Friday July 7th – Are We There Yet?
Today is Friday, the last trading day of the week. Let’s discuss our recent pullbacks…
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NASDAQ – We usually look for a dip into a dcl to curl the 10sma downward, and we didn’t really see that on that last drop. That has me questioning that as the dcl and therefore I’m also questioning this reversal on Thursday. I think that we could see more selling over time…
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I think that we will see more selling over time. Take a look at the reversal at the first orange arrow in February.
1. The MACD had divergence like we see now
2. The 10 sma had not curled down at the Orange arrow low and that next push higher rolled over.
3. Our current MACD is a kiss, not a cross at this point.
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The SPX is set up like it was back in February too. I still think that these markets can go lower next week, even if they bounce on Friday.
WTIC – Oil had that break out and it held the line on Thursday. How did Oil stocks do?
XOP – Oil stocks dropped 2.5% on heavy volume, so they are not responding to Oil, they may be more attached to the General Markets.
THE USD run out of the lows is being capped at the 34 sma so far. It does have more of a bullish MACD cross so far, so it can still go higher. This is day 9.
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GOLD – I had mentioned that day 22 might be a very early dcl, but the 10sma did not curl upward on this bounce and price is heavy, capped at the 10 or 13 sma so far. This may now be day 26 of the same daily cycle with a day 3 peak, and if it is it will break to a new low below day 22 next week.
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GOLD – We did have a similar reversal back in February. Price then dropped for 5 or 6 days to the final low.
SILVER was rejected at the 34 sma and a downtrend line. It is at the 10sma, but any further selling will lose the 10sma.
GDX was rejected at the 34 sma earlier this week too. It then dropped back to the lows and is threatening to break those lows. I know that this selling seems relentless when you are ready and looking to buy Miners, but let me point something else out here to add to our perspective…
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GDX was $30 at the end of May, and GDX was $30 on Wednesday July 5th, so despite all of this choppiness and frustration that comes with a choppy sell off, Price has not dropped very much pricewise over the past 6 weeks. It CAN drop further though, before we have a final low in place.
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So even Bull Markets have pullbacks, and every Bull run drops into a dcl roughly once a month. The drop into an ICL is even more frustrating if you are looking to buy, but patience will pay off once those lows are in place. Prices go on sale 🙂 There is nothing that you can do to prevent these pullbacks, and sometimes they are too choppy and frustrating to trade on the short side, so we just have to allow them to play out and see if the stocks remain bullishly set up or do we have a change of character. Right now, we have what looks to be opportunity to buy bullish stocks at lower prices when the time is right. Personally, I have been trading, but mostly I’ve been trading Crypto with those running corrections pushing higher. Before that we had some Biotech, and a few Tech trades, and EV and Clean Energy perked up. That said, when a dip into a dcl (or possibly an ICL) in the General Markets comes calling, it may be time to trade stocks a lot less than when they are running strong. Even strong stocks can get caught up in the selling.
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Let’s see what the markets give us on this Friday trading session. Enjoy your Day and weekend!
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~ALEX
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FOR EXAMPLE: I was trading CVNA, and the trades were very good. I would normally be a buyer right here, but if the Markets pull back and this 20sma breaks, it could sell off quite a bit. Also take a look at that MACD. It no longer looks as bullish as it used to, since price pushed to new highs and it ‘kissed’ instead.
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I was also trading ‘AI’, and it gave great gains on the moves higher. AI made new highs at $48 but the RSI (strength) was diverging. It then lost the 10sma on a drop from $48 to $32. It does look like it MIGHT be reset here, and it landed on the 10sma and bounced back yesterday, but I think that it will just get choppy if the Markets sell down. Caution is warranted when trading during a market pullback. In fact…
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I can foresee where this may even turn into a H&S with MACD divergence if it had one more push higher and then got caught up in a sell off.
