FRIDAY MARCH 13
What can I say after the massive melt taking place that has continued up until now? It is Friday, the last trading day of the week, so in this report I’m just going to cover a few charts and point forward to a deeper discussion in the upcoming weekend report. As you will see, some things just defy normal market action, so it will take more time to really dig in and get a grasp on what may be happening and how this could play out. Let’s just take a look at some charts…
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The futures are up fairly big, with the Dow almost up 1000 points, but we have seen this before and it only gave us a 1 day pop on the last reversal, so keep that in the back of your mind.
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It just doesn’t get much more ‘fearful’ than this – a reading of ONE. This often leads to a bounce & could become a short covering rally too. Let’s go to the SPX charts.
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SPX FROM YESTERDAY – I WROTE: My downside targets have not been hit yet, but we are getting close. I have 2600 as the initial target, and a deeper fib target would be roughly 2400 ( 2393).
Update: YESTERDAY WE BROKE 2600, but we are still slightly above 2393.
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SPX – We have been watching for a tag of support down near that 2600 or 2393 area too.
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SPX ALSO FROM YESTERDAYS REPORT – 2400-2600 lines up well with support that we have been watching in the weekend big picture reports. The short trade (SQQQ, SOXS) has played out well, but I closed 1/2 of mine and will close the rest soon. We should expect a bounce soon.
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SPX – The lows yesterday were actually 2478 and we are in a LONG TERM SUPPORT AREA. That means that we could actually bounce from here.
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SPX – Here I am pointing out other SHARP SELL OFFS that reversed and put in a sharp rally higher or Bounce. Notice that the first 2 on this chart (blue squares) were double bottom lows though – more of a short bounce. THAT is what happens when we have more time left and a daily cycle forms & only double bottoms- sellers remained ready to bail out on the rally. The other sell offs were V-Bottom like Dec 2018 .
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Personal thought : This bounce could be more of a V-Bottom at first, with short covering ( like Dec 2018) . We’ll have to wait and see, because we also have the Economic concerns becoming a reality with the Coronavirus shutting may businesses down. Those concerns could also cut any bottom buying short.
SO EVEN THOUGH WE CAN BOUNCE, WE CAN’T SAY EXACTLY WHAT KIND OF BOUNCE MAY OCCUR. I WILL DISCUSS THIS MORE IN THE WEEKEND REPORT.
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QQQ -WE HAVE SEEN AN a-b-c Type of drop. In the weekend report I am going to post a warning. I know that many people think that an a-b-c drop is the end of a sell off, and we rally to the highs again- but that is not always the case, and this chart may now be a broken chart.
AS A SNEAK PREVIEW OF THAT WEEKEND REPORT WARNING- The sell off shown here was an A-B-C Down. Was The sell off complete? No. Another daily cycle formed and this ONLY RALLIED (Bounced) for 7 days from ‘c’ , before rolling over from below that 50sma to slightly new lows again.
WTIC FROM YESTERDAY I SAID – With a day 23 low, it seems way too early for a dcl, but that 25% drop in 1 day is NOT Normal. I discussed that this could bounce, chop around, and then slightly break the lows for a dcl, or just plunge to maybe $20. So far, we’ve seen the bounce & choppiness. The Wednesday Oil Inventory Report did drop Oil , but it remained well above the lows.
WTIC – OIL STILL REMAINED ABOVE THE LOWS, DESPITE THE GENERAL MARKET SELL OFF. It is only Day 26 and possibly this is too early to be the dcl. We could get a bounce & slight break of these lows into a dcl. A 25% slam down is not normal, so there IS still a chance that these are the Capitulation lows.
WTIC– Oil did do slightly more than my original measured target, and is quite oversold. It can bounce, especially if the general Markets bounce.
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GOLD – I pointed out the double top look to Gold, and Silver & Miners were leading the way lower. Gold looked stronger, but it finally rolled over yesterday. Silver & Miners turned rather UGLY…
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SILVER – This became an Ugly Break down. The Miners sell off was even uglier!
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THIS IS NOT NORMAL AT ALL
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GDXJ – Usually we see a deep 4%, maybe 6 or 7% sell off, but they liquidated the Miners yesterday in what I would say is an unprecedented crash. This was about a 27% absolute melt down. This broke below all 3 of our last 3 ICLS. THIS IS WHY I ALWAYS TRY TO REMIND MY READERS THAT WE NEED TO USE STOPS, TO LOCK IN FUNDS DURING THE UNKNOWN!
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TO PUT THIS DROP INTO PERSPECTIVE
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GDXJ WEEKLY – In the 2016 sell off into an ICL, we can even see 3 entire daily cycles roll over on the weekly chart into the ICL ( lows). Look what we just did in basically 2 days of panic selling. Are you kidding me??
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GDXJ WEEKLY AGAIN – So let’s just be honest, I will look into everything for the weekend report, but we are in unprecedented territory. I can give you guidance along the way, and give us things to look for, but I cannot say with 100% certainty how this will play out. For example…
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1. Did we just flush down into an ICL, with ICL Type selling happening all at once? Maybe.
2. Do we need another daily cycle while Gold sells off? Maybe.
3. Will Miners bottom first as Gold drops into its lows? I think that is Most likely. This massive selling may get a bounce & double bottom, but we will need to take it step by step. Also…
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GDX – Sometimes after a steep sell off, we see a repair job & not a V-Bottom. Sometimes we get a V-Bottom or a V-Bottom with a quick drop to the lows before moving higher…
HUI endured a large sell off in 2008 and formed a bit more of a V-Bottom with a 2nd quick drop to form higher lows before moving higher…
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So I will obviously have to cover more than just one idea in the weekend report, and that means several ideas for many sectors. This will take time, since I need to dig in historically and maybe even think outside the box a little. This kind of crash is not common, so instead of looking at ” What happened last time the GDX crashed 25% in a day?”, it will be more of gathering a few ideas from several different sell off lows, like I have above, and putting some extra thought into it. From there we would begin taking it step by step. So enjoy your Friday trading if you are doing any, we may be at a point where we get a multi-day bounce or low. Enjoy your upcoming weekend. Rest up, and stay safe with that Virus that has been rapidly spreading out there.
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