April 28th – A Matter Of Time

Next Wednesday we have the FOMC meeting. These have affected various sectors of the market in the recent past, so it may just be a matter of time before we see a change take place.

 

SPX – Consolidations build up steam and can make for a lasting run. These markets could run higher into the Fed Meeting next week.

 

XLF –  One of my bigger concerns was that The Financial sector broke below the 50sma and the prior low. Now it appears to be improving, but still struggles below that 50sma.  Is this  just a normal back test or can the XLF recover? It is something that I’m watching going forward.

 

WTIC – Watch the Oil inventories report on Wednesday. So far Oil held up on the 200sma, but if the report is bad, this could give way into selling. We are due for an ICL, so we may have one in place from the March lows.

 

XLE – The XLE is showing divergence here and looks to be trying to bounce. I am also seeing some ‘set ups’ that look SHORT TERM Bullish in Energy stocks, so I will have these at the end of the report.   I want to say a couple of things before we review possible long set ups in Energy. We had some great looking set ups in March too, and we scalped some small gains, but then they dropped and fell apart. That was ‘a bottom’, but not ‘THE BOTTOM’.  Currently, this may be a bottom forming too, but…

1. This is still in a downtrend, and recent double bottoms bounced & then gave way too ( See Feb & March)

2. Oil is a little uncertain at this point.  The inventory report will help us to get a better picture of Oils situation.

 

 

GOLD , SILVER, & MINERS

 

GOLD – Gold is dropping down into its daily cycle low.  It approaches the 200sma as possible support. Please read the chart.

 

GOLD has been strong for 3 daily cycles, so I would think that we need a weaker 4th or even a 5th daily cycle to really roll over and drop into an ICL, changing bullish sentiment back to the “I HATE MINERS” mode.   Please read the chart.

SILVER – Silver didn’t stop at support, and it also threw a head fake in there.

 

GDX – A 10:30 Tuesday morning we had the follow through to the selling that started last week. Support gave way this week.  Please note that resistance at the 200sma on GDX was a low risk ‘short’ since we were expecting a dcl. Timing was right.

 

GDX – Selling continued as the day went on.  Miners may bottom before GOLD, so we will be looking for signs of a dcl as time moves forward.  I have exited 80% of my short position at this point.  This CAN keep right on selling off, but I wanted to lock in some very good gains.

 

GDXJ – In past reports I kept mentioning that I was buying JDST when GDXJ got to the 50sma area. So here is where I was buying. The choppy up & down action day after day can be difficult if you are expecting immediate action, however…

 

When that expected drop finally came.,  JDST went from $12.50 to $21 so far in 8 days.  It can also keep running higher, but I just wanted to lock in gains.

SO most know that I have been extremely careful about not recommending NUGT, JUNG, JDST, DUST, over the past years.   I have seen my share of inexperienced traders get absolutely burned buying & holding these 3x etfs too long. This time I decided to just mention what I was doing and some readers did follow that trade.  It went well.

That said,  one of our readers decided for himself that he wanted to take the short trade via a less risky vehicle, and chose to take the trade in GDXS ( Proshares instead of a 3x etf).  The ride is less whippy, there is probably less chance of getting tossed aside, and smaller losses if the trade goes against you.

GDXS –  This is the inverse GDX ( 2x).  He took the trade when GDX finally topped and started down into the dcl.  He described his trade for us in the comments section on Tuesday.  For those that do not have time to read the comments section, I copied it for you here. It may be a good alternative to JDST/DUST for some in the future too. I also provided a chart.

 

Sidenote: If you look at my chart above, you can see that he pretty much caught it at the mini bull flag. The entire move  (7 days so far) is $13.70 to $17.21.   $13.70 was when GDX was tagging the 200sma and was a low risk short.  The trade was a good quick scalp.

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So back to Energy.  XLE remains in that downtrend, but it did break out in April and looked to be bottoming.   Then it broke back down when Oil started selling off again.  OIL is due for an ICL, so we are looking for possible bottoms in Energy stocks.  With that situation being where we are at,  caution is warranted, right?

So AT THIS POINT, Energy stocks can be viewed as  1. ‘Buy & Hold’,  raise your stop when it moves higher,  or  2. Quick scalp trades to just grab a pop in price & lock in gains until we get further clarity in this sector.

 

MRO – Oversold and MACD rising,  this is actually a pretty good set up. We see a break out of a down channel and a back test that held up. The 50 & 200sma are squeezed together, if price breaks through it,  that would be bullish.

