EARNINGS + FED WEEK = ???

Monday morning when we woke up, The General Market Futures were higher and it seemed like smooth sailing.  Suddenly  a storm was moving in and things started giving it up . With an active week of Earnings and the 2 day Fed meeting , lets take a look at the charts and see what we can see.

IBB–  This was taken as of 2:30 P.M. Eastern time ( I added the end of day volume) .

We’ve seen this before right? A huge drop at the end of March and recovered at the 50sma.  Is that what we can expect? Let me show you what it tells me..

The IBB is a chart showing that there is a struggle at these levels. If that cant be remedied, this could be a double top.  This is what the IBB seems to be telling me…

QQQ   –  We hit the top of the wedge and reversed.

NASDAQ close up.  Bearish engulfing Candle with volume selling.

SPX –   Can the wedge be negated with a healthy correction?  It seems possible.

WTIC –  Still Looks very good .   The NATGAS chart looks the same as yesterdays report, and I still expect it to recover.

Note:  I get 1 or 2 emails asking me why certain Energy stocks  (like SFY)  are dropping onto the 50sma, and others like BAS are holding above its 50sma?

Answer :   More Sellers?  How about  “Less buyers?”    : )

  It just seems to me that that is normal in a base process,  just like you will see in the Gold Miners based on fundamentals or personal favorites.  So we can say that different Energy stocks will continue to trade differently.  Some are near highs, others drop to the 50sma while OIL is green. Yes,   SFY , EXXI & NOG landed on their 50sma today,  while BAS  & KEG  were Green today and BAS, KEG, LGCY are above the 50sma by a decent amt.     I cant say exactly why,  but it would just signal to me that more buyers are entering the latter ones.  Some stocks base out longer than others, and this happened in 2008 too, as I showed here before.  It may be best to swap out to any that seem to be trending higher , rather than hold the ones Basing at this time.   

I have mentioned LPI as an interesting set up. Why? It is trending higher.  Higher lows, higher highs, still near the highs .  Find some like this and it may be easier for you to ride, although I guess this could pull back too (trend line).

GOLD/SILVER/MINERS

GOLD & SILVER looked great today, but the way that Miners ended the day sent up a warning flag .  It may or may not be important, lets check the charts.

GOLD-   We were counting the days of the cycle in the weekend report on this chart.  Day 27  was getting near the time for a DCL  (Daily Cycle Low).  They can come on day 27, 30, even 33.

Today GOLD looks to have put in its low Friday, and it surged higher .

SILVER also had a nice surge higher, breaking out of the wedge I had drawn and also looking like a DCL .

 Silver Stocks  –  SIL –  Breaking out above the 50sma . Actually closed 10 cents lower.

EXK–   I tweeted this chart out, because it appeared to be breaking out too.   The Triangle break could be bought or a close above the 50sma.  It Closed at $2.03.

YES!  A GOLD/SILVER BREAK HIGHER!  Off to the races, right?!!

No Wait, the Miners did something a little less special.

 GDX – Miners rallied and gave up most of those gains, closing back inside the triangle .

Many of the Large Miners did this –

ABX– Great volume, breaks to new highs….gives it up?

GG– Pops higher and is rejected at the 50sma with GOLD up $21??

RGLD–  closes down 50cents with Gold up $21?

What can I tell you?  This doesnt happen often.  In the MIDDLE of a nice run, It happens and is no big deal.  In that case Miners can run first, and as GOLD catches up and runs higher, Miners can start the pull back first.   This isnt that.   My gut tells me that Miners didnt confirm the Metals pop yet, so caution is necessary.

Please look at the GDX chart that I have been pointing out for weeks now. I have repeatedly mentioned that we should be alert to what happened in that very difficult trading period of NOV-DEC  in GDX .

GDX-   In December notice that we were on day 24/25  and GDX popped higher with better  volume than today, only to reverse and close lower. See the overhead  wicks.   The drop was quick for a week after that.  I’m not saying that will happen, just that it had the last time.

So we need to see how the Miners act today.  Maybe even after FED WEDNESDAY.  Trade them if you want, buy a nice set up if you see one  (EXK was one) , but WED could get tricky.

Also we are in the  EARNINGS SEASON.  the Markets reversal Monday looked real, especially in IBB.   NASDAQ hit that WEDGE & reversed lower. I know many are hoping that AAPL earnings will save the markets, but if they are ready to sell down, down they will go.   If the markets start selling off, there are ETF”s and leveraged ETF’s that can be traded too.   BIS, TZA, SOXS, SDS, etc

TZA – when the markets started selling off

So there is a lot going on this week, especially Tuesday & Wednesday with the 2 day Fed mtg.  It may amount to a lot of market indecision and whip saw action.  Sometimes it is best to sit tight,  even keep some  Cash in cash for a couple of days until the picture gets clearer. Or trade something that you can keep an eye on.   The set up in OIL still looks very good , so my energy plays are still in play, but I have been bleeding a little bit there too.  Today I will be watching the Miners closely for clues. Best Wishes!

~ALEX

Sidenote: In the recent past I mentioned trade set ups  in DGLY , S, VDSI , DANG.    DGLY Hit the 50sma and stopped.   DANG & S  were unaffected by the selling yesterday, and VDSI  is up $3 in pre-mkt , announcing a conference call this a.m.   They still look interesting to me at this point, I am just more cautious.