June 13th – A One Two Punch?
We have big time data this week. Today we will have the release of the Core CPI Numbers and on Wednesday we actually have Core PPI numbers at 8:30 am and then The FOMC Meeting with an interest rate decision. I would think that it is possible that these numbers could affect that decision too, so will we get an extension of the current rally, even though we are getting on the late end of the daily cycle? Or will this cause the pullback to a dcl to start? The answer might start with the futures at 8:30 a.m. ET Today. Let’s go to the charts…
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The rally to the August highs continued on Monday for the SPX, and we are now slightly above those highs. This also means that we are at 1 year highs going back to last April/May! So you could also say that we are breaking from a 1 year base too.
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The NASDAQ is on day 33 and these daily cycles can put in a dcl anywhere around day 40 (Earlier or later). It is riding the 9 sma, but it did breach that 9 sma on day 7 and day 21 slightly, so a stop at the 13sma probably works best. If this starts to drop with the CPI or Fed Mtg, we could land on that 50sma.
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THE NASDAQ also broke out to a new high going back to April/May 2022. Last week I showed how these rallies can accelerate under Bullish conditions, so this should be a buy the dip if we get a dcl soon.
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I used this Weekly chart to show you the rally between the 2 blue lines. This was ICL to ICL to ICL and lasted 1 year long. You can compare that ramp up on the left or middle of the chart to what we see right now on the right. Those dcls were hardly visible in 2021-2022 run, since they just dipped to the 10 week ma. The ICLs slightly broke the 10 week ma. So again, we want to buy the dips with this bullish break out.
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WTIC – Is Oil acting weak or what? That is another 4% Drop out of nowhere.
Oil has been extremely choppy and difficult, but at least the Oil stocks are not as bad or as weak. Even so, I hate this sector this year. These daily cycles can last 40 -50 days long, and since we are on day 26 and near the lows, we may have a rough choppy road ahead. Notice that Oil is at June 1 lows again…Are Oil stocks back at their lows too?
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XOP – The Oil stocks are not at the June 1 lows and they were looking fine. They are still ‘O.K.’, and the XOP just breached the 50sma yesterday and then bouncing back a little with a 1.67% drop. Even though it bounced back, I see an upward sloping channel and price could still drop to the lower end of that channel.
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The USD is putting in a very long daily cycle since it appears to be on day 39. The 10sma has turned lower. Will the CPI rally or drop the USD? Will the Fed Decision rally or drop the USD? We’ll see, but we are overdue for a dcl.
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GOLD will likely move in the opposite direction of the USD and so far it has been unable to get above that 34 sma. This could easily go one way or the other and then a trending move would likely take place after Wednesday (FOMC).
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SILVER is also being rejected at the resistance of the 50sma so far. This can drop to the 200sma and do a shake out of the USD rallies beyond Wednesdays FOMC.
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GDX could not even get back up to the 50sma, but it did try to put in a reversal low yesterday. I have heard some say that if we drop from here into an ICL, we’d have to go back to the September lows, but that is not true. This was a Bull Run and it can become choppy and frustrating as it dips lower. I can easily show you that by asking you to look at the last ICL in September, October, and November.
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If I take that low and copy it to the current bounce, we see a very choppy sideways drop into that deeper low. That deeper low then could become a shake out at the 200sma. I’m thinking that the prior lows in March could actually be broken, so it may be a bit deeper than this.
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As a reminder with the CPI and FOMC Meetings ahead, I want to again mention those bank failures in March and the anomaly that it created with the USD & PRECIOUS METALS.
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The USD put in that strong bounce, but it ended up looking like one long 2+ Month daily cycle and then we started to rally again. If this ends up being another long daily cycle that rolls over, we could see the drop begin from here, as drawn below. We would have an ICL in February, a LONG daily cycle with Feb lows broken already, and now this would roll over and break the lows again. I know that This is not normal, but neither is a Bank Failure and massive rate hikes month after month after month, right? So…
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If the USD rolled over from here after CPI or the FOMC, we could have the lows in place for Precious Metals. When the USD rolled over in march with the Bank Failures, GDX rallied VERY Strongly. Gold And The GDX are sitting right at an uptrend line.
