Wednesday Oct 2nd – Smooth Running?
I mentioned in the weekend report that I though that this week would just be choppy, sloppy, and droppy = Volatile & Weak. So far, that is what we have. Patience is needed until we get through this rough ride.
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THE REVERSAL ON THE 10 SMA LOOKED BULLLISH, BUT NOTICE WHAT I SAID:
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THE SPX dropped on Monday morning, but interestingly, it bounced right off of the 10sma. If you really look at this chart, you’ll see that last week was a choppy up and down week too. I see a rising wedge and they often break down over time (dcl).
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THE SPX broke down on Tuesday. At day 40 we really should see more chop or drop into a dcl, and we remained inside of that rising bearish wedge.
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THE SOXX has been the weaker of the 3 sectors for the General Markets and it shows.
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THE UNEXPECTED: OIL had a strong reaction to Irans attack on Israel, and now we may be seeing an anomaly. THIS LOOKS LIKE A BIG CHANGE TAKING PLACE, so Let’s look at the chart.
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WTIC:
1. On Tuesday Oil dropped early in trade (pre-market) and also when the markets opened, and it was headed down toward the day 25 lows, but suddenly it shot higher.
2. A Day 25 low is usually too early for a dcl (These come at 40 to 50 days!), so after this bounce we would expect a drop to new lows under day 25.
3. Now, however, we have to wait and see if this just bottomed with the spread of war conditions in the mid-east. Is this a 1 or 2 day ‘reaction’, or is this spike a capitulation low?
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THE XOP was bouncing lower in a selloff too, volume was increasing on the selling, and this was expected to roll over too, but…
The XOP was bouncing lower, but look at it now. That was a very high volume Up day on Tuesday as Oil reversed higher and we have a higher low now. The ‘Drip’ trade may have finished up early and the GUSH trade would be going ‘long’ here. So far we just have high volatility and choppiness, but this has become a bullish set up.
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The USD pushed higher, but so did Gold, Silver, and the Miners.
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GOLD found support again at the 10sma on day 19.
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SILVER did not pop up as nicely as Gold, but it did reverse above the 20 ema.
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GDX dropped to the 20 ema on Monday and then gave us a slight pop and drop on Tuesday, but it didn’t give all the gains back and was still up 1.58%. It basically held up at the 20 ema.
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We have a lot happening at a time when the markets are easily affected (late cycle timing weakens the sector). This week we have The Dock worker strike at the Ports, an on going war and attacks in the Mid East, plus Cycles that are getting later in their timing, etc,. I had said that I expected a choppy week and even a down week in many areas, and so far that is what we have with the exception of Oil. It responded with a strong bullish reversal and needs to be monitored, because on a day when the markets sold off, XOP and Oil did not.
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In the weekend report we saw weekly charts that looked to be topping or reversal candles at the top, so keep that in mind. We could see more selling into the end of the week. For the traders, enjoy your week of trading, for the others, sit on your hands and be ready to buy at the end of the selling. Have a great Wednesday!
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~ALEX
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IN YESTERDAYS REPORT:
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BITCOIN did drop on day 56 and honestly, I see a small green candle starting now, but it just seems to early and too shallow for a dcl in Bitcoin. Again, this could even bounce and put in a quick double top as seen on the above chart in July and then drop into day 63 or so, but we just have to wait and see.
SO NOW AFTER THAT DROP ON THAT DAY 56, and ANOTHER DROP ON DAY 57, BITCOIN IS STARTING DAY 58: It landed on the 50sma and is bouncing, but could have another drop lower into the day 60+ area.
