When?
The markets still look a bit mixed, and I am expecting a dip into a dcl, so let’s start by taking a look at the current set ups.
DJIA – I am expecting a dip into a daily cycle low and the DJIA appears to have a bearish rising wedge forming. There is room in the apex for another pop, but it should break down from here, since we are due for a dcl. Again, the DJIA is only 1/2 way to the Jan highs. After a decent run out of the last DCL, it has been a bit choppy.
It looks like we are back to Mixed Markets, some sectors stronger than others, but since I am expecting a drop into a DCL, I would be fairly cautious in all areas short term.
I am running late this morning. I want to release this near 8 a.m., so I will not proof read for typos or mistakes. Thanks for understanding.
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Recall that there was a time when I pointed out that the Russell 2000 ( IWM) and NASDAQ were stronger, breaking to new highs. Other areas , like the SPX & DJIA looked weaker.
Since then the NASDAQ broke well above the Jan Highs, The SPX & TRAN just tagged those Jan highs, and the DJIA ( See Chart above) is only about 1/2 way to the Jan highs. This week I found what looks to be quite bullish sector too. I will cover it in detail at the end of the report, it may pull back with a drop to a dcl, and offer buy opportunities.
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IWM – Honestly this looks like more of a bullish set up. It resembles the Feb – May set up, so the Russell 2000 is worth watching. Last time ( May) it broke out, back tested and ran nicely higher. It looks bullish, but it has been choppy. We are due for a dcl in general Markets, so I can’t say whether this resists the selling or joins in. KEEP AN EYE ON IT, IT MAY REMAIN BULLISH.
SPX – Read the chart please. This can pop since day 31 Could be a dcl, but I do not feel that the DCL is in place yet. CHOPPY. Remember that this could drop to the lower channel line.
USD – I grabbed a weekly chart and the USD simply looks bullish. The currency wars are affecting the USD, and it is coming out on top. It honestly looks like it can run higher, but there are some ‘extremes’ taking place in the USD & GOLD when it comes to the COT & SENTIMENT.
So the General Markets have become choppy, and they are in the timing for a Daily Cycle low, but I have suddenly noticed RETAIL Popping up after some rather long sell offs, so I will discuss that at the end of the report. It may offer an area that ‘Traders’ could trade.
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WTIC – Was day 39 the DCL? I dont think so, these can stretch to 50 days in a normal daily cycle, but it is possible if this breaks out higher. So far, Oil was rejected at the 10sma again, BUT WEDNESDAY IS THE OIL INVENTORY REPORT. IF IT BREAKS HIGHER AFTER THAT, we may get the DCL, so OIL can be watched for a trade long ( Or if you still have DWT or DRIP, you want to stay alert to OIL at 10:30 Eastern time).
GOLD WEEKLY – The weekly chart for Gold has GOLD trading in the $1180’s now. So far this is a massive base and we seem to be at the lows of the base ( Yellow box). We are looking for a significant low, and COT & SENTIMENT are extreme in Gold, but it seems that there is no end to the selling. It should still be an Excellent trade, and I am not giving up on it, I am just recommending patience at this point. WAIT FOR A CONFIRMED DCL. Lets go to the Miners…
GDX WEEKLY – As you can see, in 2016, we had some very large drops in 1 week. February had one final crash week too. Gold was extremely overbought in 2016, so I am not expecting anything like that time period, but I wanted to point out what a large 1 week drop looks like. As we head into Option expiration Friday, this 1 week could end that way if this stretches down further. WAIT FOR SIGNS OF A REVERSAL AND AN ICL AT THIS POINT. You see the long sideways consolidation where Miners resisted Golds selling, but Miners have joined in. I took a few trades just in case this sector took off upside, but have been stopped out of all but 3. I am not buying until I see signs of life, BUT I DO NOT WANT TO MISS THIS TRADE WHEN THINGS FLIP TO A BULLISH RALLY. I love the sentiment & Horror that Gold Bulls are expressing.
