June 14th Fed Wed
Yesterday we discussed that we had a couple of days of important Data this week. On Tuesday we had 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 mentioned that I would think that it is possible that these numbers could affect that decision of whether or not to hike rates again too, so would 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? So far, the markets liked the CPI Numbers that showed that inflation is easing up. After 10 straight rate hikes, it is expected that the Fed will not raise rates today. Let’s take a look at the markets…
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SPX – On day 33 the markets continued higher and they are bullish. We are at 1 year highs and even though we are at day 33 of what can often be 40 or so day daily cycles, this rally may just keep stretching higher. I have drawn a drop into a dcl, but if the Fed pauses and the Markets like that, we can definitely get even more over bought than this.
THE NASDAQ was actually chopping sideways all through April and into May, but it suddenly perked up after the NVDA earnings and has ramped up strongly. This does look like a topping candle and it has overbought features, but with the Fed Decision possibly being a crowd pleaser, we just have to wait and see. The 9 or 10sma has been a pathway, but day 7 & day 21 has broke through it briefly, so you could just use the 13 sma as a stop.
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The IWM was the real lagger, chopping in a base for March through May. Once it broke out however, many small caps started to break from bases and play catch up too. I have mentioned that recently EV & Clean Energy were running. PLUG, CLNE, FCEL, BLDP, OPTT, etc were breaking nicely and yesterday some of the EV started to give us some follow through. Let me show you SOLO for example…
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SOLO has formed a nice long base during that choppy sideways period for IWM, but it had staring volume yesterday and started to ush higher by 9%. I have been saying to keep an eye on this sector, because if this is the start of a bull run higher, these companies have made excellent gains in the past. They are always choppy near the base, but once they get trending it is beautiful. I can’t believe that SOLO is under $1 again, but this may be a gift when we look back at these charts next year.
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WTIC – What do you think of Oil? Do you hate it yet? Oil dropped 4% Monday and reversed higher by 3.43% Tuesday. Oil has been choppy and difficult.
XOP – Oddly enough, Oil Stocks Popped and dropped. I say that this is Odd because oil was up 3.43% and the General Markets were higher too, so I expected these to break out. So far, the set up does remain more bullish than bearish, but they are choppy.
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All eyes on the USD on a Fed day, right?
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THE USD dropped to a new low, but it did reverse into the close. I’ve been discussing that we are actually late for a dcl, so we’ll see if the Fed Decision gives us that swing low today. The USD usually does affect Gold inversely, so a move higher here would have us expecting a dip in Gold.
GOLD has been trapped under the 20sma and could easily roll over if the USD bounces and Gold continues to be blocked by this 20sma.
SILVER has its own resistance point at the 34 sma and a bounce in the USD could cause this small 11 day rally to roll over and drop too. This is playing out as expected, but the unknown remains “How long will these drop if they roll over?” I’ll keep an eye on things.
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GDX has also been blocked by the 20sma. If this rolls over and fails and you own Miners in long term holdings that you do not plan on selling, you can take a position in JDST to ease the pain of a sell off. I have done that in the past.
I just wanted to show you DRD Again for 2 reasons.
1. It was one of the stronger runners ( $7-$14 since March) and it has held up nicely along the 50sma. So if these Miners do sell off into a dcl, this may be one that you want to buy as a strong miner, but also…
2. DRD is riding that 50sma closely now as support. If you see this fail, it might be the warning sign that the sell off has begun.
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It is a Fed Wednesday and no matter what happens, I have NEVER seen one that wasn’t choppy and full of knee jerk reactions at 2 p.m. and then again at 2:30 p.m. I have also purposely posted those intraday reaction in my reports after each FOMC Meeting, just to show you how difficult it is to endure, especially if you are heavily invested, so keep that in mind. I tend to lighten up greatly unless we are on day 12 of a strong bull run. Then it usually just becomes ‘noise’, but at this point we could see a lot of chop and even a drop in Miners. If we see the USD drop and Miners Pop up and over all of those resistance points, then we may have something else brewing and you could buy a break above resistance with a tight stop. I think at this point we should expect a USD bounce and a drop from those resistance areas though. JDST and DUST Might be the best way to play Miners, but lets let the dust settle after the FOMC Meeting first.
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Enjoy your Wednesday fed day trading!
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~ALEX
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I have been discussing that the leaders in tech like AAPL, MSFT, NVDA, etc are back near the highs. SO I wanted to mentioned that again with a question:
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This was ORCL the day before earnings (new 2023 highs), so my question is…
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Will INTC the lagger start to catch up? I already had it in a report, but this is a reminder that it is still moving higher. It has been basing out and looks ready to break out, so this could be a buy and hold set up if you can endure little choppiness near the base. Or by the next dip after a dcl.
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UPDATE: I mentioned FCEL as a buy breaking out above the 50sma and it is continuing to break out.
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PLUG has follow through after the breakout too, so as these climb higher, you look for a buy the dip opportunity.
SOLO was already highlighted, but it fits in this section of the report nicely too, as a reminder that it was choppy in April, May, and June, but a Pop could start a move higher if the time is right.
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PTRA has a long tight base and it popped yesterday. It is now above the 50sma too. We do need to worry about a possible Public Offering on some of these, but a small basket has been paying off well in this sector.
QS has been quite choppy, but it had a strong 15% pop yesterday. Again, if the sector is waking up, these can make nice gains overt time.
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NKLA has broken out above the 50sma with strong volume. NKLA and NIO are former high flyers that have been absolutely beaten down. NKLA has actually almost doubled in 1 week.