 

SWN – SWN is basing and I bought and sold this pop in March when I was long NATAGS.  I like this set up again, but there is resistance at the 50sma.  Encouraging to see that it was able to close above it for a bit in April.

 

WG – This one never broke below the 200 sma, and now has gained the 50sma.  This looks pretty bullish, since it didn’t break down below support.  It provides engineering and construction services to the oil, gas, refinery, petrochemical and power industries.

 

AREX – This has a double bottom with divergence and is oversold.  If Oil moves higher, I would expect this to follow. I personally look at this and think that it will struggle with those moving averages again, with that 50slanted down, but as a short term trade / scalp it could pay off if it gets to the 200sma.

 

CIE – Ditto with a slightly stronger MACD. The downward sloping moving averages are telling us that this will not be an easy run higher.

Let’s see how OIL reacts to the inventory report this morning.

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I’m almost completely out of my Short positions in Miners. I want to look for a DCL now and then we should get a 1 to 2 week bounce. As a 4th daily cycle, it may be worth shorting into an ICL for those that do take short positions. I will discuss this more as time goes on, we have plenty of time for that.  When we finally get the ICL, it will be well worth being patient.  In the past we have nade excellent trades in the precious metals sector at this time.      I also may be taking short term trades in Energy or commodities or another sector until the timing is right for miners. Happy trading this Wednesday and thanks for being here.

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~ALEX

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AKS released its earnings yesterday and broke out  of the wedge that I had been watching.  It tagged the 50sma and was rejected, so I decided to watch it through out the day for a possible buying opportunity.  It never came.  This became a pretty solid bearish engulfing.

( X , another Steel stock, released earnings after the market and got beaten up pretty badly too).

AA – This chart was in yesterdays report. It did get the follow through higher…

 

AA– That is a solid break out and may just continue to run.  If I was in it I would use a trailing stop, unless I am holding it for the long term.

 

From a reader,  ” GOOGLE is at all time highs.  Why didn’t you put your readers into GOOG or NFLX last year or recently?”

No doubt about it, for a long term  INVESTOR, riding AAPL, GOOG, PCLN, NFLX, etc has paid off well. Now lets look at a chart and see what we can learn about ‘timing the trade’.

Look at this GOOG chart with gOOG at all time highs. A chart at $820  7 months ago and now is at $872 looks great, but %-wise it is exactly the same as a chart of a $8.20  7 months ago that is now is at $8.72.   That is equal to a 50 cent gain in 7 months.  Now, Look again at the chart of GOOG.  Was that an easy trade for 8% or a very whippy ride?   If I put readers in GOOG last Aug, Sept, or Oct, most would have been stopped out or bored to death riding those sharp moves.  AND… That is an 8% gain over 7 months.   Grab a MINER at the ICL , and you will make more than that in a day  🙂

I DID recommend MSFT a while back for the long term investor. This was a bullish chart in an uptrend, at $47.87 April 2015. I did recommend this for the longer term investors. Gow has it done?

MSFT –  Great chart right?  Sure.  You could look at this and say,  ” I wish I was in this one, it has been a great vertical climb.”   Now take a closer look.  It has only gained $20 in 2 years  from that $47 that I recommended it in 2015 to $67 now.  Yes, the chart looks great and the sound of ‘making new highs’ does too, but that was also a rough ride for 1 solid year.

 

NFLX – Who doesn’t look at NFLX now and say,  ” $10 to $150!  WOW”.  And that is true, but I always talk about ‘Consolidations’ and ‘timing’ .  If I put us in NFLX 2 yrs ago, we’d be up 15% in 2 yrs. AND look at the price movement from the blue arrow to now.  Easy ride? No, nobody would have been happy if we plunked out money down there.  Buy it now for the next run higher?  Sure, go ahead, but this had 15% gains in 1.5 yrs.  At the next ICL in miners, I’ll give you that in 1 day.

Now we look at the bigger picture again.   If you were with me last Jan 2016, I mentioned  buying CLF, VALE, X, FCX, etc at the lows and I discussed holding some as CORE for this very reason.  NFLX $10 to $150 over years of time,  and I said that we might catch some of those stocks in a similar way.   Energy stocks could be the same.

This is X,  not an easy ride from Jan 2016, but very well could be a long term big winner like GOOG & AAPL over time.