April 29th – Sounds Like A Plan

Another week has come and gone and the markets have moved closer to the FOMC meeting and other events that can affect the markets. Let’s discuss the latest market action and what the plan is going forward.

 

SPX – This looks like Day24 for this daily cycle and it has a Day 21 peak. We see a swing high in place and this can drop into a dcl.  I am expecting some gaps to fill and likely a back test of support and the 50sma into the FOMC MTG Wednesday.

NYA – This looks like a back test so far too, but we possibly have enough time left in this daily cycle to do more than just a back test, so will it bounce around or consolidate?

 

There is more to this set up than just what was stated above, so let’s look at 2 more sectors…

 

XLF –  I have been saying that the Financials need to recover to give me a bit more confidence in the longer term trade set up. So far the XLF remains rejected at the 50sma. If this drops into the FOMC and then we get a decision that hastens the break down,  the other markets may just keep dropping into new lows.   This week could be pivotal.

 

NASDAQ –  The Nasdaq has been very strong and ran to new highs, but it too could pull back and fill a gap, back test the break out, and back test the 50sma. With ‘New Highs” , doesn’t that mean that there is no overhead resistance and markets will just run higher?

 

No – A break to new highs does not automatically mean that we will see a run higher and higher.  We have the FOMC Meeting and the French Election Finals to contend with In the near future.

 

SIDEPOINT:

I was basically asked last week in the comments section , ( No quote)  Could we repeat the NASDAQ blow off type of accelerated move to a blow of top, since today looks similar to 1999?   Looking at the chart below, the answer would have to be “Yes, why not.” I’m not saying that it will, but the comparison is valid. 

See the chart below : A long bull run, a sharp “shake out pullback” to the weekly 200sma area, and then a vertical  move higher.  I would not rule it out.

 

USD #1– So far we cannot ignore the lower highs and lower lows.  The FOMC usually does move the $USD one way or the other as it dances along the 200sma.

 

USD #2 – I thought that we had an ICL sell off in January shown here, since we saw very short sell offs into the dcls in Nov & Dec, and then one long one in January

( See the chart , ignore the Boxes for now, just look at the sell offs & read the magenta note ) but…

USD #3 – …but we keep breaking to new lows, and I dont think that the 1st daily cycle out of an ICL would be that weak, so….we must be seeking out an ICL now and January was just a LONG L.T. Daily cycle.

USD #4– So with the FOMC meeting, will we see this drop into an ICL? Really, we just have to wait and see what WED/THURS brings.

 

Now for the BOXES. I looked at the daily cycles of the USD too.  We had a LONG daily cycle, then an average one, followed by 2 long daily cycles again.  That had me wondering, would this one be short, perhaps halted by the FED decision? A sharp smack down and recovery could put in an ICL i.m.h.o., and TOP golds next dcycle  too. The USD movement has been odd, dropping with Gold recently. We have seen this in the past and it usually resolves back to inverse relationship in time. 

 

USD WEEKLY – The MACD looks weak, but the USD is holding up rather well around support so far too. I would not play the USD long or short until we get some resolution.

 

WTIC – Oil is at day 26 and on support, but Oils cycles can run 30-50 days long and that means that this could be close to a dcl, or only 1/2 way, right?  Oil cycles vary a lot in length and need to be monitored. I also like to look for other clues too as time moves forward.

 

WTIC WKLY – Though it is on support, I feel that Oils weekly chart is looking weak. I drew in another leg down. Another clue is…

XLE – Energy stocks for the most part broke out and failed. Many false break outs occurred in Energy stocks during Early April, possibly signaling that OIL has another leg lower.  I still saw weakness in that last 4 day rally & then it rolled over. I am NOT in any Energy stocks currently,  except  a small starter position in SWN ( More of a  Natgas stock, but I need to watch it carefully too).

As a reminder:  My original thought was that OIL would drop, bounce to a back test, and make new lows, so we should still be thinking that this could happen.

 

NATGAS – A bullish set up –  I traded NATGAS ( BOIL & UGAZ) well out of recent lows and then sold it to re-enter lower.    Honestly NATGAS has not really broken below where I sold it for weeks, so it is holding up well. It is a bullish set up and I want to go long again soon. I was waiting for a drop to the 50 & 200sma, but that just might not happen.

 

 

GOLD, SILVER,  & MINERS

 

GOLD #1  –  3 daily cycles right translated is strong and Gold did that. The dip has been rather mild, so many wonder “Can this really drop into an ICL when it is this strong?”.

 

IMPORTANT CHART, GOLD #2–  Excuse the typo on the chart 🙂    Gold looked very strong last May too, even breaking out to new highs with a huge 2 day pop, but the  drop into an ICL still came  ( red square) .

 

GOLD #3–  What if Gold has a 2 day POP after the FED? Well, a break to a new high on the FOMC mtg would draw in all of the Gold bugs, but it is time for an ICL soon, so it could roll over like last May. This chart should say MAY- Not August…

Obviously I needed coffee.

 

GOLD #4 – If you see this burst higher at the FOMC, it will look very convincing. Notice also that the last break out to new highs in April 2017 lasted 4 days, peaked, drop. This drop in Gold is as deep as the one in January, so this could be the DCL and  pop at the FOMC could top  out & drop.

