Wednesday June 28th – Waiting Patiently
Was this enough of a sell off for a dcl? Maybe, but we have no confirmation of a low yet. The last 2 daily cycles were 50 days long though, so that means that we could also see 10 more days of trading ( 2 weeks). I will include some stock picks that may be ready if this is the dcl, but please keep in mind that if the drop into a dcl continues, they may lose support and do a shake out. Let’s discuss the current set up…
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NASDAQ :
1. Yesterday both the SPX & NASDAQ reversed at the 20sma and you can buy reversals like that with a tight stop for a low risk entry.
2. Usually, the 10sma is curled down when a dip into a dcl takes place, and that didn’t happen, but under bullish conditions, could this be a shallow dcl? It is not out of the question, so we’ll look at some tech stocks in this report with the idea that reversals like this can be bought with a tight stop, just in case this is the next low.
3. Take a look at the last reversal 4 days ago. This also could do what the last reversal did and drop tomorrow below that 20sma.
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Some stocks do look to be near support, others look as though they need more time.
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GOOG did drop and reverse at the 50sma and the trend line. I’m not interested in buying it here, but it does have a low-risk entry if you buy it with a tight stop. If the Market sell off continues for a week or so, it could really go on sale at the 200sma near $100.
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I will discuss some other stocks below at the end of the report.
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WTIC – Oh look, Oil was rejected at the 20sma this time and remains extremely choppy. No surprise there. Oil daily cycles often run for 45-50 or so days, so this chop may just continue. Each drop has higher volume, so this may even break down.
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USD – Notice that the USD was held back by the 50sma again. So the USD was down on Tuesday, and Gold…
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So the USD was down on Tuesday, and Gold couldn’t take advantage of that weakness again. I really think that we need to be patient if we are planning on buying this sector. The COT is not looking very good for a meaningful low yet.
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SILVER did bounce off of support and it is oversold, so it may try to continue to bounce a bit higher. I mentioned that Silver bottomed before Gold in September, but it also bounced around those lows for a while, so I’m not expecting silver to rally (Until it breaks above that downtrend and 50sma). Silver stocks have been weak and we can be very glad that we didn’t buy on the way down (yet).
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GDX – The Miners are showing divergence as GDX approaches the 200sma, so this does give us a mixed picture. GDX should actually bounce from here, but I just can’t expect it to do very much unless it bottoms way ahead of Gold (not likely). Can you buy it with a stop? Sure, but be mentally prepared for possible chop & maybe a drop later.
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When I step back and look at the GDX chart, I do see 5 waves down or an A-B-C dip. A quick shake out wouldn’t be out of character for it either.
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Note: I wanted to mention that I will be away from the markets Thursday and Friday, so I won’t be in the trading or able to be commenting in the comments section below the reports, but we will still have the daily reports as usual. I will be around today.
I’m not only going to discuss Bitcoin and some other bullish charts below, but I also wanted to show you a comparison that may be helpful to some also. Enjoy your Wednesday trading!
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~ALEX
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BITCOIN – I posted this 2 hr chart of Bitcoin to show that even though it was dropping, it was back testing a support area. Crypto stocks had gapped open and pulled back as a buy at this point.
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BITCOIN then bounced exactly where I wanted to see it reverse and it pushed higher. Crypto Stocks all started to rise up too, after giving a nice entry point.
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BITCOIN is flagging bullishly right now (LIVE 6 am ET June 28)
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RUNNING CORRECTION:
I want to show you a ‘Running Correction”. This is one that I had in the reports in the past. A running correction can be difficult, because it comes after a strong break higher, but then it gets very choppy, often in an upward slant. It moved up & down & up & down and then usually quite suddenly …
It moves up & down & up & down and then usually quite suddenly it just bursts higher. This often happen when price is trying to break from a consolidation or a base too. Let me show you one more…
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Let me show you one more example. THE GDX WEEKLY in 2016 started to run straight up out of the base and I mentioned then that it looked like a running correction. Did it burst higher too?
