Buy The Dip?

At times we sell and stay out, conditions may not be setting up for a low risk buying opportunity.  At other times, however,  we wait patiently for the trade to come to us and then we Buy The Dips.  Are we in that position now? Some sectors are saying,  “Yes, you may want to buy the dip!” lets review several sectors first and then discuss what might be setting up as a good long entry.   To the charts!…

QQQ – this weekend I said I wasnt shorting this set up anymore at the blue arrows anymore / I saw internal strength

Yesterday we saw this

Here is what I am thinking…

If this consolidation breaks out upward, we may find many long set ups in individual stocks and there are also etf’s (And 3x etfs for fast traders) that can be profitable. See  UPRO & TQQQ for example. I am not taking a position here yet, I am focused on ENERGY  as you know,  I entered my NATGAS position yesterday  ( I showed on the chart what I was looking for ) and GOLD/MINERS are starting to shape up again.  Lets review.

$NATGAS

I have been pointing this out for quite a while in various charts, I’d wait for the break out to buy to be safe.

 This was NATGAS  Feb 10.

I bought UGAZ yesterday. This is a FAST 3xETF    ( please understand that I cannot manage this position for you, it is too fast and needs your personal attention) .  It is meant to be held for a day or two like JNUG, NUGT, etc.  If you are an experienced trader  you can decide whether to trade it or not , but you must know your stops or where you may want to exit please.

Ex of how fast UGAZ can move – it can move against you just as fast.  (  In Dec it went from $9.50 to $5.50 in 3 days1 )

  Natgas stocks can be XCO, UPL, ( Both are pulling back to the 10sma)  Also  UNG can be traded and FRANK- ( Thx Frank)  was mentioning to me that he watches GASL  ( 3x ETF OIL & GAS)

GASL-   again FAST & DANGEROUS, only experienced traders & it must be watched closely ! I’m sorry , but I will not have time to  manage  3x ETF positions for anyone.  Know where to sell.

$WTIC-    posted yesterday that I expected a pullback, maybe like this

$WTIC  FEB 10-  see the likely support area, and watch your energy picks too.

XLE yesterday I said to watch for strength or fail as it dips to the 50sma

XLE –  Strong so far, with the energy pull back.  It may just go sideways or continue higher, but this action encourages our buy the dip in energy.

SMALL LESSON:

In the first hr of trading yesterday, I drew up some charts of energy stocks to show possible targets that could become BUY THE DIPS.  Some traders here added yesterday,  and one person asked if that was o.k?  Just take a small position and add on any further dip? 

 Yes, I have done that in the past if it is a bullish set up, as long as you have a stop in place and are willing to take the loss if it drops further than expected.   In the past I have added a SMALL POSITION on a pullback like yesterday ( If a move off the lows is strong, sometimes I Just want skin in the game in case they take off upside again).     Then I also add on additional dips if they are lighter volume, or add on a reversal at my targets.  This is one way of building a position , As long as you understand that they may still drop further.

THIS is a strong energy stock, it sold off yesterday, but was bought back. Building a position that way would have (So far) worked well.

 MILL

BLDP – I took position in this squeeze, because the stop is right below, this set up is strong.

Other charts that pulled back yesterday, as mentioned above . This is how I look for entry  (support at moving averages, maybe reversals at such supports).

 Use these above charts as a guide to look for entry on your favorites.

GOLD & MINERS

ACTUALLY looked good.  GDX/ GDXJ pulled back on light volume. I would still  LOVE to see a slightly lower price , to start a new daily cycle. I would expect a possible double top in a run up if that happened, maybe even a break to new highs.

When I look at the Mining sector only using Technical Analysis, it looks strong .

GDX has NOT even tagged the 50sma, stocks like CDE, PZG, GFI, NG, AG  etc,   all look quite healthy. A reversal higher could be bought and traded I.M.O.,  but it is lekely to be weaker if this is still just another  ‘bear market rally’.  Right now, the stocks havent really broken down much.

GOLD – normal pullback so far

SO I am watching this pullback in ENERGY mostly. Those stocks had a nice initial run up out of  the lows, and we caught a good amount of that, I want to see if there is going to be another leg up  ( Many are showing strength and indicates that there will be ). SO I am adding on the pullbacks.  And also NATGAS has broken out from the patterns that I have posted about for weeks now. I am long NATGAS.   I have mentioned that I do like the set ups in SOLAR STOCKS too, I am not in them however, simply because my focus is elsewhere right now.

Thanks for being here ( Welcome new ones) and happy trading.   If you are newly signed up, may I recommend that you go through some of last weeks posts too- it will help you to see why I was watching the energy sector so intently and how I am viewing the various sectors.

~ALEX

NVO by request.  I was looking at the weekly and just view it this way .  Maybe a pop from $42.80 to $44.72 to start, but this is what I meant by a weakening MACD