Bounces

When most people first start trading, they see a market that is running up,up ,up – or falling down, down, down and they want to jump in and get some of that action. What happens? As soon as they make their move the market does a 180 and heads in the opposite direction due to extremes.  We may be at the point that extremes are about to cause some decent bounces. Lets look at some charts.

SPX   July 1 – the original thinking was that this could be a bear flag and become an a-b-c down.

SPX – with a lighter volume drop to the 200sma so far , and for other reasons mentioned further in this report, I am thinking we get a bounce here soon.

There is a chance that that Bounce is bigger than expected if we get a short covering rally.  Let me explain.

1.  The NASDAQ looks the same as the SPX above.

2. The TRAN broke down and back tested, but in this sell off it has reached oversold and sits on a trend line which is acting as support , despite the other markets selling off.  (50 sma tag possible?)

3. Utilities still look very ugly, but there are bounces on the way down, and we see divergences here too.  Notice from June 1 to July 1 – price is basically the same.  (Watching the 50sma for a tag again)

There are many markets in the EURO ZONE that have been sold off with the GREEK / EURO concerns and they get to a point that they crash their B.B.’s.  That usually causes a quick bounce to the 20sma. Some like the EWI,  look like a quick buying opportunity for traders

There is another reason why I think the markets bounce here.  An old trick that someone taught me years ago about ‘extremes in sentiment’ and ‘over reaction’.  He pointed out that when you see certain extremes in the markets, you often get the opposite reaction.  Extreme selling begets a bounce, catching the shorts off guard and forcing them to cover.  That could even lead to a small rally.

2 charts that he would use to measure extremes would call for a reversal in direction very soon.

Notice the CPCE is the same as October??  That is extreme and likely due to concerns with Greece / Puerto Rico, etc.  This almost says relief rally, but I dont want to go that far.  I would go as far as to say its a buy for traders with a stop below the 200s,sma.  UPRO, TQQQ, etc   (  With my own personal experience…. I would have expected a stop run below the 200sma and then a reversal, but the candle yesterday shows support was found there.)

USD–   I draw my most of my charts at night.   As I mentioned yesterday , the USD is a bullish set up, but it was not showing strength (yet).  IN fact , a wedge now seems to be forming, which could cause further delay.  Pre-market the dollar is up strongly at 97.14 –  maybe it can break above this wedge and negate it.

 For some reason I drew 2 charts of OIL.  Both pretty much pointing out the same thing. We could get a bounce at the 50% / support area, but it may only be a bounce .  See charts

NATGAS – the concern is weakness that shows on the indicators.  It is the same weakness that I pointed out in OIL before the drop began.

This is the chart of OIL as it started to drop, see the RSI /MACD weakness is similar to NATGAS now?  Traders may watch both UGAZ and DGAZ – choosing the one that suits the break out or break down.

The CRB is following OIL  ( grains remain strong) .  The last time it gapped down like yesterday it was already oversold but just kept dropping,  see the left side of the chart.  Maybe that 3 yr low IS ahead of us

Remember when I said that despite all the selling, Biotechs looked strong and posted this?

Biotech –  “staying healthy”

I had posted charts of IDRA, ZIOP, LJPC, HALO, EYES, BLRX, SCLN, KITE, etc –   Traders may want to Look them up, some have moved even higher, some look like they could be setting up for a run higher.

GOLD , SILVER , MINERS

If I was not writing a market report covering ‘everything’ and simply trading on my own, I feel that most of my undivided attention would be spent in this area.  I think a great trading opportunity is fast approaching and I am trying to take note of the many different areas that affect the precious Metals.   Lets do a quick review for now.

I got a rare buy signal last week.  It does seem too early to fit cycles timing to be THE LOW. ( I am personally trading it as a possible DCL, but couldn’t outwardly recommend it as a low risk entry).   As you can see, It is even earlier than normal lately for a DCL in Gold,  so more downside timing wise is likely to occur.  The last 2 daily cycles being 32 days and 24 days long.   We tagged the 10sma  Monday , we may now drop into a real DCL . That would make today day 21 & still counting down.     Please excuse the typo on the chart please.

SILVER –  really should be dropping to a DCL soon.  Volume higher was light and the wedge has more room too.

GDX –  Some miners like CDE, EXK, PPP  looked pretty good yesterday, but the expectation is for Miners to drop further.  I pointed out in orange boxes here prior areas where that rare signal came in.  Please note  OCT 2014 again…it just moved to the 20sma in a flag and did a final drop to the ICL.  That could be what we see here in time, a drop to the DCL / ICL.

I am going to spend some time today digging into the Precious Metals markets a bit more.  There is a lot to look at in the past drops to ICL’s and I want to review all the bullish and bearish factors in front of us. I need to stare at charts and get a picture in my mind of what to expect.  The great majority expect a slam down to the $800-$1000 area and then a v-bottom flash back higher.  I read 3 articles mentioning that the HUI / XAU  are breaking down.  They went below the 2008 lows.

That could be a shake out- Time will tell.  If it was a break down it would be a tremendous buy in my opinion, but I still see other things that make me wonder if the P.M. markets will leave the majority behind.  I really want to look into this area.

  It is 9 a.m.  and I need to release this now .   I am currently very lightly trading, and I am waiting for low risk entry in certain areas. I think the markets are going to bounce or bottom pretty soon,  but I cant be sure how well it will stick.  It may just be a relief rally caused by short covering when it comes.  It can still be very tradable for those in front of their screens .  The CPCE number was EXTREME and it along with other indicators do point to a bounce soon.     I want to look into the Metals markets today,  so I may not be in the comments section much.  I’d like to be better prepared for a future trade there.  So much to look at!     For now it is a traders market,  but volatilty is everywhere.  Stay nimble –  Stay Frosty!

~ALEX