Thursday December 10th
When I left for lunch yesterday my portfolio was a green, but when I came back from lunch? It was pretty red. This was not a complete surprise though, was it? No it wasn’t. We have had several weeks of excellent trading and great gains in various sectors, but last week I started to warn that not all was bullish in my analysis. I will start with a quick review of what I have been stating in recent reports as far back as last Wednesday. The sell down today should not have been a shock or sudden surprise, since the warning signs were there and have been presented. We will briefly discuss possible downside supports.
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THIS WAS WHAT I WROTE FOR DEC 1st :
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On Dec 7th, this was repeated:
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So we had a sharp sell down on Wednesday:
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THE NASDAQ DROPPED 250 Points and slightly bounced into the close. It is hard to tell if this will be a 1 day drop? A 2 day drop? A drop into a dcl at the 50sma? Or what? So lets take a step back…
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NASDAQ – In the past we would get quick drops to the 13 sma as shown here and we are there now. That MIGHT be all that we get, but with the Put Call Ratio overdone and Sentiment so extreme, we also could get that drop to the 34 sma / Green line as a dcl.
THE SPX – Here I am also pointing out the possible downside targets of the red 8 ema/10sma (we are there now) or it has in the past dropped down to the Green 34 sma. The bulls have been buying the dips, but we are also due for a dcl, so I’m just looking back at that prior run and can lighten up further if we break down from here. I did cut a few positions in 1/2 when I saw Wednesdays selling.
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That 1 day drop has helped to ease the greed a little. This has dropped from 91 to 80, but it obviously can still go lower and usually does so as the Markets drop.
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WTIC – Oil has paused and chopped sideways recently, but it is a bullish set up. The Oil stocks that we discussed ( CPE, MRO, APA, ERF, NOG, and so many more) have moved up about 100% out of these lows. I will discuss a couple of Oil stocks at the end of the report.
GOLD reversed at resistance on day 7 and dropped to the 10sma. I would love to see it just reverse higher from here, but even if it drops further, the Nov lows are the breaking point that would cause this to be another failed daily cycle. So far this is fine.
SILVER also reversed right at a resistance point and dropped to the 10sma.
GDX reversed on Monday at the 34 sma and has also dropped to the 10sma as of Wednesday.
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At this point nothing has really changed with the current set up and the expectations in all sectors. We did have a little selling in the latter part of Wednesday, especially in the Nasdaq and at this point we really do not know how deep of a pull back we will get. Will it be a 1 day drop or more of a steady dip into a dcl? Some of us are holding Miners, others may be holding Tech Stocks or Energy stocks or other positions mentioned in recent reports and will have to decide if you want to just ride this out or trim some positions just in case it gets a bit deeper to the 34 sma or so. Some already started trimming as the selling picked up yesterday.
I have encouraged selling portions of your big winners on the way higher to at least lock in some gains anyway, and also to use Stops or Mental Stops as a protection just in case we do get a deeper drop. As always, each person will now just have to look at our portfolios and decide what adjustments they want to make, if any. What looks healthy enough to keep and what you may want throw out. Which ones you may want to ‘trim down’ or even which ones you may want to ‘add to’ on the dips.
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We’ll see what Thursday brings our way, enjoy your Thursday trading!
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~ ALEX
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We have had a lot of bullish trade set ups discussed in recent reports, so you can check prior reports as a reference. For today I only want to discuss a couple of trade ideas until we see how these markets settle down.
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AIKI was in yesterdays report as a Buy as it breaks from the base. I do own it as of Tuesday. After initially getting caught up in the selling yesterday it actually began to come back and closed green, so it still may continue higher. I didn’t sell this one.
CANF also dropped and recovered, so I’m keeping an eye on some of these that made a come back or resisted selling all together.
TGB was a buy and it is still a bullish set up here. A stop can be placed under the 50sma and trend line.
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TRADE IN THE OIL SECTOR: On November 23 I pointed out that LPI was lagging here as it flagged. It was a buy here around $11, or a buy as it breaks out. Well…
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LPI has definitely played ‘catch up’ and has almost doubled from our buy. Congratulations if you took this trade, I personally try to sell at least 20% as it gets this extended and maybe more. If you did not het this trade …
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CVI may be another set up set to play catch up. It has moved nicely out of the lows too, but with this recent sideways chop it stalled and formed a bullish flat top wedge. CVI is a low risk entry and now be ready to continue to run higher again. This is a buy or buy the break out. CAN IT DROP TO THE 34 sma? It could so a stop under the pattern may reduce risk.
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The PLG Trade in review: PLG is very much like the SUNW, WWR, BLNK, SOLO, PPSI, etc trades. Let me discuss that here.
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#1 PLG was posted as a BUY Under $2.00 using this chart in November
#2 PLG I mentioned this base and said that I would BUY & HOLD PLG expecting much higher prices.
#3 PLG just like many other trades, it took off and added over 100% Gains in just days, so I sold mine and I did mention in the live area (under the reports) that I was now out of all of my PLG above $5. What next?
#4 PLG I do want to own PLG for the longer term, but often I will see a stock that ramps up like this take days and weeks to consolidate those gains. We have had other very strong trades like this and I usually just have to watch them and see how they play out.
Other trades that rocketed higher and are now consolidating can give us a clue as to how PLG might play out. PPSI, WWR, SUNW, BLNK, SOLO, etc are all good examples of how these may play out. PPSI fell back to the 50sma and has bounced higher since then for example.
SOLO on the other hand was more of a gradual climb. It tagged the 8 ema and kept running before starting a longer consolidation, so we just need to watch the progress and see what we get with PLG if we want to re-enter later.
