Cash Is King

I started last week with a good number of trades on, and while I still see a lot of good looking set ups, I find that I am slowly going to Cash.  Some trades I cashed out of and others I got stopped out. Lets look at the charts and discuss future possible opportunities.

SPX– High volume reversal .  Why was volume so high? Is this going to just be a back test of the break out & 50sma, or does that volume indicate a larger drop? We will know soon enough.

 

 

SPX WKLY–  Doji candles can indicate indecision, and for the 2nd week in a row, our weekly chart is a doji.

 

Lets look at the NASDAQ…

 

NAZ WKLY –  I am still watching the wedge.  Back test?  Without the wedge, this looks like a strong reversal higher.

NASDAQ DAILY–   Prior pops to new highs have rolled over.  Again, for some reason Friday was a high volume reversal off the top.    Those  USUALLY have follow through.    Price spread was Minimal however.  Odd.

 

IWM –  Did NOT have a high volume day Friday.  You can see that the IWM broke to new highs Thursday, but no immediate follow thru. I am again pointing out that Bearish Rising Wedge here, it may be back testing ( & Fail) .

 

TLT WKLY– I captured this chart on Friday morning and it actually closed a tad higher just over $119.  It looks like the TLT wants higher price.  It is in a downtrend ( Correction?) currently.

 

 

I want to discuss Energy here a bit.  I closed some positions because I had to be away from my computer for a few days last week, and I got stopped out of a couple too.  While  OIL & NATGAS Appear fine,  some Energy stocks are weak.  I want to take a good look at several things and tell you what my conclusion is.

 

WTIC WKLY – This is a very tight pattern and should break & run strongly.  Up or down?  It looks like a continuation higher,  but we’ll see.

$WTIC-  Bullish above the 50sma.

 

NATGAS–   bullish reversed off of the 50sma.  Safe for now.

 

So lets look at the XLE.  Some energy stocks look fine,  however I would say that more look weaker below their 50sma.  Others are just ugly.  When we consider that OIL is holding up in a sideways pattern, we would wonder why Energy stocks are not.

 

XLE– currently I see weakness in the close up here.  It COULD BE a bullish descending wedge break out & Back test (Blue lines),  or a red channel selling off lower.  Gaps have filled and it’s oversold,  but also MACD is weak and volume selling increased.   Mixed signals.

 

Lets get a big picture view and see if we see anything of interest. 

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I looked at the 2009  vs  The XLE now , and see similarities and differences.

XLE 2009 – it actually bottomed WELL before Oil in 2009.   Oil had a capitulation & final lows in Feb 2009.

  1.  For this chart of the XLE , Let me just call  THE REAL LOWS the high volume capitulation lows in October.

  2. Then you can see that there was a long consolidation for 4 months.

  3.   XLE then made  deeper lows in March.  These were really just  a “Stop run” , but they can be considered the  final low .

   4.  Cant help but notice that XLE never went below the 50sma after the final lows in March. It followed OIL nicely.

 

Looking at XLE Now-  Cant help but notice that the XLE has dropped below the 50sma this time,  but also I notice that the XLE is different in many ways than the XLE of 2009  ( Oil is very similar to the OIL 2009 Bottom).

 1.  Currently the XLE also has that Capitulation type lows  in OCT , and then another  final high vol capitulation drop in Dec.

 2. A stop run took place in January  (lowest lows to date)

 3.  XLE already put in higher lows in March when Oil put in its lowest lows.  XLE also put in higher Highs.

 4. Currently the XLE is at a trend-line support  ( orange line) with higher lows and higher highs.  It is oversold and the MACD is shaping up. This may be bullish in its own way.

What can be concluded here?   SO far the XLE is putting in higher lows and higher high, Oil has put in lows and gone sideways. We really want to see the XLE hold at this point.  A break out in OIL may save this pattern of higher lows and higher highs in the XLE.  MANY oil stocks are in consolidation.   ( Some are breaking down badly  GDP, HERO, VTG, etc) .     So it is risky until  OIL or the XLE resolves the current set ups.  It is a stock pickers market in energy, since they are all acting differently at this point.

 

Example of pleasure & pain in this sector.

REXX WKLY- Nice strong reversal so far

GDP- capitulation sell off

 

   Caution is warranted until we see what OIL wants to do … and how these and the XLE react. Keep & Honer stops if you own these already and if you were stopped out  (I was in a few) , dont just jump back in – in a hurry to catch the next move. Allow these markets to show us what they want to do to avoid risk.  It is somewhat Mixed currently.

I also showed this bigger weekly picture recently .

 

 

GOLD, SILVER, and MINERS

GOLD –  popped and looks bullish, but in Cycles, it should not make much progress.   It will draw in many Bulls,  but I expect it to likely roll over.  Note the POP in May didnt get very far either.   Both seem capped at the 200sma.

