May 31- CHANGE OR STILL CHOPPY?
In the markets, at times it can be a Challenge to discern early on whether or not some of the Changes that we see taking place are real changes with follow through or just continued choppiness. Lately the choppiness has been full of whip saw moves, and for that reason, I have admonished keeping any positions small and always honoring stops. Eventually, we will get more of a directional move, but when will we get some follow through? Let’s go to the charts and discuss this further…
It is Friday, the last trading day of the week, and with no major changes to the markets this week, I am going to look at things a bit differently here…
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SPX – I don’t usually use B.B.’s, but they CAN act as support and SPX is on the 200sma & Bollinger Band. The last bounce lasted 3 days and couldn’t gain any traction. We are oversold, at the 200sma, so I’d say that we could do a shake out below the 200sma, and recover with a bounce, but so far these bounces have been weak. Please read the chart.
It is possible that we crash through support here and then put in a reversal candle by the close, but if you see that, you want to ask yourself , ” Do I want to buy & hold over the weekend, risking any loose talk that could come from the U.S. President or Chinese Tariff wars?” Keep that in mind if we get a shake out move.
FRIDAY MORNING EDIT- THESE ARE THE FUTURES AS OF 6:30 AM E.T. – AS I PROOF READ THIS REPORT THAT WAS WRITTEN LAST NIGHT
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OIL INVENTORY WAS DUE Thursday & we had a strong reversal Wednesday day 16. This is what I wrote…
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OIL INVENTORY WAS DUE Thursday – And when it was released, this was the headlines as Oil started moving higher.
” OIL IS RISING”…
OIL – Oil went higher, and then crashed into the end of the day. Too weak to tag the 200sma, too weak for a good bounce off of the B.B. So much for that Wednesday reversal, and now we’re looking at Oil with a day 9 peak, left translated at this point, and at new lows on day 17. Oils daily cycle can be 30-50 days long, so this could really drop over the next few weeks (with bounces along the way)!
As a reminder, OIL & The Markets do often run together. IT IS NOT GUARANTEED , but often happens, and Oil looks pretty weak so the markets may remain weak.
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USD – The USD chart looks like a bearish rising wedge. I have been pointing out this upper trend line for a while, and a drop from here could be good for Gold. So how does Gold look? It has been choppy, but it looks good, let’s take a look…
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3 Gold charts :
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GOLD #1 – I’m using that B.B. again on this chart, just because Gold has actually been responding to it well. Read the chart.
GOLD #2 – I’m going to try not to get too excited, but Gold looks good since it closed over the 50sma ( Again). It also bounced right off of that trend line that I have been drawing (After a false break out). IS THIS A BREAK TO RUN HIGHER? This looks quite bullish. It is set up nicely, I’m just really surprised that Gold never tagged the 200sma.
GOLD #3 – So we have been moving choppy & sideways at the lows, but the MACD is rising, we are on day 20 Friday & moving higher above the 50sma. WE NEED FOLLOW THROUGH, because a break above day 8 would be very bullish, turning this is into a Right Translated Daily Cycle. $1304.20 is the day 8 Peak.
GOLD is shaping up nicely, but things have been so choppy that it becomes hard to trust the moves. We’ll need more time to see if we can break the highs of day 8 above $1304, but this set up really does look good..
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MINERS: Again, I’m trying not to get too excited. This choppiness has had a few false moves already, but this looks pretty good too. ..
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GDX – Pinched Bollinger Bands USUALLY happen before a bigger directional move and these are pinched . So look at this chart: GDX has been crawling along the 200sma in a very choppy frustrating manner, but sooner or later it is going to break & run. GDX popped higher with Gold yesterday. It could start to climb higher with some follow through. LETS ZOOM IN…
GDX – We are only 25 cents from the highs of this daily cycle at $21.02. The MACD is inclined or rising even though price went sideways. The RSI is at 50 even though price has gone sideways . A good push higher would be nice.
GDXJ 2 Hrs of Trading – GDXJ was pushing above the 10sma and about to break from a bullish descending wedge too, so I drew this after the open (11:11 a.m. E.T.).
GDXJ AT THE CLOSE – Closing at $28.50, GDXJ is above the 10sma and partially breaking through that wedge. Notice that as price chopped downward in that wedge, the MACD & HIST are rising.
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SO WHAT DO I THINK?? I can go over all of the bullish points for Precious Metals again, but you know those by now, right? The Last ICL was over 8 months ago, the Set up is Bullish, and the USD looks close to the Top, etc etc etc. This set up can be bought with a tight stop, but just understand that this is as choppy as it gets, and that may or may not end here. Scroll up and take a Look at that GDX chart again. No one can predict when that Choppiness will end, and it has been a tough ride for the longs ( or shorts). Time will tell, but Thursday did look a lot more bullish for the Precious Metals, let’s see if we can get 2 days in a row. 🙂
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Let’s see what Friday brings our way!
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~ALEX
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IF THIS IS GDX BEING CHOPPY , THE FOLLOWING CHART MAY BE ENCOURAGING..
AU looked as choppy as GDX along the lows, in fact, they looked very similar until yesterday. This Break out is encouraging, because maybe we’ll see this for GDX Friday if Gold has follow through . Maybe GDX can get some follow through like this.
GSV – I posted this possible shake out on May 21.
GSV – I captured this Midday yesterday and it still looks good. The volume came in stronger on the upside, so watch for a break out ( or more chop).
SGSVF – On May 23 we saw this strong reversal in SGSVF and Gold was barley moving, so this could now be putting in higher lows.
SGSVF – And you can see the follow through as it heads for the 200sma.
So we are still seeing signs of life in some Miners. NG, AU, BTG, and several others popped nicely, this may be the beginning of the upward bias. I will cover various Miners set ups next week if this sector starts its break out. Time will tell.
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CSIQ – The SOLAR stocks have been Bullish, and CSIQ is trying to break out after crawling along the 200sma. This goes on a watch list.
SPWR – This set up for SPWR remains healthy & bullishly aligned. It almost doubled in the last 6 months.
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ANOTHER LESSON ON STOPS: HIT WITH THE UGLY STICK –
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TROX – I posted this chart of TROX yesterday as a possible break out and back test. It ran from $6 to $15.
TROX CLOSE UP FROM YESTERDAY – So it re-gained the 10 sma after earnings were released, and was heading to the 200 sma with increasing volume. Things looked good. On Thursday morning, it began to rise and they actually announced a WEBCAST for investors at 1 p.m. I DON’T KNOW WHAT THEY SAID ON THAT CALL, BUT…
TROX – TROX began to sell off in large numbers after 1 p.m. So it failed at the tag of the 200sma & large numbers of investors bailed out. I still do not know what they announced on that webcast conference call, but this is why it is important to use stops ( Either at the 10sma or recent lows). . . let me show you something.
TROX – Even though this could bounce, I would be stopped out by now. This is not mild selling, so I would not want to hang around and ‘take my chances’. The Risk / Reward on that is against you, because…
TROX – If this becomes an A-B = C-D with a bear flag from b-c, ( and they often do), this would drop to the $6.50 area! Yikes. I know that it looks like a capitulation shake out below recent lows, but this should have stopped out anyone. I don’t hang around to find out later, because the Risk / Reward is not good. RISK of further selling is real. If it just gap fills, reverses , and recovers, you can always buy it back later if you want, but this was ugly after that conference call.
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EDIT – LOOKING PRETTY GOOD HERE, VERY CLOSE TO THE DAY 8 HIGHS – LOOKING FOR $1304+
