A Morning For Focus

I want to focus specifically on the subject that was my midday alert Monday, but first a quick market overview.

SPX – We looked ready to move higher, and we did, but within a possible wedge pattern.

I took a look at the QQQ’s and pointed out this…

Why were we at the 45 degree trend-line on SPX, but still a possible further drop on QQQ?  I posted this , and the 50sma was holding price.

I took another look today and I’m thinking that the January  “tails” may have been an over shoot. Why?  It was also a BUY at the 50sma in AUG ( red Arrows) .  If you are trading UPRO or TQQQ as some have written that they are, please keep in mind the wedge pattern forming in both is a ‘Bearish wedge pattern’ .  They often break down after nearing the apex, so use the trend line as a stop.

$NATGAS is the same as yesterdays report.  No change, sideways move at the lows.

GOLD / SILVER / MINERS havent changed either.  I am expecting a bounce , but a roll over into a real trade-able  & meaningful low. I’ll just re-post a GDX chart so you dont have to go back to the weekend report.  I must say that the GOLD & GDX CYCLE COUNT is unclear to me.  3rd daily cycle? 4th Daily Cycle?  As things play out it should get clearer.

GDX WKLY – 2 wk bounce & drop?

LETS LOOK AT OIL – ( we just hit new lows as I write)

In yesterdays midday update, I wanted to point out to you an interesting occurrence in the Energy Sector. I want to have to watch how this plays out, it may be a nice opportunity.

REMINDER:  I thought –  Could OIL bottom like 2008?   SO MANY are calling for $30’s and a big break down & drop that I hate to follow the crowd, though it could happen.  I read reports warning  ” OIL is weak, avoid it or go short  “.     Some also saying it is forming a bear flag.    I decided that I needed to look at the 2008 lows in OIL.

To me?   OIL today and OIL 2008-2009  look very similar , so lets watch how it plays out. I posted this for you …

OIL 2008,  Fight the 50sma, Break to new lows and recover. Many call this 2009 action  “Weak”, I call it ‘bottoming’.

SO I was away Monday morning, but I came home to zoom in on OIL and ENERGY STOCKS. 

MARCH 9 –  I was ok with OIL making new lows.  A break to new lows and recover is possible, since a daily cycle low is almost due

LETS ZOOM IN AND SEE IF THERE IS A REASON FOR HOPE

LOOK AT THE OIL 2008 CYCLE COUNT     There was a Day 33 new low

OIL NOW –  break to new lows & reversed higher  – Day 31 new low (so far at  $42.85).  It could go lower from here so deserves monitoring.  I’d like to see a reversal by Friday for a weekly reversal.  * We just broke to fresh new lows as I write

What can we look for bigger picture going forward?

The WEEKLY CHART is always healthier above the 10WMA, so if OIl is bottoming, in a few weeks I want to see it gain the 10 weekly Moving Average like in 2009 .

 As I mentioned in the UPDATE,  often you will see GOLD down $10 -$20 and the miners go green.  It often indicates that a reversal is close.  If you look at OIL charts vs XLE or other energy stocks , you see that Energy stocks bottomed well before the OIL sell off ended in January .  SO Monday  I also noticed reversals in ENERGY stocks while OIL was near new lows. It may be a noteworthy clue. Can these reversals hold if OIL goes lower?

 I say a noteworthy clue, because stocks like REXX, EXXI, BAS, DNR, etc, etc,  all lost their 50sma, so recovering the 50sma would be encouraging.    Some may wish to wait for this to happen before jumping in, it is a safer trade.  I may be early with these energy stocks.

 Encouraging is the fact that it is 1 thing if you only see 1 or 2 reversals, but Monday many energy stocks started to go from  RED to  GREEN.  I pointed out  REXX, EXXI, and look at BAS- down 20% intraday & a reversal started there also. Possible capitulation volume.

OIL is at new lows, and some of these stocks ran up 100% and are only pulling back partially. Now a possible reversal.

EXXI

NOG

AAV –  held up well

SO I am watching the ENERGY SECTOR again. Some of these stocks were so sold off at the end of 2014 that they made 100% gains out of the lows.  The second run usually offers 1/2 of that %-Wise, but 50% is great.  I would try to buy only stocks that have earnings out  ( REXX, EXXI, etc)

I pointed out this  set up in CLNE

Some bought this reversal at the 50sma today ,  congrats!    Honor your stops if this doesn’t continue to act correctly.

I also just wanted to throw out a couple of interesting bullish set ups. Low risk because your stop can be right below. 

MCP –  Thx for the reminder Maria

MEA – A steel stock

So this is the area that I am pretty much focused on.  Will the recent OIL lows hold or will they be broken? ( *  see footnote)  Either way, I want to see what happens to the Energy Stocks and the XLE.   Yesterday they reversed while OIL was still down and when an entire Sector shows signs of reversal and signs of life?   It can be setting up to make a run higher.  In the first leg up, some of these ran 100% . I am hoping that some low risk entries here, either a move above the 50 sma, or just buying the reversals with stops near the lows, can pay off if we get another leg higher.   Nothing is a guarantee, but again, so many reversals while OIL is making new lows? I love the contrary view in that situation.  Best wishes !

~ALEX

* Oil lows were broken as I wrote this

P.S. –  I may post a public post in the afternoon regarding some of these set ups .  I may show a chart or two  (  REXX , EXXI  for example) to show the reversals that took place Monday as OIL was at lows.  I wanted to post here in yesterdays midday update  & today before doing so , so you can take a position first if you wish to .    If  you feel that this reversal may be the daily cycle lows, but if the reversals do not hold, I wont post a public report until we have another opportunity to re-position.