 

SILVER– Looks worse.  Silver Popped with Gold in May,  it has NOT shown any strength on this Pop in Gold.   That may be a warning.

 

GDX –  Popped and reversed quickly.  The RSI turned at 50%. This actually doesn’t look too bad,  but lets be cautious.  Some Miners have shown themselves to be acting differently from the metals, but I have to recommend caution. Look at that drop in March, that is how Miners  usually drop into an ICL.

 

 

GDXJ- The juniors have acted stronger in this Investor Cycle, and this chart actually looks pretty good.  As a warning , take a look at  GPL, MDW, PAAS,  Friday. Volume was monstrous too .

 

Its funny, I drew this chart in May and never posted it. GDX was $1 higher than now.    This shows us that this sector has been difficult to make money in.  The sideways chop is frustrating,  but I believe a very good  opportunity is coming.  It may be worth not over trading and trying to save capital for that ICL.  😉

 

As you can see from this chart below,  the deep meaningful lows ( ICL) were arriving roughly every 6 months  (See the colored boxes) . They contained on average 4 daily cycles.  In March we were surprised to see only 3 daily cycles and a 4 month investor Cycle.  Will the next ICL come after 4 months? 6 months? More?  I’m going to be watching closely.

 

Here are 2   (of  many)   possibilities of how this could play out.

 1.   Gold crashes down to $800- $1000  ( like everyone thinks )  and makes final lows in that ICL.  Since everyone & their brother wants to BUY THAT DIP,  it would likely be a V-Bottom that rockets higher with short covering and massive buying.    I do find that just too easy, but anything can happen.

 2.  Look at the above chart again.  Gold actually put in a higher low from Nov to March .  We could bounce around and go sideways, eventually dropping into the next ICL.  This happens in accumulation periods,  when big money buys each dip .   If the next ICL  was also a higher ICL , no one would probably see it or buy it.   As it rallied higher , many would be waiting for that final ICL drop .

  Wait- That 2nd scenario… that would not be a steep enough drop for an ICL , right?  It couldnt just go sideways and then a quick drop.   Well look at the ICL in May 2014.  Sideways and a quick drop. We will just have to see what this market delivers.

     SIDENOTE:   As mentioned here any times before,  Some MINERS possibly  already have put their lows in.   See LSG, RIC, TRQ, BAA, GSS, etc

LSG – Lows in 2013 so far.  Up over 580%

I want to release this report Sunday Night instead of Monday morning.  I also want to add a couple of ‘trade ideas’ for the active traders,  so I will release the report now and draw up a few charts to add on later. I will notify everyone in the comments section when those charts are here, or you can just refresh the report in the morning and they should be there by then.

 

Thanks for reading along and best wishes on Monday.

~ALEX

 

TRADE SET UPS /  Trade ideas.  I’m just going to add a couple of ideas here , until we see which direction the markets want to take.  Please keep in mind that even good chart set ups can fall apart under bearish conditions.    I am adding these here because I know we have very active traders here, but for some it is simply best to wait and see what the Markets in general want to do.

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RNF  WKLY – Fertilizer / clean energy company.  Nice reversal back above the 10WMA. Looks ready to break out higher.

RNF DAILY–   This would be a buy here above the 50sma and the break of the RSI line.  If this gets follow through,  it could run nicely. Semi sloppy consolidation , so keep a stop loosely below.

 

I posted VUZI  last week . It is still valid.

VUZI last week-

NOW- follow thru. It may just break & run, or form a cup, etc. I would buy any pullback like last wed, Thurs, Fri with a stop below the 50sma

 

BIOTECHS have done very well.  I posted MNKD , ZIOP , and a few others.   All have follow through.  This was –

ZIOP-  pointed out here that it was a buy at $10 as it crossed the 50sma

Now-  Ran higher and paused Friday.  A pullback to the 10sma could be bought. It may form a cup from $9 to $14.

 

CEMP– Sweet run.  Buy a break out of the flag, place a stop at the trend line.

ATNM– Pharma have been popping.  Could be a quick trade for bottom fishers.  Theres no way of knowing if this will break out higher now or just continue sideways.  The set up looks good.  In May it almost doubled on that little pop.

If the small caps or Tech stocks continue to rally,  MM may be set up to break higher.

MM WKLY–  long base moved above the 10WMA

MM DAILY – Broke from a triangle and dropped to it as support 2x.  Could be a small cup & handle setting up to break higher again.

MM Close Up-  It looks like it wants to break higher now,  but you may watch list it and see if it drps to the 50sma on light volume too.  Thats a buy.

 

Do I trust an energy stock?  LGCY looks good.  This was the Weekly posted here June 17th.

LGCY DAILY –  If Oil breaks higher, this may do well.  Break out & back test here? Watch that trend line.

 

Lets see what the markets bring this week. I am not personally adding any new positions until I see how things play out from here. It may take a day or two, it may take a week or two.  The sideways moves and chop up & down have been ongoing.  Best wishes!