Friday May 16th – Stretching Things Out
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SPX – The markets gapped lower and then closed green again, continuing to Stretch Things Out in this bullish run. This is a day 27 ‘peak’ so far and daily cycles for the general markets can vary, but seem to dcl roughly around day 35-40ish. I have recommended raising stops along the way, and…
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I have recommended raising stops along the way, and when the markets are as bullish as we’ve seen, you could actually just start to consider riding things out and playing 2-3 daily cycles as ‘buy & hold’ (especially individual stocks’.
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What about leverage? If I see a solid run that starts to respect the 10sma, I might consider using the 10sma on the main index as a ‘sell’ trigger, and then just try to rebuy later for the 2nd daily cycle. If the SPX drops to the 50sma for example, that would save giving some gains back. If the markets run to the highs and churn sideways after breaking the 10sma, that may be tricky rebuying, but leverage is something that I do not personally hold into a dcl. We all need to figure out our own way of playing a trade or landing the plane that you are flying. There is no set rule when markets vary so much.
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AAOI is one bullish stock that I pointed out as running from $10 to $20, and a dip is now happening at resistance. This could run from $10 to $20, and down to $15 if it lands on that 50sma. It may just churn, chop, and crawl there when a dcl comes due for the general markets, but this is what I look for in these strong runs (to try to buy the dip). Earnings were released when price was Under the 50sma last week.
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RKLB dropped and recovered yesterday, so I grabbed this midday as bullish price action. It closed almost $1 higher at $25.22.
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WTIC reached the 20ema and then pulled back in April. It then pushed above the 20 ema, but has now reached the 50sma resistance and price dropped on day 25, so Oil is making progress, but it is expected to continue to be choppy and difficult.
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THE USD reached the 20ema, paused and crawled, and then tagged the 50sma.
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GOLD dropped below the 50sma yesterday and then put in a sharp reversal. I have pointed out that we could see a dcl here, because the last daily cycle was only 26 days long, and now we have a reversal at the 50sma on day 27. This could be the dcl, even though they used to run closer to 30+ days long. Look for a move above the 20 ema next.
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So I am expecting one more daily cycle lower that may look a little like this, because so far we see higher highs and higher lows.
The last daily cycle peaked on day 10 (L.T.), and I do expect that this one will also become L.T., peaking between day 7-11, and not able to move above day 10 of this last daily cycle. Yes, you can buy the dcl / miners with a stop just in case it takes off to new all-time highs (less likely).
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I DREW THIS AS A 5 WAVE IDEA YESTERDAY:
I still have to think that to change sentiment a bit more and give us a real ICL, so this would peak and roll over as L.T., and that could possibly be as soon as late next week. That would give us 5 waves down, as seen here.
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Look at APRIL 7 on the general markets. That is the ICL. Keep that in mind, APRIL 7.
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Now look at April 7 on Silver: Is that an early ICL for Silver? Did it join the General Markets at that point? It could be.
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SILVER also sold off to a slight new low on Thursday and then reversed on day 27 as a possible dcl inside of a wedge or triangle. There is an ongoing debate in my mind as to whether or not Silvers crash with the general market exhausted selling and became an early ICL. IF IT WAS AN ICL, then Silver could take off higher in a 2nd daily cycle. Some Silver stocks are near the lows (EXK, G, etc), but others are strong (see CDE).
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Take a Silver stock like EXK for example. It has shown strength in the recent past, last year and even in March. It also then crashed with that general market ICL into April 7. A break of that downtrend line could become quite bullish for EXK and if Silver has bottomed first, this sector could surprise many.
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GDX had a 26 day daily cycle in March to April, and it now has a 26 day daily cycle from April to May. This may be the dcl. GDX is still putting in higher highs and higher lows so this gets tricky. You can buy this dcl with a stop, just in case it breaks to new highs in a runaway bull market, but I have to expect a dip into an ICL sooner than later.
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I’ll be discussing the big picture more in the weekend report.
Enjoy your Friday trading!
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~ALEX
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BITCOIN continues to look like a bullish consolidation. In the past, it has worked its way over to the 20 ema, so if that is happening here, it has a few more days to churn or drop. Bitcoin trades over the weekend, since it trades 24/7.
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I CAN DREAM, CAN’T I? 🙂
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BITCOIN: A quick 2 day drop like this over the weekend would be great, but anything can happen really.
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BTDR released earnings yesterday and dropped sharply, but then it started to recover, so I posted this in the comments. Buyers stepped in when it dropped.
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RIOT (& others) dropped and started to recover in the morning too, so I grabbed this chart at almost noontime. It close at $8.70. Riot originally popped with earnings and moved higher, but now it has now dropped toward the 20 ema and an upsloping trend line. It could even dip lower for another day to reach those areas.
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WULF also Popped 15% higher on earnings, but has been caught up in the selling when Bitcoin dipped. With earnings behind us, this should be another good one to keep an eye on for a possible ‘buy the dip’ at support.
