May 5th – Fed Changes

As the Fed Decision approaches, it is expected to be a non-event when it comes to an  interest rate hike. It does appear that some sectors are lined up for some changes, however.  Let’s discuss why.

The General Markets really look like they could go either way, because we have both   Earnings and the Fed to contend with.  On Tuesday,  I saw some ugly results … AMD was down 25%,  ETSY was down about 20% , TWLO was down 30%, and a few others were getting hit in after hours on Tuesday.  AAPL released and dropped $2.70, but that is nothing for a $147 stock. So earnings could hinder the market progress, but that remains to be seen.  They have been very bullish after the recent consolidation.

At the same time I saw Coach up 11%, FSLR was up about 10%, and a few others did well, so we’ll see how the General Markets handle Earnings releases and the Fed decision ( TSLA and FB release after the bell on Wednesday).  At this point, Tuesdays markets showed no real change from what they have been doing.

SPX-  Chart-wise, the markets do look like they want to go higher, but a FED reaction could send it in any direction for the short term.

WTIC –  Oil broke down Tuesday, but it hasn’t broken the March lows yet. If it does, the ICL is still ahead. We have the oil inventory report that comes out on Wednesday mornings.  We do see divergence on the MACD too.

WTIC-  Trend line break coming up?  I originally pictured this in early March when we expected a drop. It still makes sense and energy stocks look as though we will get this drop.  I own SWN as more of a NATGAS attempt, other than that, I do not have any energy trades on and I am being patient.

As a sidenote: USO did break the lows by a penny, so we’ll keep an eye on Oil.  I am also watching the Oil stocks for clues.  Are they bottoming or breaking down.  So far, they are bottoming.

NATGAS – No real change, but I am looking at this as though the dcl could be in place. We broke the trendline and then recovered the 10sma. Thursday is the NATGAS inventory report.  I still haven’t taken my long Natgas position, but if that day 38 dcl holds, and we get a reversal higher, I might enter a long position.

GOLD – I feel that Gold may hold up and put in a dcl here. This is day 36 in my analysis. Gold may not bounce this high AT ALL. It can top early and just go sideways, which makes playing a 4th daily cycle more dangerous to play.

That said – I am not recommending a trade here.  It is a FED DAY and on Fed Wednesday, anything can happen in the short term.  I can picture a knee jerk sell off into the dcl too, since Golds drop doesn’t look like the typical slam down into a dcl.  This shows a 3 day slam down for the rest of the week, and a trend line break.

GDX – I’ll show the same things here.  Miners have had a good sell off, and if the Fed Decision was viewed as bullish for Gold, Miners could rally like this.  As a 4th daily cycle, it could peak very early with a quick POP and a sideways move.

GDXJ – Resistance has been seen at the 50sma for GDXJ, so it’s hard to imagine that it would get above it here.

GDX – Read the chart. This is the idea that a FED DECISION is bearish for Gold & Miners. A quick slam down could take place.

GDX DCL -Slam and DCL

SO we are due for a dcl in Gold & Miners, and I do expect changes after the Fed Decision is released, but as you know…  anything can still happen. I cannot recommend a safe trade at this point, so I won’t. Patience can save you money in volatile situations, so any trade taken at this point has to be taken at your own risk. By the final hour of trading today, we should see which of these paths have been followed.  Enjoy the day and thanks for being here at Chartfreak!

~ALEX

I want to let the readers know that I am going to be on the road next week. That never stops me from writing reports, but I will have to try to make them more brief and to the point, similar to this one.  In the past when I have done this, readers could not even really tell the difference, so I’m not expecting any interruptions with reports.  It is likely that you will see me in the ‘comments section’ or answering emails during the day less frequently.

The Timing is good, because next week will likely be rather uneventful.  The General Markets could pull back , but they have been bullish and that just may continue with normal pull backs along the way.  I am expecting us to see a weak bounce in Gold/ Miners and then a drop begins to the next Dcl / Icl.  Waiting for that ICL with CASH will pay off in spades.  You can more than double your investment in Miners out of an ICL. I will be detailing that as we approach that ICL.  Oil may put in a low soon, and Natgas could be a long play, but overall things should be clearer next week and easier to report on.