Dec 7th – Fast Markets, Fast Reversals
After dropping 800 points on Tuesday, if I told you that the DOW JONES rallied more than 700 Points on Thursday, would you believe me?
Well, it actually did, but that was only after it dropped over another 800 points first! These markets have been fast, choppy, and Crazy at times. Within just 1 week we saw 2 Bullish bursts after Powell and the G20 Mtg, followed by 2 days of crashing that actually erased weeks of trading.
Well, today is Friday, the last trading day of the week. Let’s look at some of the market action, and this weekend I will cover more detail in the Big Picture Weekend Update. …
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SPX #1– Day 26 of this daily cycle saw a big crash & a big reversal too. What Might be next in the short term ?
More choppiness? It may still be just short timing-wise for a dcl, so …
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SPX #2 – I try to picture a normal 30+ daily cycle and with that I see possibly more choppy trading. NOW LOOK BACK AT MARCH- See the Blue Boxes. If we get a higher low (DCL) on day 30+, that would mean an ICL took place in October. So this might remain choppy!
SPX #3 – I actually drew this Thursday morning before the reversal. I was thinking that if the OCT low was an ICL, we would need to avoid breaking those OCT lows. SO again, is an Oct ICL in place or is that ICL ( Deeper Low) just ahead? Read the chart.
It was REALLY choppy After the initial drop in February, and I warned in my reports long ago that that choppy difficult trading period could happen again. This has been ROUGH TRADING. IT-WILL-NOT-LAST-FOREVER! This type of consolidation period often paves the way for trending moves later. We will find very good trading in the weeks to come, but for now it may remain a bit difficult in some areas. I am finding Solar and Biotech as a couple of trending areas, I will discuss that again at the end of this report.
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USD – The USD could drop into a dcl, bounce again, and then seek out an ICL. It is currently showing weakness.
WTIC – Thursday Morning I posted this in the comments. Oil dropped, but then looked to be recovering the 10sma. THAT IS WHAT I WOULD WANT TO SEE BY THE CLOSE, A RECOVERY OF THE 10 SMA. OPEC decided to post pone a decision of whether to cut production or not, to raise prices.
WTIC – Oil recovered the 10sma with a reversal candle. Note: I read that OPEC met, but indicated that they would not make a decision whether to cut production or not until Putin arrived Friday. This looks like OPEC will cut production, to boost price.
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XLE POSSIBILITY – I drew this as a possibility on Dec 4, and this deep drop did happen Thursday. I love the divergence, and…
XLE NOW – We got a reversal at the low. This does look bullish, and follow through may come with OIL Output cuts by Opec. This would push GUSH, ERX, Etc. higher.
Side note: Unfortunately Thursday (& again Friday) I am away from my Screens for 2-3 hrs midday. (I had to go get an MRI for an old back injury, Friday is follow up). When I came home, we had the above reversal forming and I took a VERY RISKY TRADE IN A 3X ETF, I Bought GUSH on this reversal. I can put a stop under the reversal, but since GUSH is a 3x etf and can move quickly, I risk getting stopped out . GUSH, ERX, UWT, USO , are a few leveraged Long OIL / Energy trades.
GOLD – Gold broke to a new high and then dropped. I believe that this very bullish looking chart is a fake out longer term, and I will explain more in the weekend report. One thing to take note of, though, is that Miners are NOT leading here and GDXJ is lagging badly. It is a mixed picture , and I will discuss that too.
GOLD – 4+ month highs! Could Gold tag the 200sma? Yes, it could, but I think that we are coming due to drop into the next Intermediate Cycle Low (ICL.) THAT MAY BE THE BEST BUY OPPORTUNITY SINCE 2016. To be honest, I did think that the run out of this last ICL would be exceptional, I said that many times, but now we can see many other Bullish factors lining up too. The General Markets are weakening, likely topping, and if they continue to flounder around or drop in 2019, Miners may get the inflow of that money.