GDX WEEKLY – I mentioned GDX could shake out below $20, and here we are. Now what? Time will tell, a measured move goes lower still, but does NOT have to take place.
Note of interest: I looked at a ‘measure move’ down for Gold. They don’t always fulfill, but dropping into an ICL could see price escalate to the downside, so just above the $1170 area would be an equal measure drop.
General Markets are dropping into a dcl. I’m looking at support levels below, like the 50sma, etc. OIL is in the timing for a dcl, today is inventory report, so be aware of that if you own DRIP or DWT.
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If you are waiting for the ICL in Gold like me, WAITING PATIENTLY Is going to be the key. It is just going to be a matter of Sitting on our hands, and patiently waiting for real signs of life here. It is Very Overdue, but outside circumstances may be affecting it in the short term. The shorts are so heavy in Gold, that it would seem that any kind of a solid bounce could lead to a real sharp short cover rally, and the lows would be in place. That said, now that Miners have joined in on the selling, and earnings surprises are 50 / 50 lately, so we want to be patient and wait as long as it takes for the buying to begin. I want to stay focused, because I think that this could be a very profitable trade when the Miners flip upside. It often is the most profitable trade of the year for me.
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Enjoy your Wednesday trading!
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~ALEX
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TRADE IDEAS: FOR TRADERS THAT WISH TO PUT SOME MONEY TO USE
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I wanted to point out something interesting in retail, and since some have POPPED in this sector, they may pull back with a drop to a dcl, and offer buy opportunities. USE THIS AS A WATCH LIST if you are interested.
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ANF – After an extended period ( 4 months of Choppiness), and a slam down in June, I am seeing Pops take place in Retail. Look at ANF. I’d watch it for a bull flag or back test, but that was a nice pop on earnings and this choppy 4 month consolidation looks to be over. Earnings release will be August 30.
GPS – The GAP also popped back above the 50sma, and this dropped from $34 to $29, breaking below the 50sma in June. Earnings are Aug 23rd
JCP – JCP has been quite weak, but it is popping above the 50sma too.
M – Macys is actually a Buy & Hold candidate after earnings . AUG 15 earnings report, and it looks like the last one 3 months ago was a gap higher that never filled.
UA – This was one of my best Long BUY & HOLD plays for years and I had to cut it loose when they started to lose it ( This chart is not complete, it should go back for years). This looks like it may also be turning things around since Bottoming last November. It had a nice April to June run, and has sold off since then. It may be at support.
SO YOU MAY WANT TO LOOK THROUGH YOUR RETAIL STOCKS (and be aware of earnings release dates).
XRT – RETAIL, The choppiness seems to have ended. After 2 months of sideways chop, it seems to be breaking out. This is has been moving higher off of support for over a week now.
Take a look at the retail ETF RTH ( Volume is too light though).
NVAX -After a strong EARNINGS POP on Aug 8, this is pulling back to support at the 10sma and could be bought with a tight stop It is Biotech, and may be volatile or have added risk. At least earnings were well accepted and that is behind us.
LAC – Lithium. Earnings came out yesterday a.m. and look at that reaction. This sell off in July looks like GDX lately. The stock has definitely been weak and struggled, but maybe things are turning around. I want to read that report and this is on a watch list. Note: 1 thing that I son’t like is that it popped in May and then just rolled over.
VSTM – Another August 8 earnings Pop is pulling back to support. VSTM IS IN AN UPTREND and looks low risk with a stop. Again, BIOTECH can have added risk, be aware of that.
WHY ARE MOST POT STOCKS SELLING OFF ( EXCEPT FOR CVSI, WHICH IS A ROCKET)?
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CGC – I think that they could be just consolidating, and many still look Bullish, but it is a matter of timing. This looks to be forming a very bullish flat topped wedge, but had a sharp drop this week alone. I’m watching for a reversal. That said…
CRON – This also looks to be forming a bullish descending wedge, but it broke below the bottom. It need a reversal to be a shake out .
