Friday August 14th – Weekend Ahead
Today is Friday, the last trading day of the month. Some trading has become a bit choppy and we’ve also seen Pull Backs in the Precious Metals, so I want to explain that this choppiness is basically due to the ‘timing’ of the markets. For that reason, I just want to try to be brief and ‘to the point’ in this last and final trading day of the week.
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SPX – Daily cycles often run around 40 days from low to low. On day 32, we need to expect that a dip to that next low ( DCL) is getting closer. That said, these markets have been strong, despite weaker fundamentals. It is quite amazing.
WTIC – I have been waiting for a break out above the 200sma. Oil has flat-lined, so I’m declaring it dead 🙂 Kidding aside, Oil needs to break out ( Up or Down) very soon. I do expect a pop higher, but no catalyst has pushed it forward yet.
XOP #1 – So our Energy stocks are meandering around out here. They are well off of the lows now, but unfortunately they are getting late in their daily cycle at this point too. We have been waiting for 2 weeks for this sector to rally, and OILS sideways chop seems to be dulling the move. So what does all of this mean?
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GOOD NEWS, BAD NEWS? Let me explain…
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XOP #2– POSSIBLE GOOD NEWS: Even though the XOP is getting later in the daily cycle at this point, it may just be that 1/2 cycle dip that I have been noticing in the recent market moves. They are subtle, so that good news is that this dip might just be 1/2 way point. See the chart.
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XOP #3– POSSIBLE BAD NEWS: The longer Oil takes to POP, the more we have seen the ‘CHOP’. Recall that I was excited about the Energy trades over 3 weeks ago at the Purple arrow lows. A DCL. Now we have seen minimal upside as oil struggled, and the later it gets, the less excited I am about our upside potential, so STAY FROSTY. WHY?
By now, 3.5 weeks after the dcl, I thought we would be sitting on bigger gains and a dip would be harmless, but I have small gains in BTE, SLCA, etc. I am now becoming concerned that if we don’t rally strongly after a 1/2 cycle dip, then a dip to a dcl could take all gains back. OIL BREAKING LOWER instead of higher would do that sooner!
XOP #4 – CONCLUSION: So for now this is fine, it could be just a small 1/2 cycle dip followed by a POP in Oil and a rally in XOP, BUT STAY FROSTY! This has been choppy and price remains uncomfortably close to our entry points. A drop in OIL could sell this down into a break down. ‘Time’ has been the enemy here.
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PRECIOUS METALS :
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GOLD #1 – That was a very long extended Daily Cycle that ended with 15 straight days higher. The drop to a dcl was SHARP & SWIFT, and that was expected. I sold before the top with this concern , saying that these don’t always end ‘nicely’.
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GOLD #2 – We do not have a ‘confirmed’ swing low, you need to see price recover the 10 sma for that, but I think that it is a safe buy. Why? We hit day 47, and that is very late. We do have a swing low after the reversal. The question is, will this run & make new highs? We’ll see, but for now we should have the lows in place at Golds 34 sma.
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SILVER has broken above the 10 sma and Silver has a strong reversal that does look like a dcl. Remember how Gold had 15 straight days higher without a break? That contributes to the deep drop to the 34 sma. A flash crash. Silver did not do that on the way up, so it only dropped to roughly the 20 sma and looks like it could easily break to new highs. For that reason, I bought Silver stocks, and can place a stop under the recent lows. Silver looks good.
GDX#1 – GDX does not look like as big of a reversal as Silver or Gold really, but that is good if you didn’t buy yet. Do we wait for the cross of the 10sma & break of that overhead downtrend? I feel that that is waiting too long under the current circumstances. I say that We are near the lows, it is oversold, and this SHOULD BE a dcl due to the ‘timing’ and the set up of the Main Metals. Read the chart.
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GDX #2 – One draw back is that at times the move out of the lows can be choppy (see the Box at the last lows) , but a stop under the lows still allows you to buy with minimal downside risk. Notice that GDX has now reached an oversold level, so a pop from here is anticipated and then I just monitor things step by step in the week day reports.
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So we look at a stock like CDE – I posted this Midday in the live area saying that it could be bought with a stop under recent lows. It has also reversed at a common support area (20 sma)
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HL – I mentioned that I bought HL so this is the chart. It had a small pull back, didn’t it? It has already regained the 10sma, so you can look for Miners with similar characteristics and buy with a fairly tight stop under recent lows until these have a chance to play out or gain some upside. I would expect new highs from a set up like this, and that alone would be Under $6 to over $7.
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So today is Friday and it’s up to you if you want to hold positions over the weekend, or even start some new ones. We have seen a little choppiness in various areas and some of the daily cycles are getting older with each passing day or week. I am still holding my Energy trades, added some Miners, and have open swing trades in the biotech area, while being stopped out of a couple this week too. I am actually about 50% cash after this week, and that makes sense as the daily cycles age, but with a dcl likely in place with the Miners, shopping for a couple more positions might make sense.
Note: I got called away from work yesterday, so I was only available for 2 hrs or so midday. That may happen again today, I may leave to go and help out my parents with some yard work, but the above report should be helpful for you to decide what to think about The General Markets, Oil & Energy and The Miners.
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Enjoy your Friday trading!
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~ALEX
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I just want to spend a moment mentioning that we should be entering the 4th daily cycle in Precious Metals. ICL to ICL is often around 6 months. These 4th daily cycles are usually the ones that roll over into an ICL. It IS possible that instead it rallies strongly for a few weeks and then dips to a dcl and the 5th daily cycle rolls into an ICL. THAT IS POSSIBLE, but below I want to give you an idea of what I will be looking for to see if the 4th daily cycle is weak & just a short term trade. If it is weak, we could roll over to an ICL drop.
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PAAS – I see PAAS on support and this could be bought , assuming that we are at a dcl and this has become oversold. From here, will it rally to new highs? It could, and that would be nice from this buy point, but the possible weakness that I said I would be looking for is drawn on the next chart.
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PAAS – I have drawn a trend line and PAAS gapped down over it. Will we rally and just fill the gap, chop around and simply ride up that trend line, unable to break back above? That might be a sign of weakness, and by day 10+, this would be something to take note of. An ICL could be ahead if we see that.
I apply the above thinking to any position that I own as the time approaches.
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RIOT – Since I had to leave early on Thursday and was quite heavily invested in Riot, I put a sell at $3.50 for a part of my position . The 10sma was $3.65 and I figured I’d sell if Riot got that low, breaking the 10sma. It sold right around $3.50 and I mentioned that I lost a partial position ( not my entire Riot Position though). Then price dropped to the $3.10 area as I checked in near midday lunch. I posted this chart at 11:44 a.m. , in the live area…
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RIOT – So here I mentioned that I just bought back 1/2 of what stopped out, because the trend line & 20sma could be support. It was a ‘logical guess’, but I had to leave again and couldn’t sit in front of my computer. This was my post yesterday.
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RIOT – I couldn’t believe it when I got home and saw this at 6 p.m. RIOT dropped to that 20sma and recovered fully to green? THIS would have been very hard to watch real time, but it looks good again. That was a big reversal and…
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BITCOIN 4 hr chart: Bitcoin itself looks fine. It still resembles a large cup type formation. This has allowed MARA And RIOT time to consolidate the recent gains.
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Just a follow up for ACER – I had pointed out this tight triangle / flag type consolidation, and …
This longer term view with that GAP. Well, ACER broke higher from that tight flag, but…
ACER – I would say that ACER seems to have extended the flag with yesterdays pop. I now draw it with the highs across that high. It still looks bullish, I still own it.
