August 16th – Capitulation?

 

 

SPX  – We saw the markets drop on Wednesday and start to recover as the day ended. I am expecting a dcl, and I do not think that this was it.  We could bounce & drop or  just continue lower, in my opinion.

 

NASDAQ – Interestingly, the SPX tagged the upper channel line, and the NASDAQ has already hit the lower channel line. It found support on the 50sma, so if you are eager to go long, you could buy with a tight stop, but again, I think the markets can drop further. This could break down.

 

XBI  – The Biotechs have been dropping, and Volume spikes have been quite heavy.  This looks like a better candidate for LABD, than LABU.  A possible H&S formed as it lost the 50sma and back tested it , and it was rejected.

 

XRT  – I discussed how good retail was looking, and one day later, the XRT gives up the break out,  ON HEAVY SELLING VOLUME. It may just drop to the 50sma, so it can stay on a watch list, but could it drop to the 200sma?  I’d say yes, because   Macys earnings came out and it got hit hard.  ANF was down too, so this is a sector that was setting up nicely, but still needs watching.  I’d keep it on the watch list, for now .

 

USD  – This is a form of topping or indecision candle.

UUP  -Reversal

 

WTIC   – So Oil has now dropped down to the 200sma, and this is what I expected.  It is day 41, so it CAN form a dcl here, but at this point it could do a shake out too.  There is more time to drop if it wants to,  so anyone wanting to go long would wait for a swing low, or use a Tight Stop on at the 200sma.   It is time to put a tight stop on DWT or DRIP if you own it too, or outright sell.

 

GOLD –  Click to enlarge.  Gold is capitulating and the drop has become very steep. Will they run the 1120 lows in Gold?  We need a reversal before stepping into Gold, because a capitulation flushes out holders.   Please read the chart.

**  7 A.M. Eastern Time GOLD LIVE THIS MORNING –   Gold sold off sharply in the after hours and has reversed since then.   IS THIS FINALLY A REVERSAL THAT WILL PUT IN A LOW?  Seriously,  only time will tell, this has been relentless selling.  Gold dropped all the way to $1160.32 & is not $1178, so that is already about an $18 swing.

 

GDX  – This chart was in yesterdays report where  I mentioned the type of 1 week slam down that we have seen in past sell offs.  I would like to see a loss of support & recovery,  that is a shake out, but so far?  Well…

GDX WEEKLY  – We got one of those Big drops as of yesterday too.  This is capitulation type selling that pukes out Gold Bulls.  Look at that weekly RSI 5,  THAT is extreme, more than any other ICL. This could drop further Thursday and put in a reversal on the options expiration Friday,  we just can’t tell from here.  Wait for a reversal, when capitulation takes place, it is like a flush of sellers.

 

TRX was a Miner that was really holding up well, despite Gold big sell off.  I bought it back in June.  Well, I got stopped out of TRX as it broke the 200sma in the morning, and I posted this in the comments.

 

 

GDX  – High volume spikes come at capitulation lows, and we got a high volume spike. It is when everyone has just had enough and they bail out with both hands.  You can have more than 1 if there are enough sellers.    GDX has been showing 30- 40 million per day roughly, but had 127 Million  yesterday.  When shorts start to cover, this will start to take off higher, so We should be close to the lows.

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I just want to point this out,  NOT AS A BUY SIGNAL for you, but more of a reason to see how close the lows must be.  This is a very rare  ‘buy signal’ for traders that comes only at ICLs.   I used to buy this every time, because it is extremely rare and  if I remember correctly, it only failed once out of many times ( and not by much).

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GDX  – This is called an RSI 2 Buy.  When GDX sells off SO MUCH that the RSI 2 closes under ‘1’, it is an extreme that can be bought and by the time the RSI 2 moves back above the 30, you are in the green.  I’d like to advise that you DO NOT try this, it can bounce & double bottom & still work, but it is scary when that happens.   So notice that GDX RSI 2  = .28 at the close.  EXTREME.

 

We seem to be in the Flush out the bulls, Capitulation stages. It is usually designed to stop out the die hard bulls, because it gets extreme, and yesterday was a good idea of how that looks and feels. I’m thinking that , even though this looks like it’ll never end, we are very close now to the lows.  There is a currency war and things are extreme, but you still usually get a reversion to the other side.  Shorts are so heavy, we should get a very strong short cover rally soon, and then we can see if things unfold as a ‘Bounce” in what is now a bear market breaking down again,   or the start of a Major Upleg to a Bull Market.  There should be plenty of time to observe things as Gold moves higher, and the Miners should put in some great % gains.

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  I know that many  ( myself included)  had some Miners that were holding up well, and they finally stopped me out too.  I owned EXK, AUY, HL, TRX at one point.  Now it is best to wait for a swing low, before re-entering.   If you are a quick nimble day trader type, you may have other plans.  That is totally up to you, but as always, use stops to be safe.

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 Enjoy your Thursday market action, and we’ll see if we get a reversal in Miners or will the Friday Option expiration have something to do with that?

 

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~ALEX

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I noticed many of the Medical marijuana stocks were looking ugly recently, selling down to lows.  I pointed out a couple yesterday, because when you stepped back, the big picture was actually looking pretty good.  They were at support levels.  I now see a good handful rebounding yesterday & possibly setting up as bullish soon.  I will cover the 2 that I mentioned in the report yesterday, and the others I will keep an eye on.  They are not quite ready yet  ( but you can look up  OGRMF, CANN, APHQF,  KSHB 3 yr wkly as just a few of the examples of possible future set ups, if you would like to).

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CGC  – I used this in my report , and CGC slammed down to the lower trend line. This was Wednesday…

 

CGC  – This was Thursday-  Wow , what a 1 day blast off of that trend line. You can look up the news feed and see why.

 

 

CRON  – With this chart CRON was up about 13% and started crossing the 200sma again.  If it also regains the 50sma, that would be a nice Shake out.  I like the volume.  Also …

 

 

CRON WEEKLY  – In yesterdays report I pointed out that this hit the bottom of the bands, but broke below the lower trend line. Regaining it could be a shake out too. Did Wednesdays Pop  regain the trend line?

 

CRON  – Yes, CRON regained the lower trend line after reversing off of the 50 weekly ma.   I did buy it.  It gapped open and sold off, and when it reversed I entered the trade with a tight stop.  If this breaks above the 50sma on that daily chart above,  that could be a break out above the upper trend line here, and I will add there.   So basically, it is a BUY above this triangle in my opinion, or here with a stop at recent lows.