GDXJ – 4 Month highs!! Oh, wait, no, that was only Gold. GDXJ & SILVER are no where near the 200sma. This is nothing like Gold, but …
GDXJ – It DOES resemble what is known as a “Complex Base Pattern‘. That is a temporary, but very frustrating set up to try to trade real time. We saw one in 2016, and we all know how that resolved , after a Shake out crash. An ICL is coming due too, which may provide a shake out. I will discuss this more in the weekend report.
It is Friday, the last day of a VERY VOLATILE week. This market has changed direction faster than a Cheetah chasing a rabbit! Maybe you went to cash & want to continue to watch how things play out? That is not a bad choice. For traders, the set ups that went unscathed and didn’t exactly follow the markets swings were the Solar Stocks, some Miners, and Biotech/ Pharma. That said, I am going to discuss a few trades for the brave souls or trading addicts like myself, that always want to look for an opportunity. Energy is trying to put in a reversal after the major sell off too, so that is also a bit of a riskier opportunity if it remains choppy, but it may V-Bottom & that has been mentioned too.
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I will be in the comments section for the first hour of trading if anyone has any questions or would like me to look at a chart for them, and I should also be back later in the afternoon, the last hrs of trading. Enjoy your Friday Trading
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~ALEX
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Again, Some Biotech & Pharma set ups have ignored the Market sell off, and remained bullish. Let’s discuss a few now.
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CRMD – I pointed out CRMD at the 50sma as a low risk set up, and noted that it did NOT sell off with the markets. I bought it. It popped 22 % yesterday and I feel that it will make a cup. It ran very well July through October, so I did not sell the pop.
GH – This is just another example of a health stock pointed out 2 days ago that is acting quite Bullishly. It closed up 8.5%, ignoring the market sell off.
SO now we have…
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CVRS – This also ignored the market sell off, and I bought it as it gained the 50sma again. The MACD & RSI look bullish and I see an inverse H&S formation. The AUG-September run was almost 100%, and this has now consolidated those gains.
I looked up GALT, IDRA, ZIOP, INO, NVAX, and a few others that I trade often. GALT & ZIOP Look good, Maybe INO & NVAX are getting ready also.
GALT – I have traded GALT a few times.
Look at the moving averages bunched together with a bullish climb. GALT ignored the Market sell off too, it is a BUY right here with a stop under Thursdays lows. Along with this short term Bullish set up…
GALT WEEKLY – GALT has been climbing higher, even though it has not been a smooth ride, for 2 years. We see higher lows consistently along a lower trend line. Galt is at the Lower trend line, and at times, it surges higher from this point. A surge to Former highs would be a 100% move. Again, GALT ignored the market sell off, so it could be more of a buy & hold with a stop under the trend line.
SGLB – Sigma labs is also climbing the 50sma and ignoring the equity sell off. I do not love the lower volume ( 60,000-100,00 / day), but the chart is healthy and SGLB actually doubled in October & has pulled back. Yes, during the market sell off, SGLB ran up 100% in 1 month.
SO BIOTECH/ PHARMA / HEALTH ARE RESISTING THE SELLING. SOLAR STOCKS ALSO CONTINUED TO ACT BULLISHLY, SEE ENPH, JKS, RGSE, SEDG (still a buy here), etc.
SEDG – I do like this solar stock. I dont own it yet, I bought ENPH & RUN Recently, but I am thinking of buying this reversal. 1. It didnt follow the market crash and 2…
SEDG – It is a large Gap fill consolidation after a great run from $15 to $70. It now looks to be turning up while putting in a rounding bottom. See the above chart for a close up again.
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REMINDER DNR – Do you remember when I said that we could see the dreaded base building process in some energy stocks? I said that I owned DNR here and was hoping that the 10sma would hold it. Well, it broke to the lows as shown here. So it may build a base, but I’m hoping that once OIL begins to climb…
DNR – We get more of this type of a move. You can see on this updated chart that DNR & NOG ( I owned both), crashed to the lows again. NOG stopped me out. A rise from here would be a good %-Gainer.
DNR – And this is that ‘Base building ‘ possibility again. Apply this thought to any energy stocks.