The GDX WEEKLY in 2016 did continue to run up and didn’t pull back. SO why am I showing you past ‘Running correction’ type moves?
I think that some of the recent choppy consolidations in Crypto Stocks MIGHT BE ‘running corrections’ too. These chop sideways and upward and then suddenly break higher, so I wanted to point that out in case this choppiness continues.
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HUT may be forming a running correction after surging up and out of this base / consolidation?
MARA closed higher after chopping upward and sideways, so it also may be breaking from this consolidation, but if it remains choppy, it also may form a running correction. Please let me just say that these also can be hard to ride on the down days and they CAN ALSO BREAK DOWN. I just wanted to point this out in case these do eventually Pop higher and leave these bases behind..
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THE WEEKLY CHARTS ( RIOT HERE) remain very constructive as these bases form following a drastic sell off. Over time I expect these to try to recover as Bitcoin does the same.
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RIOT pushed 8% higher, but you can see that it is lagging in that consolidation area. It was a good buy here at the 50sma, especially if it does what many of the others have already done (break higher).
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NOW LET ME SHOW YOU SOMETHING ELSE…
Many Housing stocks have recovered after a sell off in 2022. I want to point out to you something about that kind of a recovery, because we may see something similar happening right now in Crypto stocks.
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BZH – When we glance at Beazer homes, we think, “Wow, I could have easily rode that up almost 150%! ” However…
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BZH – Take another look at Beazer and you’ll see that it was choppy and sideways for MOST of the run. That is NOT as easy to ride in real time as it looks!
MARA, RIOT, HUT, etc are all doing what the housing stocks did on the way up. It looks easy in hindsight, but please study this chart and you’ll see that these are very much like what we are seeing in Crypto.
MARA last week. Just like BEAZER, it has had sideways choppiness along with that occasional bump higher. Let’s look at more…
MARA Currently: Up, sideways triangle, Up, sideways triangle.
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Again, This was UP, sideways, Up, sideways, similar to MARA, RIOT, etc.
TOL – Toll Brothers is another housing stock that recovered roughly $40 to $80. This also had a lot of sideways chop and pullbacks, but it looks easy to ride once the recovery takes place. This would have been very boring & choppy from January to May (5-6 Months of chop!), but then the rally paid the gains.
HUT – So again, Up, Choppy, Up, and choppy, but…
HUT WEEKLY -This looks like an inverse H&S and a solid base. If this recovers over time, we may wish that we just bought and held like the housing stocks, but it won’t be easy. 🙂
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MTH – Again with the housing stocks, we saw 1-2 months of sideways chop lower occasionally, but the rally was bullishly higher. Also notice that twice MTH lost the 50sma, and closed below it for days. Cryptos may do that too. It probably looked very weak or as though it was failing, and some likely got stopped out, but when it proved to be a shakeout & recovered, you could still get back in and profit.
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AMD has also doubled since January in a choppy manner.
It is now pulling back to the 50sma with this current General market dip. When we have a dcl in place, this may offer a buy opportunity in this area. If the drop into a dcl continues for a week or 2 longer, AMD MIGHT get close to the 200sma (see May), so I would use a stop if one buys at the 50sma.
GOOG – Google (Alphabet) has dropped down to the 50sma and reversed there yesterday. Goog has been on a recovery run, but this one is exceptionally choppy, so I am avoiding it for now, but if this is one that you’ve always wanted to ‘buy & hold’, this may be a good entry.
KMX – CARMAX Popped 10% on earnings last week and it has now closed that gap and reversed at the 10sma. It also has been running higher since March and with a good earnings report, it may be a good buy here at support. Again, if the drop into the dcl continues, this drop could also.
MU – Micron Tech is choppy, but does look to be basing out and breaking from that base. This looks like a back test of chop at the 50sma.
DDD ran from $4.50 to $60 in 2021, but sold off in 2021 – 2022. It used to be a 3-d printing stock that I traded often when it was running strong, and now it looks like it may be stabilizing and trying to break higher from here. It is at the 50 & 200sma and reversed at that support with a 10% pop yesterday. It is oversold.