GOLD #5 – Read the chart.  A bottom at the FOMC also could occur, but the point is… we are due for an ICL in a 4th ( Or maybe even a 5th Daily cycle low).  Playing Long here is NEVER easy and not even recommended. The charts of the Miners will help you to see  why…

 

GOLD DAILY CYCLES – Even though very strong rallies within the first couple of daily cycles  ( Magenta) do make vigorous moves higher, they rolled over into ICLs. This recent move does not look much better than other rallies out of an ICL. Expect a sell off into an ICL sooner or later, and Miners have been weak.

 

 

SILVER – Is Not as strong as GOLD has been,  it has been selling off sharply.  This should be a hint that GOLD will not just keep going higher and higher. When I look at this chart,  I feel that Silver may telling us that GOLD & SILVER may actually BOTTOM ( DCL) At the FOMC MEETING. We could get a break out to new highs in GOLD ( like Gold did last MAY), and then DROP into an ICL.  I have drawn in an FOMC low & Rally for Silver.

GDX also has finally joined in with GDXJ & has been selling off for the last 2 plus weeks. This may be a swing low last Wednesday like we see in Gold, so again it is possible for Miners to rally at the FOMC Mtg & drop later.  Will Miners break to new highs? Unlikely, they have struggled while Gold was strong.  Only time will tell as this unfolds next week. Some want to play the 4th daily cycle, but remember that You do NOT Have to be positioned when the FOMC MTG takes place, it isn’t the safest trade out there.  The 4th daily cycle can be very tricky.  Some should just play it safe and remain on the sidelines, especially  if things do not clear up Monday & Tuesday.

 

GDXJ – The lows looked similar to last March lows, so this may be a DCL forming.

 

GDXJ – If GDXJ could not break above the 50sma on the 3rd daily cycle after 2 attempts, that should mean that it will not break through the 50sma on this daily cycle too.  Is the 50sma the perfect place to short again, for those so inclined to short Miners? Most likely, I will monitor things going forward.  NOTE:  Notice how a run to the 200sma this time would still be a lower high than the March highs, so that COULD happen too.

 

GDXJ –  Just to give you a visual,  this is not an exact scientific prediction.  It is a guess using a 4th daily cycle as a guide – a weaker rally and the FED MTG propping Miners up in 3 days.

 

GDXJ – I hate to say it, but this was a weak effort by GDXJ, even though GOLD was very Bullish.  See the chart, it looked like the old ‘bear market rally’ out of an ICL. Magenta arrows = 2 strong daily cycles in a bear market, blue arrow was the weakness that followed.

WHAT ABOUT THIS?  EGO & AEM had a strong reaction after earnings were released. Of course I will be watching for ‘follow through’ and see how these earnings busters play out, but notice also that EGO got absolutely killed in February & March & then rallied right back. To me that means that  ‘THE LOWS’ for EGO may be in place, but I would think that a drop into an ICL by GOLD, SILVER, and MINERS will hold back progress until the next Run higher. This could then be a stronger Miner in that run.

 

EGO WEEKLY –  So if ‘THE LOWS’ are in place for EGO,and it POPPED after earnings, how could that play out?  I could see it run nicely in this daily 4th daily cycle for Gold and then do a back-test at the ICL as shown.  Ego would not fall to new lows, and it would be a strong buy then, because this is already a nice set up.

AEM – Ditto.  These may break to new highs and then roll over & go sideways in the final sell off.

AEM WEEKLY –  This is actually a great looking chart. Using TECH ANALYSIS ONLY, I would be buying both EGO and AEM with this set up.  However, Knowing that we are expecting an ICL, I would expect that the 2nd chart could play out.

AEM weekly is an awesome looking chart though.

This is my analysis for the last few weeks leading up to the FOMC meeting and the French Elections.  Add these thoughts to your own analysis and together it can guide you through the next few days and weeks of trading.  Of course I will still have the daily reports and continue to analyze things, update thoughts, and follow the markets as things play out. With a Wednesday  FOMC MTG,  I’m not sure if anything really big will happen between now & then, but we’ll  continue to Think Big-Picture, Set Goals, and Take action when the time comes.

 

Enjoy the rest of your weekend and we’ll see you on Monday!

 

~ALEX

 

.

2 ONGOING TRADES

 

MACK WEEKLY – In the past, MACK has run higher in this base and sold off by the weeks end. This week it closed near the highs, remained on top of the 10 weekly MA, and we have a MACD cross. I’ve been holding this one for weeks, can I get some follow through please  🙂  It looks good so far.

 

EDXC PROGRESSION

 

EDXC – APRIL 3rd –  I pointed out that EDXC is setting up again and looked ready to break out. Notice that it was steadily holding up on the 50 ma  ( green arrows) .  This company has improving sales and recently came out with new products and a new contract for sales in their Tea market, so I like the story. ( Phito-Bytes).

On April 26th – I posted this chart as it started to break out higher. This move put it above that weekly  200sma

I also posted this update for the weekly chart

EDXC – The last 2 times  EDXC moved higher from the 50sma, it went up for 3 weeks in October, and 4 weeks in January.  This is only week 1 and so far the move was big.  It remains near oversold, not overbought.

I believe that EDXC has a great chance to eventually run back to the former highs and even higher if they stay on track.  They do sell a few new products and they have seen demand for these products growing. It has not been an easy ride if you watch it constantly day by day,  but I don’t.  I bought it at 3 cents and I’m just letting it ride. Here are 3 articles that discuss recent progress of EDXC .  Continue to do your own Due diligence.

31% revenue growth EDXC

EDXC Biggest month ever

New produxt sales begin