Friday- Navigating The Choppy Waters
Today is Friday, the last trading day of the week. The markets have been choppy, there is no doubt about that, right? They have moved mostly sideways. What a choppy market can do is ‘shake up’ the traders, even cause doubt about the current conditions.
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Notice: We saw the Dow down over 500 points on Tuesday as it broke below the 50sma. Then we saw it rise up over 300 points on Wednesday to the 10sma, only to see Thursday drop it down another 250+ points, and it sits on the 50sma again. See the chart, and let’s just discuss that choppiness for a moment.
That said, Oil is selling down and the Precious Metals sector is also choppy and unclear. Do we really want to be adding trades heading into the weekend with these conditions prevalent? Not unless we see VERY CLEAR AND CONVINCING moves on Friday. WHAT IF I ALREADY HAVE POSITIONS OPEN? That is perfectly fine, you may also have decent gains . In that case I would just look at the trade and either let it ride? Maybe raise stops and let it stop out? Let them run until they look threatened? Take profit if you see it as the best choice, etc.
I mentioned that I have been lightening up, to raise cash for the coming ICL in Precious Metals. That requires patience, but can be very rewarding. So for Fridays report, instead of adding to positions, let’s just discuss the current situation.
SPX – This looks like a bullish break out with a back test, but it has been going sideways for 2 weeks. It may drop to the 50sma again if selling continues Friday. I will easily add positions if we are early in daily cycle if it goes sideways across the bottom, but at this time, I want to watch this play out on Friday.
SPX WEEKLY– The weekly is fine, but I did want to see a break above the March Peak sooner than later, I’ll explain that further in the weekend report.
NASDAQ – The break higher from early May remains in tact and has been bullish for the Tech sector. Thursday was a tad heavy volume-wise as it sold off by the close. NO BOUNDARIES have been broken, so if I had positions in the tech sector that looked fine, I’d hold them. Now I want to watch this Friday too, because…
NASDAQ – I did mention using this and other chart in March & Mid April saying that I’d be watching this as we approach the summer ( The old saying: Sell in May and Go Away). I was thinking that Precious Metals might rally as Markets drop.
NASDAQ WEEKLY – So we need to have this in the back of our minds, as we watch to see if this bullish 4 week tight pattern does break higher or not.
USD -Thursday the USD dropped and reversed back up toward the 10sma, but I do expect more downside into a lower dcl.
We have discussed the 2 main scenarios while watching for GOLDS ICL. This too has been a bit choppy.
GOLD – This is strange, but GOLD looks to be breaking above the trend line, which is bullish, yet it is also struggling at the 200sma. Gold has also closed above the 10sma (1297) for 5 days. That makes this possibly day 7 out of a new low, but Miners do not seem to be in sync with Gold.
GDX – Miners are now back under the 50 again, and still below this Magenta trend line. GDX remains choppy & sideways too.
GDXJ -GDXJ was rejected at the 200sma, and lost the 50sma, so the JUNIORS are choppy here too, going sideways for 2 weeks without a big gain or loss.
So my thoughts are as stated above: Unless you are just interested in short term trading, and we do have some very active traders here, why open new positions on a Friday with all of the frustrating choppiness that we have been seeing lately. This week we saw the Dow down 500+, then up 300+, then down 250+, day after day. While it may be fine to continue to ‘Hold positions that you may have already open, as long as they don’t violate anything’, I can’t recommend opening other long term positions in TQQQ or UPRO, until we see how things are going to play out. Follow through is hard to find recently.
I had opened a small position in GDXJ,as mentioned in yesterdays report, and believe it or not, I did not close that position. Gold still looked Neutral to bullish, so I wanted to just let that position play out. If we drop into an ICL in the coming weeks, I will be stopped out, or I may close it today, since it is Friday. I still want to see how Gold plays out in the short term.
Finally, I have been closing a lot of positions myself recently. I HATE owning over 10 trades at 1 time, and I was buying and holding Tech stocks, medical Marijuana, and Miners, I had almost 20 open positions. With an ICL approaching in Precious Metals, I wanted to raise cash and be ready to go in heavy when the lows are confirmed to be in place.
The markets were choppy, tricky, and frustrating this week, really. On Saturday or Sunday, I will have a weekend report discussing the bigger picture on all of the markets, until then…. Enjoy your Friday trading and have a great weekend.
~ALEX
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THE ENPH TRADE:
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ENPH Using this chart on May 2, ENPH slowly became my heaviest holding, after buying it lower near the 50sma which was at $4.25, and…
MAY 7 : I adding along the way during this mini consolidation at the 2nd Magenta arrow, as recommended here, still near $4.30’s.
The eventual break out was another place that I recommended adding, and I bought a little more before it broke higher here on MAY 9 too.
ENPH – I was perfectly fine just riding this higher with dips and surges along the way, especially above the 10sma, and I recommended that here. HOWEVER…
ENPH is still above the 10sma, and may be fine, but I wrote in the comments section yesterday that this is also known as a bearish engulfing. Price open above the prior days ( Buyers still jumping in) and then selling off to engulf the prior days entire candle. What does that indicate? It CAN indicate that there are more sellers taking profits than buyers, so Selling overwhelmed buying.
I mentioned in the comments section a couple of times that this MIGHT BE the start of a deeper dip or consolidation for ENPH, or maybe just a dip down to the 50sma. Even though that remains bullish, I sold mine to lock in gains. I can always get back in later if it sets up properly.
IN AFTER HOURS, ENPH began to rise again, buyers probably stepping in since it was at the 10sma. It is also higher in pre-market, so you still have time to decide what you want to do with your position, if you are still holding and didnt see my comments yesterday.
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