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So today and tomorrow, the data seems very important to all of the market sectors (with the exception of Oil and Natgas). CPI Numbers (inflation) can affect the USD & GOLD and it can also affect what the Fed does on Wednesday- so this could be what they call in boxing a ‘One -Two – Punch”.
The General Markets are due for a dip, but bullish numbers can stretch a daily cycle. The precious metals are clearly at an important point too. Will we get that drop into an ICL that was interrupted or shortened in March? Or was THAT enough of a dip to be the ICL and we still run higher from here with the Data release and very stretched abnormal daily cycles? I guess we’ll know the answer to those questions after the Fed meeting, but we may get a clue at 8:30 a.m. ET today. Even if things sell off, we will be ready to buy the dips when the selling dries up (dcl) . Enjoy your Tuesday trading.
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~ALEX
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Recently in April and May I pointed out the bullish set ups in Uranium as BUY & HOLD. We have large bases with Monthly, Weekly, and Daily bullish set ups. They can be choppy and hard to hold, but they should also be rewarding over time. The follow through looks very good too, let me show you with a brief update:
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After the rally and pullback into March, CCJ has been chopping higher and then it burst higher in late May, flagged sideways, and started higher again yesterday. This now looks like it formed a cup and handle with a back test of the 50sma. Bullish.
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On May 10 I pointed out the base and break out in DNN. You could buy the break out or a back test. DNN actually did a shake out after this. Let me show you…
DNN broke out, chopped sideways, and then did a quick shake out at the 50 sma. It then rallied, flagged and popped again yesterday. This would be tough to hold, but you can see that these are acting bullishly, recovering dips and breaking to new recent highs.
UUUU did NOT do what DNN did (a shake out). This was the base that I pointed out from April 13. I thought that it would run to the 50sma, pull back, and rally. That is exactly what it did…
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– Rallied to the 50sma, pulled back, and broke out as expected.
– It then back tested the 50sma, but it did NOT do a shake out like DNN, instead …
– UUUU reversed at the 50sma and looks ready to rally soon. If you didn’t buy it at the 50sma, this may be the next best spot to enter for a run to Feb highs. it MIGHT dip back to the 50sma one more time, but almost all other Uranium stocks rallied yesterday, so this may be ready to go. See CCJ, DNN, URG, UEC, NXE, etc.
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URA ETF: If you are more comfortable with an ETF, this is The URA WEEKLY chart. After a very bullish run 2020 – 2021, we have seen a Very choppy consolidation, but you can see that we may be ready to break out and start the next trending run. This means that you may have missed the lows, but not the rally.
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The Clean Energy stocks are still acting bullishly. Recently I mentioned PLUG, CLNE, OPTT, BLDP, FCEL, etc a couple of weeks ago, saying that bases were forming and they can break out. Lets take a look.
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PLUG broke above the 50sma, crawled and is continuing higher. I grabbed this 1 hr into trading and it closed up 13%
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BLDP broke out yesterday with a 14.62% POP. This is a buy even though it is choppy.
FCEL broke out last week and then had earnings and dropped back to the 50sma. It popped 11.59% yesterday too, so these are continuing to look good as buy and hold. Volume is strong.
Biotechs (XBI & LABU) Do continue to act bullishly, as expected.
MBIO – As mentioned over the past several weeks, many of the biotech/pharma stocks are running higher over time. There IS RISK in individual stocks. I did see one company ‘miss’ on their FDA trials and it got chopped by 35%, so ABI, LABU, IBB may be a btter way to go for some, others may choose smaller positions or a small basket.
I owned TWST, but I sold it on a Friday and it just keeps running higher. This is a run from under $12 to almost $19 now, and that is what I said I expected when I pointed it out. I wish I held mine, but volume was light heading into the weekend , so I cut it loose and took profit. I’d like a dip to get me back in.
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The General Markets and Biotech have been running nicely, and I like what I see with Clean Energy stocks so far too. We are seeing bases breaking out with follow through there, but some of the best buys coming up may be the Miners and Crypto stocks after we get a low in place. After the FOMC Meeting, we should see some directional trending over time, and I’ll have more stock picks or trade ideas after the dust settles.
