested and it has acted as a barrier in prior weak daily cycles.

GDX has been pushing on the 50sma, but even with Gold higher each morning it cannot push through it. It closed below the 10sma today and other indicators indicate continuing weakness. This may just roll over soon.

GDX MARCH 6 – About a month ago at the lows, I said that we shouldn’t get too attached to our Miners if we see a convincing bounce, because a back test of the 50sma is likely.  That may be all we get. I drew this to help the readers here picture what we could be facing in the future.

Here we are 1 month later as it plays out.  Basically it has been  ‘Do or Die’ time at the 50sma, and so far, even with Gold running higher, the Miners cannot ‘do ‘ it.  As a short term trader I have been shorting the tags of the 50sma, but I’m not ‘recommending’ that to those unable to be in front of their screens.  I did mention selling this bounce at the 50sma if any took a trade in Miners and then just see how this plays out.  You can play this any way that you think fits your style of trading.

GDX – We have to be somewhat aware that markets can do anything that they want, and that this can go either way, but the probabilities are starting to lean strongly towards the downside pathway.

I see things lining up as expected after a whole lot of shaking and volatility. I mentioned many trade set ups in yesterdays report, please review that report if you need an idea or two, they continue to be valid. I expect many more set ups to form as things settle, laggers set up, and other areas make progress too. Next we watch to see how the Precious Metals react to the DCL in the USD.  Some may be planning on shorting the Miners, We have tagged that 50 sma area 3 times, so that is a good area to go short.   Shorting is not for everyone though, and others may just want to wait for a bullish set up to form after the selling.  Waiting for the next daily cycle low to go long is a great plan too.  For the record, I’m still in NAK and please take a look at NAK last October & November when Miners crashed.  Nak ran higher despite the Miners selling off. I think it can be viewed as an industrial metals stock too. It remains above the 200sma  ( and the 10sma held too), so I am still in it. Enjoy your Wednesday trading!

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~ALEX

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OREX –  Just an FYI- If you have been with Chartfreak for a while, then you know that I have explained that the long tight bases that experience some buying can get explosive to the upside.  OREX already actually tripled, but this chart is impressive and I am keeping my eyes on it. The daily chart is a buy on the 50sma, but I’m not taking that trade personally. I am in OVAS, which may be bull flagging right now.

SWN – I had 3 charts of SWN in yesterdays report and pointed out a good spot to buy it.  A move above that 20sma and breaking a down trend line was pointed out. I also mentioned that I jumped the gun and bought it inside of this pattern.

SWN – At the open SWN dropped a few cents and then started moving higher, so that was your opportunity. I captured this at 9:39 and posted it in the comments.

SWN – And we saw decent follow through by noon. It is still just getting going in my opinion, but that was how to catch the lows.