Friday November 7th – Follow through or Falling Through?

Yesterdays theme was all about looking for clues, right? Yesterday’s follow through on a half cycle low actually fell through.  That does not mean that we can’t bounce now off of the 50sma, in fact we probably will next week, but I want to show you some of my favorite stocks and we’ll see if they still look HEALTHY or WEAKER by now.

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SPY – When we had 3 gaps higher, I mentioned that there is an old trade that I used to take called a ‘3-gap play’. If a move higher ‘gaps open’ and moves higher 3 times in a row, you short it. I didn’t take that trade this time, because it is a bull market, but the gaps filled as of yesterday.

 

YESTERDAYS REPORT WAS THEMED ‘CLUES’, and I used this chart to show normal moves in this bull.

SPX -We have seen dcls and half cycle lows repeatedly on this run out of the ICL. Price has often respected the 20 ema along the way. This is likely the half cycle low that I had mentioned in the last few reports, as price reverses again at the 20ema.

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The markets sold off yesterday and The SPX lost that 20 ema on day 19. This could be a clue, along with that MACD cross, that the markets are getting heavy and will roll over sooner than later. It ‘Could’ still be a half cycle dip, it MIGHT bounce at the 50sma, but will it make a new peak??  If not, it is L.T. and we watch for it to fall into an ICL.  Many of my stocks that I trade lately are breaking down and we are on month 7, so right now I think we may have peaked on day 13. Left Translated.

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When we get a drop into an ICL, THAT will become the next best buy. Many stocks will break their 50sma and may land on the 200sma. Last April we had a crash down to the ICL when Trumps Tariffs continued to cause drop after drop. Buying at that final low gave us great gains in many stocks and etfs. A drop into an ICL may look something like this.

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You can see that we had a steep dreadful drop into that last ICL, and some people gave up trading all together thinking that ‘Trumps tariffs’ would cause a recession and ruin the economy. That crash lasted from the ‘peak’ of Feb 19 to the low of April 7. It was roughly 7 weeks peak -to-low. With something similar we could bottom in December (and get that Santa Rally?).

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NASDAQ – The Nasdaq also lost the 20 ema, but it has been chopping through it recently more often than the SPX. I think that it’s a time to be cautious, we are in the 7th month of an intermediate cycle and I’m starting to see some weakness  in my favorite stocks.

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TIME TO LOCK IN GAINS: Take a look at a few of the stronger stocks…

RKLB successfully launched a satellite this week, and yet it plunged lower. Earnings are set for Friday, so why did this crash? It lost the 50sma and support yesterday, dropping 12% with no news. This is what I am starting to see with our formerly healthy stocks. RKLB is scheduled to have earnings today.

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OPEN was a favorite of mine and I bought this at the 50sma. I also got stopped out quickly. Earnings are also today.

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NVDA we all know how strong NVDIA has been. Well, volume has been steady selling, and yesterday it sent a clue that it may want to sell off too. AND…

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MSFT started to pull back with our half cycle low, but the volume looked a bit too heavy off of the top. It has now actually started to crash.

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I think that we are seeing clues that the selling may be more than a half cycle dip now.

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WTIC – Oil may have an ICL, but so far it continues to remain choppy and trapped under the 50sma. It should ‘crawl’ here and break higher over time if that is an ICL.

 

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The USD made a new high, so we likely have an ICL here too.

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GOLD was running higher from August to October and seemed like it would never pull back, now it seems like it’ll never get going again. Gold has chopped sideways at the 34 sma for 7 days. It is pinched between that 34 and 10sma and it really should be able to break higher in a new daily cycle, but it is starting to feel like it will not make a new peak, it too will begin to seek out the next ICL.  THAT should be a great buying opportunity in a Bull market and I’ll discuss that further in the weekend report.

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SILVER is also on day 7 chopping sideways and should move higher sooner than later.

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GDX has become weaker than Gold and Silver and that may be a clue too. GDX is still trapped under the 50sma, and that was after KGC and IAG released earnings.

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I am only trading and so far this week many of my trades went against me ( RKLB, OPEN, PLUG to name a few). The set ups were bullish, they were good looking, but they became weak and fell apart, so this is leading me to believe that we are not in just a half cycle low, we may be ‘peaking’ , chop around, and then sell down into an ICL. We COULD still put in a bounce, but if we do not make a new ‘peak’ above that day 13?  I’d sell the bounce.  I was stopped out of my trades yesterday, so I am going out to breakfast with some friends and coming back around 10—mainly to see if CRYPTO STOCKS can start to lift up higher. Bitcoin is below, enjoy your Friday trading.

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~ALEX

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BITCOIN – With a day 64 low, this SHOULD be a dcl and we should get a move higher soon. Many of the crypto stocks do not look bad, so this may be the better trade available, unless the general markets bounce out of a half cycle dip. A run to the green downtrend and 200sma should start things off, and then we’ll take it from there.