Tuesday January 28th – Are We Having Fun yet?
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SPX – After 8 days of steady gains, The General Markets crashed at the open, gapping down and staying down for most of the day. We started to see a reversal here as the SPX regained the 50sma. Now we need to see if the News about the Chinese AI company was a horrible ‘knee jerk reaction’ (?), or is this going to be a real problem. The daily cycle is not broken.
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THE NASDAQ lost the 50sma, and tech took most of the hit. Again, this hasn’t taken out the dcl, so it is not a broken set up, but that was a 3% drop and it won’t take much follow through lower to break down. The next couple of days are critical.
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And then the Dow Jones did this, closing up almost $300? Is this a ray of hope that maybe only Tech Stocks will take that initial hit, and then things will settle down? We’ll see, but the Dow and IWM did not overreact the way the Nasdaq did. What stocks are on the Dow? It is the Dow Jones INDUSTRIAL Avg, so stocks like Home Depot, Caterpiller, Wal Mart, Coca Cola, etc are found there and…
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Some of the Dow stocks were down, but others like Home Depot (HD) are good looking stocks, even on a down day.
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The Dow and IWM did not overreact the way the Nasdaq did. Also, I wrote this in the morning, when I saw a good number of stocks go green in my watchlist and it held true through the day. This may be more of a temporary ‘tech’ knee jerk reaction, but only time will tell.
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I posted these in the morning too, so let’s see what happens today.
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WTIC – I recently mentioned that Oil could drop and seek out a dcl, and that is what appears to be happening. In the weekend report I mentioned another daily cycle taking Oil into an ICL too.
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GOLD was also mentioned as due for a dcl, so this drop should not be unexpected. This was day 23 and Gold used to find a dcl around day 30, but lately they’ve been a bit shorter, around 25 days. The first orally and dip in this Triangle was 24 days low to low.
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SILVER dropped and actually bounced off of the 200sma. It did NOT break above that downtrend line to signal that we have an ICL in place, so we’ll have to see if these current lows hold up or break down.
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IN THE WEEKEND REPORT I SHOWED:
THE SILVER WEEKLY CHART has not broken out yet. Silver is actually coming due for a dcl, so it could pull back soon, form a higher low, and then break out. That is 1 very possible scenario, since Gold already broke out…
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OR I SAID THAT SILVER may just drop and put in an ICL on the end of this current daily cycle, making a slight new low.
You can see that Silver has a tendency to be very choppy and it is not at the apex of the wedge. That means that an ICL for Silver may come with the next daily cycle making a new low. That is also a possibility, but the Stochastics does already look like it bottomed and curled up. Silver is due for a dcl too, so it will very likely show us strength or weakness with the next dcl in the next week or so (higher low dcl, or lower low ICL)
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THE GDX dropped and rallied back a bit by the close. Not bad on a day when Tech was getting slammed to the ground, right? That means that The GDX ETF only closed down 60 cents or 1.6%.
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IN THE WEEKEND REPORT I SAID:
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My advise is this: Buy the dip on the leaders showing strength. The funds buying most likely will buy the leaders too. A lagger here and there may be fine, especially if you see them start to move higher, but a majority of your basket at the dcl may do better with leaders like KGC, AEM, HMY, etc etc. They are at the highs and may pull back to the 50sma
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So you can see what I mean. KGC dropped and recovered to ‘down 7 cents’, on a day that was a blood bath in other sectors. It closed down 7 cents at the end of the day too.
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Another of the ‘leaders’ that I have been mentioning such as AEM, dropped and almost recovered too, showing the strength that we need to focus on. This was a $90 stock closing down .47 cents.
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I had AU in the weekend report with this chart. I thought that AU might bounce to the downtrend and then dip down into a dcl. Well, with todays selling, it certainly didn’t bounce, but…
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AU was a $28 Miner only down 22 cents. Watch the leaders as Gold and Silver dip down into a dcl. They may be the ones that you want to own the most of.
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Well, we certainly saw what seemed to be an irrational reaction to the news about a Chinese AI company. When it was mentioned that it can do what Open AI does at a fraction of the cost, it seemed that NVDA and other companies were overpaying and under advantaged. Investors pulled their investments and some sympathy selling overwhelmed things. Now we need to see if the stocks that got whooped can recover.
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We really need a little more time to see how this will all play out. Was it a knee jerk reaction and buyers will step in and scoop up bargain prices, or will the selling continue as investors remain disappointed in the AI news? Stocks using ‘AI’ were all the rage and gains were quick, and that goes for Robotics and Quantum stocks too, but now some may start choosing other areas to invest in, like Home Depot, PAGS, CVNA, META, Precious Metals Miners, etc. as an additional choice in a basket of stocks. I was actually surprised to see that Quantum and Robotics stocks did not sell off more than normal yesterday. In after hrs, NVDA was back over the 200sma, and I saw many tech and Crypto stocks starting to bounce back too. Bitcoin actually dropped and bounced back right where it should have, so I’ll discuss Bitcoin below. Grab some popcorn and we can watch the show today. A show of ‘recovery’ or a show of ‘follow through selling’? Hopefully we’ll see some stability come into the Tuesday markets.
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~ALEX
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In the weekend report I talked about Bitcoin dropping and possibly putting on a handle to this cup.
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I drew it like this: Just in case the chop continues, I wanted to give you an idea of how a handle could form.
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BITCOIN dropped quite a bit, but it bounced right off of the 50 ema, and that looks like a perfect set up. Crypto stocks were beaten down severely due to this drop plus the general market selling, some down 20-30% before putting in a slight bounce. That again may help some to decide to just trade the Crypto ETFs. Some crypto stocks held up ok, but the leaders like WULF, HUT, IREN, etc. sold off sharply.
