Tuesday July 23rd – Reversals
DATA- This data can be used to gauge inflation ( usually through wage growth, I think).
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THE SPX broke below and closed below the 20 ema. Notice that it did do that in late May and then it recovered, and now the SPX has also recovered on Monday. So this in itself would not be concerning, and you can buy it with a stop and view it as a dcl or 1/2 cycle low and look for another run higher, however…
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When I then look at the selling with The NASDAQ, it was deeper than in May. It broke below an uptrend line and the MACD shows some weakness. It also hasn’t recovered the 20ema or even the trendline yet, so with this set up, I am a bit more cautious. You can still buy this reversal with a stop, but since this looks weaker, I’d have a slightly more cautious feel to it. THAT SAID…
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Take a look at THE SOXX. This actually got pretty ugly.
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The SOXX gapped down below the uptrend line and below 10 & 20 ma, and kept dropping. If the Nasdaq threw up a caution flag, then this one really is a cause for a cautionary approach, the way I look at things. You can still buy the reversal, but I would not be heavily invested (at least until we see some real signs of recovery or bullishness here). It is oversold, so we could see a decent bounce and I drew one here, though it remains weak, as drawn.
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And then The IWM has a sign of strength and a reversal at the 10sma, so we really do have a mixed picture here. The IWM would POP and then chop sideways and then Pop and chop sideways again, int he November-December rally. You could have used stops under the 10sma then ( & now).
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The WTIC – Oil dropped sharply on Friday and sliced the 50 & 200sma, but also put in a reversal at day 32. The XLE & XOP are still looking fine, so this may simply be a half cycle dip in a 45+ day cycle.
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In the weekend report we discussed that Gold appears to have given us a false break out (for now).
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We also do not know the exact low for GOLD, for us to be able to do a proper ‘count’. I have said this though – It appears that an ICL formed, and the GDX confirms that too, because we broke to new all-time highs when we should have seen weakness. This could be day 30 out of a low from the first blue arrow (Very close to a buy), or it may be still a little early if the ICL came from the apex of a triangle. We need to use Silver and GDX in the equation too…
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WE DISCUSSED IN THE WEEKEND REPORT THAT SILVER IS THE REASON THAT A 4 or 5 DAILY CYCLE INTERMEDIATE CYCLE WORKS: BUT WE ALSO MAY HAVE AN ICL WITH SILVER, IT JUST DIDNT BREAKOUT TO NEW HIGHS. IF SO, THESE LOWS CANNOT BE TAKEN OUT…
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From the weekend report: Silver didn’t make a new high on dc#4, so it would be that weaker 4th daily cycle that drops into an ICL (or a 5th even weaker daily cycle that drops into the ICL). THIS CHART MAKES SENSE TO A CYCLE VIEWPOINT, BUT IT DOESN’T MATCH GOLD. Gold & GDX have been showing too much strength to be a normal 4th daily, and they look to have an ICL is in place. Silver had a weaker 4th daily cycle and it could roll over with a weaker 5th as shown, but it doesn’t have to. This may be an ICL too…
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COULD SILVER be an ICL with Gold and GDX? It could if these lows aren’t broken. We really have to let this play out to see what we get. A bounce and one more mild drop might be all we get to day 31 or so (dcl).
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GDX certainly looks like an ICL was in place, right? This would have been the 4th ‘weaker’ daily cycle and instead it shot up to new 2024 highs and looks like it will be R.T.
WAIT! In fact, GDX is…
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In fact, GDX is at April 2022 Highs! Those are 2 year highs, so how could this possibly be a ‘weak’ 4th daily cycle?? This had to have been an ICL when the Fed discussed rate Cuts and cooling inflation. Silver is the only one that didn’t join in, but it probably will in the 2nd daily cycle.
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Silver didn’t join in on the run to new highs, but it probably will in the 2nd daily cycle. In fact, if Silver was just lagging in the first daily cycle, I think that we want to be prepared for a possible explosive move in the 2nd daily cycle. I’ll be watching Silver stocks, since they may possibly try to play catch up on the next run.
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And of course there is Bitcoin. Can we talk here?
Bitcoin itself is a very bullish looking set up, but the crypto stocks are … I have no words??!! I own a basket and they can be so frustrating, but we all know that if they take off and you aren’t in them, they’ll run 20% in a day without you, and then it’s very hard to buy in.
So yesterday I had a morning funeral to attend and when I came online at noon, I saw Crypto Miners down roughly 1%, but earlier they were down 4-5%. By the close, MANY were green. So that is Great, however, if I was home, would I have lightened up when they dropped 5%? Maybe, because I did the math and my account would have been down thousands of dollars. Let’s say that I had 1000 of this and 1000 of that, and both were down $1.50 each. That is ‘down $3000’. If that happened 3 days in a row, the pit in my stomach would be real, but again, I came home and checked and my account was Green yesterday. These are the HARDEST trades to take on, but just buying a basket at an ICL and trying to ignore it has worked out so far. I’ll discuss Bitcoin below, have a great Tuesday trading!
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~ALEX
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BITCOIN has been rapidly pushing out of the lows, with mild pullbacks to the 10sma , so far. The problem is that many Crypto-related stocks are not acting quite as bullishly, so we want to keep an eye on that.
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HIVE was simply running yesterday, up almost 10%, but this wasn’t the story for all of these…
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IREN – After tagging the 50sma near $10, Iren reversed higher last week. When I checked in at lunchtime, IREN went green. I didn’t realize that it was down at $10.84 earlier, but it was now $11.42, and it closed at $11.58, up 2.5% (better than down 2.5%).
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RIOT during my lunch – Riot just turned green after a sell down in the morning.
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RIOT did close green. It’s not pretty, but going from down $0.43 to up $0.21 is fine by me. And it does seem to be breaking from a base. If Bitcoin just suddenly takes off, something like this might get caught up in the buying.
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WULF: When I checked in after noon, Wulf had moved from red to almost green, but you can see that it was down quite a bit earlier.
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WULF – We need more volume , but this was down quite a bit to then up 2.3% at the close. I’ll take green over red any day, but this doesn’t look as strong as Bitcoin has been in July alone.
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