September 7th Weekend Report – This Too Shall Pass
The drop that we are now seeing is one that I discussed back in July and August, so let’s take a look at the expectations going forward.
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The NASDAQ has now ‘peaked’ on day 13 and this looks to be the high for a 35-40+ day daily cycle. THAT leaves a lot of time & room to drop. Before we panic and assume that this will drop straight down for 3 weeks, take a look at that last drop July into August. It stepped its way lower. So…
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THE NASDAQ can drop and then chop sideways for 2-3 days, and then Drop and chop sideways, etc. etc. , as it rides the 10sma down. I have drawn an example of that below, so that you will know what to be prepared for as a possibility. It would be a good shorting opportunity at the 10sma if this is how it plays out.
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THE NASDAQ WEEKLY could become an A-B-C drop – or even more bearish with a 5 wave drop and only 1-2 being complete so far, so let’s keep that in mind. NOTE: Once the bullish sentiment is cleared out, however, usually we get an awesome buying opportunity longer term at the ICL. The end of the corrective phase.
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So we have THE SOXX with follow through selling too, as it lost the 200sma and crawled under it with a bear flag. If this bounces again next week, it should be a ‘short’ set up (For SOXS, SQQQ, etc). And again, THIS BEARISHNESS WILL LEAD TO A GREAT BUYING OPPORTUNITY IN TIME. You could track NVDA, NFLX, GOOG, AAPL, MSFT, etc and buy & hold longer term at the lows of this correction.
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THE SOXX WEEKLY: You will recall that I first pointed out the Semiconductors as the weakest link in July – the leaders down. It does now show up as ‘broken’ after last weeks drop, and not as a drop & recovery.
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SOXS: This looks easy to trade, but it certainly is not easy to short a bull market. SOXS does move in a big way though, and if you catch it right, it adds 12% in a day. If the markets do bounce next week (or pause like this Wed & Thursday), you may be able to take a position before the next market drop and SOXS Pop.
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WTIC – OPEC announced that they plan on INCREASING PRODUCTION last week, and when you have an abundance of a product, the price drops. Oil broke down from the triangle last week. Oil is below $70 now, and has dropped from $95 to $67 over the last year, so it really can’t drop much lower right? Maybe, Maybe Not…
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I SHOWED YOU THIS CHART 2 WEEKS AGO:
Oil is below $70 now, and has dropped from $95 to $67 over the last year, so it really can’t drop much lower right? Maybe, Maybe Not, but it traded below $10 only 4 years ago. Oil CAN drop even lower. There is support around $65-$60 and then not much until $40.
XOP stocks fell to support, but I wouldn’t trust this at all with the Markets selling down and Oil possibly going lower too.
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THE USD is forming a low, but so far we don’t have confirmation as to whether this is just a dcl and the next daily cycle will roll over 1 more time as weak and drop into an ICL(?), or is this the ICL? This is support though.
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GOLD is holding up well, and is still near all time highs. This is nearing the end of the second daily cycle (Day 29), so the 3rd could break to new all-time highs, especially if the USD rolls over 1 more time.
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SILVER WEEKLY – Silver dropped more than Gold, and landed right on the 30 week ma. I am looking at Silver as a possible ICL in August and this was the first daily cycle. It basically ran higher and then rolled back over, so I also have entertained the possibility that we have one final daily cycle that is now heading into the ICL. The reason that I don’t like that idea is that it is so different from Gold, which is completing the 2nd daily cycle. Logically, this should be Silver completing its first daily cycle with Gold completing a 2nd. We’ll see.
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GDX WEEKLY – I think that we all have mixed reactions when we see the Miners here.
1. It can be said that GDX ran from $26 to $40 from March to August, and actually, that is great! $26 to $40 and many induvial Miners doubled in price or more! However…
2. However, LOOK AT THAT CHOP since June! Brutal. GDX got caught up in that July General Market Crash, so unlike Gold, it sold off sharply and then recovered to new highs, only to sell off again this week.
3. So that leads us to : The GDX & GDXJ are extremely choppy right now and even though ‘buy and hold’ still works in these conditions, it is NOT easy to do. I have sold my Miners a few times. So…
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This chart shows a close up of that Choppy part of the recent run that I called ‘Brutal’.
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Zooming in on the Daily Chart for The GDX, we see that the first daily cycle dropped right back to the lows after a $33 to $39 June -July run. That was the Market crash, but GDX peaked R.T. on day 20 of that 33 day run. Now we have a loss of the 50sma on day 23 and the Miners look to possibly be getting dragged down with the General Markets selling again. Gold is due to bottom soon with a day 29 low, so if Gold pushes to new all-time highs, we’ll see if the Miners join in and bottom sooner than expected (day 25 or so?).
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So the General Markets are set up to eventually drop quite a bit lower. Once they do and the bullish sentiment is cleared out with a market correction, they can become very bullish at that ICL, so being patient and waiting on the sidelines for that ICL (or shorting bounces along the way ) may be the best way to handle that for some. Shorting bounces is the same as ‘buying the dips’ on SOXS, SQQQ, etc. Oil broke down and can continue lower over time. Gold is nearing the time for a dcl and is close enough to the highs that it can breakout to new all-time highs again and if it does, the Miners should react higher, but we’ll have to wait and see. Choppy markets and sell offs can be extremely frustrating on a day-to-day basis, but we ALWAYS see nice rallies form out of the aftermath, so sometimes just being patient and stalking the next trade–or allowing the trade to come to you, is the best way to move forward. Also, Bitcoin is setting up for a low, and ETFs can be used to make money on that run, if the Crypto-Miners do not cooperate. I HAVE seen Bitcoin run higher with the General markets pulling back.
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In times like this when trades are chopping sideways or pulling back, I like to remember that… “There is ALWAYS another trade’ in due time. Enjoy your weekend and thanks for being here at Chartfreak!
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~ALEX
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Again, from Wednesday
BITCOIN – Notice the rejection right at the 20 ema blue line. That is what I’m using as a guide but now look where we are cycle timing wise. We have arrived at Day 61. This is Bitcoin at midnight Tuesday into Wednesday, and we do have a reversal at the day 61 low.
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BITCOIN – dropped again and is now on day 63 with a reversal and a green candle on Saturday so far. We are due for a low and again, the ETFs should help out if and when Bitcoin moves higher.
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We are due for a low and again, the Crypto ETFs should help out if and when Bitcoin moves higher. I personally like GBTC, IBIT, and FBTC for their volume, and I trade BITX as a 2x leveraged at times too.
