Thursday March 28 – The Balancing Act
With the current market set ups, we have seen some choppiness. I raised my stops and got stopped out of a few positions, and I may just strike that balance between cash & positions until things settle down a bit. Let’s take a look at the markets.
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SPX – The SPX lost the 10sma again and the MACD crossed down, and this would normally look a bit more bearish than bullish . Last week I took a position in the SOXS, but I’m going to show you why I decided to close it for now.
RUT – The RUT is also below the 10 & 50sma, and it broke the early March lows, so this doesn’t look healthy. I am seeing divergence in 2 indicators below that is telling me that we could see a bounce, AND…
TRAN – The ugly TRAN is a bit less ugly after Wednesday. It’s not great, but it is oversold, Pushing the 10sma with increasing volume, and the RSI curled up. I just want to see if we can get a good bounce ( and maybe short that bounce). The SOXS trade was a good one, I didnt want to give the gains back, because I lost some profits in my MJ stocks Wednesday.
So the TRAN & RUT look like they may want to bounce, but the General Markets do continue to look weak . I may regret closing my SOXS position, but I had decent gains already and wanted to lock them in for now.
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WTIC – Oil has a bearish rising wedge. I thought that we would eventually get a tag of the 200 sma, but at this point we may not. There is strong divergence on this rise and we are at the apex. I think Oil may begin to pull back at any time.
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GOLD – Gold pulled back and is sitting right on the 10 & 50sma. IF IT BREAKS DOWN FROM HERE – we could get an equal drop to the February sell off. I am watching this as a support area that could give way, due to the fact that Gold is on day 15 today.
SILVER – Silver has been weaker than Gold or the Miners. It struggled at the 50sma and RSI 50% and now looks to be leading the way lower.
GDX – GDX looks better than Gold & Silver. That doesn’t mean that it cant get caught up in the selling if there is a sell off, but this chart is not as bad as Silver. If Day 16 is the peak, and we drop into day 33 or more, we’ll have a L.T. Daily Cycle. For a normal ICL drop, we would expect the red line to break.
NG Weekly – And if we get a pull back, I’m going to be hunting for set ups that remain bullish. If NG Drops for example, it may just be a back test of the recent break out. We will go shopping after the pull back , if we get one.
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So I was stopped out of some trades this week and due to the current set up and choppiness, I may just stay in cash for now and wait and see if we get the bigger pull back in precious metals. If the General Markets do bounce & then start to Roll over, I could then take my SOXS trade back, but only if it looks obvious that the markets will drop & not continue to chop sideways.
I do want plenty of cash on hand in a couple of weeks though. Miners are on day 16 and I think that a great buying opportunity would develop in the Miners if they pull back, especially if we get a normal drop into an ICL. That possibility is definitely still on the table, and it will be worth patiently waiting for. Gold & Silver are starting to look ready to pull back, and if that sector finally gets caught up in some selling, it may be the last best chance to position strongly while the stocks are on sale.
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This was my GDX chart this past weekend. A drop to support and reversal or even a quick shake out there could be the last time prices are this low for a long time, so cash is not a bad place to be if we get this opportunity in the next couple of weeks.
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Enjoy your Thursday markets!
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~ALEX
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CTST – I own CTST and yesterday it dropped down to $9.45 for most of the day. Heading into the close it suddenly reversed and turned green, forming this reversal off of the 10sma. It also looks to be a CUP & HANDLE and ran higher after hours, but the chart shows rather strong divergence already (not shown here) . Will it break out? Well…
