WATCHING REVERSALS

Overnight Futures are down – “China is panic crashing” is the word today.  Half of the stocks trading in China were halted to prevent a landslide crash. So far I just see March prices ahead. 3 months ago the SSEC was here.  See the chart of Greed & Fear below.

July 6 chart :  Yesterday I was pointing out several reasons why I would expect to see a reversal higher in the markets.  It appeared that we also found support at the 200sma Monday, but Notice what I wrote on this clip from yesterdays report  (underlined in Red).   It just seemed likely that we would get a stop run below the 200sma and then a reversal higher. LOOK at that CPCE matching OCTOBERS market lows!  (Click to enlarge)

We got the shake out below the 200sma and a reversal. Our futures are down again, will we get another reversal higher today? If so, it could be a buying opportunity, let me explain…

Here is the NASDAQ –

A very clean break down and recovery.  Knowing that the CPCE hit the same as it did at the LOWS In OCT, that reversal was the buy.  They sell it off and buy it back.   Traders:  Watch for that again today, you may find a buying opportunity .

I have said that the USD looks bullish in many ways.   Yesterday , however, I did point out that wedge forming (Bearish rising wedge) and I still see it in place. Also a topping candle has formed.

When the dollar topped and reversed a bit,  OIL bottomed and reversed a bit.  Will that stick?  Will it just go sideways and then resume selling down?

   So far Oil dropped to the 61.8% retrace and then ran up to the 50% area forming a reversal candle. OIL is as oversold as it was at the March lows.  I think that it may bounce to the 10sma and fill that gap – we’ll see what happens if it gets there.

“Traders” are not without low risk  buy set ups .   Energy stocks also bottomed and reversed and have a bullish set up for traders   (Bounce, Rally, whatever- these were bullish reversals).  For those looking for less risky trades, you need to see a trend start and a break above the 10sma , etc .   That will take time.

HK– the strongest days of OILS sell off had HK  forming a double bottom from a month ago.  It stopped selling off while oil plunged the past 4 days   ( Note that HK was $1.10 the past 4 days-  Its a buy here with a stop below $1.00)

LGCY – up 11% today with a divergent nice set up

GDP – Capitulation -This does not look like it can go lower without a good bounce first.  Maybe it has bottomed?

Did you see FCX after everyone talked about COPPER being dead?  Stop run reversal & run to the 10sma?

VALE –  sweet reversal candle , also almost ran 100% in April from this level.

Those (And many more) are LOW RISK BUYS, because you put your stop slightly below the lows already in place.   Risk / Reward is in favor of the longs.

See also  CHK, SGY, AA, CENX, AKS, X, STLD –  those had nice reversals.  Commodities are oversold and may bounce to their 10sma  (or more).

EDC  ( emerging mkts got killed in the recent panic).  This looks bullish too.  Even GREK & NBG  wouldn’t sell off further Tuesday.

NATGAS – I would expect a break higher now if OIL rises and the dollar pulls back, but I have no edge with this neutral chart

GOLD, SILVER, MINERS

I posted this chart of GOLD yesterday , maybe we had a DCL on day 19?   ( It seemed a tad early as mentioned in my typo chart below ).

Now the drop continued, but interesting support  at a trend line. This is not a reversal candle really,  but sentiment for GOLD is very low, at extremes.   The COT is probably VERY BULLISH right now.  I will wait for further proof, but things are getting very interesting to me.  A small lower low and reversal today would be a day 22 low & counting.

Silver – Finally some selling & panic!    This drop caused MANY MANY posts about the death of silver now . Emotions are high.  Why do I love that?

SILVER COT-  as of Tuesday June 30  When Silver drops, smart money usually closes their short positions . The drop last week and this week would have this becoming a bullish set up.  * If you look closely though,  SILVERS cot remained at these levels through October and the lows were a month later.

I am watching this drop in the precious metals closely,  because even though it seems early for an  ICL, many many other things are lining up. Lows in the summer are common ( See chart below).  Lows came in early summer many times for the past 15 yrs,  and right now the Metals are hated and Feared.  A buying opportunity feels close.

  SO at this point I think the stock market may actually be working on putting in a low.  The RISK is the type of panic that we have been seeing finding follow through.    I have mentioned the type of internal readings I am getting as posted in yesterdays report line up with prior strong rallies from these levels.  ‘Traders’ are now seeing an abundance of trade set ups with low risk on these sell offs in the form of reversals ,  investors or those who dont like to be in the markets during such volatility need to wait for further proof of a “bounce” or a “low” in place.    That takes time and involves the start of an uptrend, breaking above certain key areas, etc .

  A sell off today may be just another reversal in the making. Watch the 200sma on the indexes.  Do we sell below and recover again? That is bullish indicating that they cant sell it off without buyers stepping in.     Monitor some of yesterdays reversals as the day goes on  (VALE,  HK, SGY, etc for ex) –  see if you Traders get another low risk entry and a reversal.  It may be worth taking those reversals as short term trades risk / reward wise.

Happy trading 

ALEX

As I was writing this morning the Futures recovered quite a bit.  NASDAQ futures were down almost 70 overnight, now down 23?  It tested that capitulation area so far.

For JD-