Tuesday May 23 – Patterns Within Patterns

Please reread the weekend report for my thoughts on the markets. Mondays moves still fit the thinking that we have gone over for the past couple of weeks. In addition to the weekend report that I released, I gathered some charts of trade set ups or trade ideas that may be forming.  At times we see patterns forming within patterns, like the picture above, and I want to share those charts here…

 1st, there are 2 charts that I need to discuss –

NATGAS –  Due to the bearish heavily short COT report, this has been a very tough trade to hold ( I got stopped out while on vacation recently). Natty broke out and then invalidated that break by dropping back inside, but has now found support at the 50sma. It is a low risk buy from that standpoint, but a bit tricky because the inventory reports are released on Thursday and the weekend report showed that COT has been increasing in heavier shorting.  It is a personal call whether or not to take this trade here, but the stop under the 50sma does make it low risk.

XLE – Please read the chart as a side note, before I discuss some energy stocks. Basically, there is still no break out here, even though Oil broke out a while ago.

Charts From The Weekend…

All of these charts were gathered this weekend. The more research that I did for the weekend report, the more it kept on growing and it just got too long to include them.  Many were still valid, so now we have the advantage of an extra day of trade to see if these set ups remained good a day later.  You will see that some were possibly ready to ‘break out’, and are still looking like they may do that, so let’s take a look. If you keep a watch list, you may want to add a few of these to it.

To start:  Last week I did mention some Energy stocks that looked to possibly be leading out of the lows or shaping up, and included a few in the weekend report as possible leaders.  They were these charts of  RES, BTE, and ERF.

All 3 of the above stocks pulled back like this and they still remain healthy looking. The odd part is that OIL was higher and The OIH & XLE and many other Energy stocks turned down like this, as shown in that XLE chart above.  I have mentioned that another drop in Oil is my expectation at this point.

I was also watching GST and drew this weekly bigger picture chart for the weekend.  It still needed to move higher ( Above $1.20)  to break out,  so this was meant ro go on a watch list.

GST on Monday – You can see that GST was actually up 11% more on Monday. It is above $1.20 now, but looks as though it needs more upside to break out. It may do that Tuesday.  This is now worth watching for a possible immediate break out above the 200sma.

EDXC #1 –  Another BIG PICTURE chart , that looks perfectly healthy and shows signs of breaking from a sideways consolidation soon.  Earnings were released last week and I own it, so I had my eyes on it.  Earnings news was very promising growth-wise.  I have presented this one in many prior reports as ‘a growing medical marijuana company reporting increasing demand in pain & anxiety remedies for pets,  and they recently signed a contract to infuse Herbal teas for human consumption.  This is a large constructive base, though it is taking its time to really get going.  A return to former highs is a 500% gain,

EDXC #2 daily –     It has been popping along the 50sma for weeks.  This is why the weekly chart looks constructive. Monday it popped and I posted this in the comments at 11:37 a.m. This could be a loose & somewhat sloppy inverse H&S, but it looks ready to break out.  It ended the day here with volume over 1 million.

TGB WEEKLY –  This is a bullish break out.  On the daily, It pulled back 2 cents on Monday and looks to be possibly bull flagging above the 50sma before continuing higher. It could eventually double on its journey to the former highs.

TMQ –  Loose bull flag, holding the uptrend line so far.  A drop to the bottom trend line is actually a tag of the 50sma on a daily chart.  That would be a low risk buy, but it may just break out higher. A break out higher would be a buying opportunity too.

CENX WKLY –  Look at this steady climber. If commodities start to all run again, this one looks steady already.

NAK –  Semi bad news?  It is up-trending but I noticed an odd but very real pattern.  It has Tagged the red line (or 200sma see the red arrow)-  POPPED for days – then goes sideways, and drops to the red line again.  Repeat. Repeat . We look to be in the sideways part before a quick drop, so this MIGHT drop to the red line before the next move higher if this continues. I would consider adding  there if it did.  I’m not selling what I own, because this drop may not happen, I’m just preparing you for a possible pattern to continue playing out.

COFFEE  WEEKLY – I noticed a double bottom on Coffee  (JO).  JO has returned back to the 2016 lows.

JVA _ This is a coffee stock that I track and we have traded it here well over a year ago. On a weekly chart, it is NOT back at the 2016 lows like JO is, and it is consolidating sideways.

JVA – after releasing earnings Friday,  it gapped down sharply Monday morning and then reversed higher.  This is now a ‘bullish engulfing’, and that usually indicates that the gap down selling exhausted or rid itself of the sellers, and buyers stepped in. These are often bought immediately with a stop under Monday lows, but you also can just put it on a watch list and see if it JOs double bottom holds and runs higher, pushing this along with it .

CLF – this was in Thursdays report. It seems to be basing after a break from a descending wedge.

CLF – This is CLF when I gathered charts last weekend.  It could be bottoming, watch for a break out higher and a stop in below this base.

NXE – NEXGEN ENERGY  is now trading under the ticker  NXE on the AMEX. The volume is light at times, but it has had a great run from $1 to $3.40 November to February and is now consolidating.  A drop to that 200sma could happen  ( A buy), but that MACD is rising as it possibly forms a right shoulder to an inverse H&S.  I like the chart potential when it is ready to make the next leg up.

GV DAILY LAST FRIDAY– This actually moved 10 cents higher on Monday, and is now above that 200sma. The 50sma is curled down and may act as resistance, but the run from $2.80 to $8.50 shows its potential if it gets going.

Well, That is a lot to think about right?  Please know that this is just a number of possible trade ideas to choose from, for those that want a trade or two.  Some may be happy in cash waiting for an ICL, others may be happy with the trades that they currently hold.  I am NOT saying that you should buy all of these, I certainly do not.  These are ideas of set ups for some of our active traders.   At the same time, these set ups may also help us to see whether certain sectors, like energy,  are improving or not.

Enjoy your Tuesday trading and I will cover the various markets sectors in the next report.

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~ALEX

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Note: Those taking trades  may also want to check and be aware of whether the company is releasing earnings any time soon or have they already done so.