Unanswered Questions

Things seem to be playing out as expected, but that still leaves a few unanswered questions longer term. Lets look at some charts…

$USD – the pullback has acted exactly as expected (So far)

The weekly chart of the Dollar has been very strong…

Here is what I am watching on the Wkly chart

Honestly, If you re-read Thursday and Fridays report, it is more of the same in many sectors. The moves have been small,  so for some sections this will be more of a review than any new information until things play out a bit more.

NASDAQ Wedge  as of March 24

The NASDAQ – Broke down from my original wedge, but held the 50sma. This still looks weak in many ways longer term. We need a move higher fast, or this could just be a pause on the way down.

In my last report I mentioned that we may just see more of that sideways consolidation type activity ( Choppy short directional) as the wedge plays out. Even a run to new highs remains inside that wedge.

SPX March 27–  long term bearish, but is now at the bottom of the wedge and could pop higher.

Biotech IBB WKLY – on fire for sure , but can experience multi week sell offs, as seen in the past. If it does a parabolic blow off top type move, it’ll probably hold the red line for now.

 OIL WKLY

OIL DAILY-  yes we had a big sell day  Friday, but look at the Orange Arrows. Early Wednesdy had a slam down day. The next day dropped lower to the 10sma & reversed back upward, so we just need to see how this plays out .

GOLD / SILVER / MINERS –  some believe we have put in an ICL,  which means this pullback would be shallow. If we havent , we should break down .  Time will tell as we pull back.

I have pointed out that in the past ( See OCT 2014 for example)  strong rallies get many to go long & then have rolled over, so I am watching for that possibility.

I drew this for us MARCH 16 to point out that possibility that we could rally & break out ( green arrow)  then drop to test (Magenta arrows) .

Here we were MARCH 27 and we have rallied for the break out. Last week we’ve started to pull back.  I expected this possibility , so we’ll see if it plays out.   A strong break higher now  ( or a higher low) would likely mean the ICL was in place early.

I have also shown this chart ( March 10)  as a reminder that if Gold rallied and then sold off, it would become a great buying opportunity. We dont want to allow the “Fear” and emotions that will come at that time to sway us.  Since this chart was draw, we have rallied.

GOLD DAILY  – Thursday chart below – rejected at the 50sma  ( Dropped further Friday)

So that leaved us with the weekly …

GOLD WKLY- Rejected so far

$SILVER – a drop from here to an ICL could “test” that break out. A  smaller drop and break above recent highs would be quite bullish.

GDX WKLY  – did not recover the recent break down yet, and was rejected .  We need more time to see how this plays out.

I think a great buying opportunity is coming again in Metals and Miners.  In the past I have traded these opportunities and done very well.  Many Miners ran up  80- 100+%  during the run up out of those lows in November, so I will be watching for this trading opportunity closely as time goes on.  I bought the recent lows for a trade, but got out early.   I currently still own my energy trades, and I still think OIL is in a bottoming process. In the past it has bottomed very much like we are seeing right now.

Please remember to use & honor stops in these volatile markets.  We have seen some very big swings , especially in some Bio-tech stocks.  It can be difficult and even frustrating trading in markets that are choppy or volatile.    For example:  If a trade goes against you or you don’t feel that it is acting correctly, it may be best emotionally to just step aside and wait for another trade.   I know that in Energy stocks EXXI ,GDP,& BAS were holding above the 50sma,  so if you bought them there, you made money and then gave it back.  That often becomes part of the choppy markets.   REXX and several others seem to be struggling a bit more.  I don’t know why, and I don’t know if it will regain it again or fall away  ( I still own some), so if you arent comfortable with it,  move to cash and wait for another set up , or even wait for a good trade in Miners or another sector.   The XLE even lost the 50sma , likely due to XOM & CVX losing theirs.

I was away from my desk last Wed – Friday during the day, and expect the same this week.  Things are expected to get back to normal for me after this week and I’ll be available in the comments section more . I wish you all a great trading day!

~ALEX

P.S.   Gold is down $15 as I write, so yes Gold got rejected at the 50sma and sold off.   NO it doesn’t automatically mean we now sell off to an ICL.  It does NOT mean that it is a good time to ‘go short’ .   Your low risk short was rejection at the 50sma, this could recover.  Down $15 sounds like a lot, but Use this chart as a guide.

  Trade using charts, not emotions…It is not a bearish chart yet, even with this mornings sell off.  Even down $20 & reversing higher is Bullish.