Oil – Buy the Expected Dip
OIL
OIL’s C.O.T. – The shorts by ‘Smart Money’ increased again. They are determined to ride a drop in Oil prices, though Oil has been bullish in recent weeks.
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Precious Metals – Alive Or Dead?
Precious Metals – Alive Or Dead
I see a lot of people have started absolutely hating Precious Metals and Miners in recent weeks, and that is understandable. Gold, Silver, and the Miners have taken a dive, especially since the recent Election results in the U.S. They cannot seem to catch a bid, and each reversal just doesn’t seem to stick, even though Oil and Metals like Steel, Aluminum, and Copper rocketed higher.
We have to ask: Is the Bull dead or Alive in this sector?
Here at Chartfreak, we have been discussing this extensively throughout the past several weeks. I’d like to open up a portion of the weekend report from Dec 4th, along with a few charts from earlier reports, to show how we have been monitoring these areas. Enjoy.
As of Nov 18th, GDX was already at an important Fib retracement of 61.8%, so we looked for the sell off to stop in this area.
RECALCULATING ROUTE
Have you ever been driving along using your GPS and you decide that maybe you’re going to take a short cut to your destination? The GPS detects that you have left the designated course and immediately needs to compensate by announcing, “Recalculating Route!”. Well last week sectors of the markets took sharp detours right after the elections. Using over 50 charts, this weekend report will discuss the road we find ourselves on now.
SPX – Nov 1st , Expecting a trade-able ICL, maybe in the 2070 area.
Did You Buy That Dip?
At Chartfreak, we were anticipating that a higher low in Oil would prove to be an exceptional buying opportunity after the recent summer sell off. Cycle timing was telling us that it was ‘time’ for a low to develop, so we began monitoring the charts using technical analysis and cycle timing. Did you buy that dip at the right time? Let me show you what we were watching using actual charts from our August reports. You can ask yourself, if I was a chartfreak member, would this may have helped me with my investing in this sector?
WTIC AUG 3 – Anticipating the coming low, I used this chart to start with. We had a 50% retrace and some Energy stocks were beginning to look Bullish too. I encouraged readers not to buy until we get a break above the tight downtrend.
Public Report – The Uphill Climb
The Uphill Climb
When a climber begins his or her ascent, they are full of energy and the start of the climb is always easier than when they near the peak. As the climb continues, you may see him or her periodically rest, shake out the tightness, even drop back and pursue a different path to the top. I often see that same thing happen in the climb of various stock market sectors, and Precious Metals and the Oil sector is experiencing that now. (Long term they remain bullish in my opinion),
WTIC – This was June 14 and we were on day 50 of a Cycle, so it was already late in crude oil’s daily cycle and I was expecting a low soon.
Market Turning Points And Trading
Market Turning Points And Trading
In a recent premium report, I reviewed interesting Market turning points that are showing up across various sectors. I’d like to share some of that with you now. Please note that most of this information was released in the weekend report of May 21st or within previous reports.
S&P 500 – SPX – We see a mild pullback in the General Markets after a strong rally. Not even a 38.2% retrace yet. Many advisors were becoming very bearish and pointing to a possible H&S pattern, with a big drop to come. I see that H&S pattern, but they often fail, as I was more focused on a few other areas that indicated the markets were going to break out higher, not lower.
Public – Energy Sector Review
Energy Sector Review – It’s all a matter of perspective. If you fell asleep Sunday night and didn’t wake up until after the market closed on Monday, you may have thought that not a lot had happened. If, however, you read my report Monday morning , you saw that Oil had dropped 4% overnight. CNBC and many other sources of information where lit up. Was ‘Oil dropping to the 20’s again’? Was it ‘a great time to go short’? No, Cycle timing and the charts were pointing to possibly just a small pull back. We are invested in Oil & Energy, so this was important. This was our Oil chart in the report.
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WTIC – Oil was early in the 2nd daily cycle, and the first one was Right Translated. So I expected more than just a day 6th high in this run.
WTIC MONDAY – Many ( Not here at Chartfreak) likely jumped in on the short side pre-market, but the shorts got overwhelmed. This reversal did fill the gap and it did something else too…
Notice this important observation
WTIC – Oil had recaptured the 200sma for the first time in over a year after repeatedly being rejected. It also CLOSED over the 200sma for 5 straight days!
Today when Oil dropped and filled that gap, it actually also got back over the 200sma by the close. I felt that Oil ‘Could’ drop to the 50sma and still be fine, but holding that 200sma for 6 straight closes is impressive in my opinion. Oil remains bullish.
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Oil reversed , but it still closed slightly down.
The XLE dropped right to the 20sma and reversed higher to close green. This also ‘could’ have dropped to the 50sma and lower channel, but it remained strong.
SO this was actually a bullish show of strength for Oil & Energy, I will discuss Energy a bit more at the end of the report. Lets review the markets.
ENERGY STOCKS
So the ENERGY STOCKS mentioned in last Fridays report ( And the Friday before) Still remain valid. They went on sale today, but most recovered. I did get some feedback that some readers here were buying. I also got feedback that after reading scary things in other trading forums Monday morning, a few sold at the open, basically at the lows of the day. Not knowing whether to buy the recovery as the day went on, I’m asked are they still bullish set ups or did the drop ruin things? Lets look at a few and see why they look and remain bullish to me. In some I’m going to go over the whole big picture for them – it may help.
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CPG – Breaking out from a long term trend line. It ran $7.50- $11.86 . I show this to show the progress that they are making since being mentioned in the report. This was at the end of Feb.
CPG WKLY – Now $15– It gapped down Monday morning to support, recovered and looks ready to run from an inverse H&S base. This also did not sell off when OIL sold off for 9 straight days.
CNX- Breaking out from $4.53 to $8
CNX WKLY NOW – When you look at a chart like this (weekly) it looks like we would say, ” I could have easily just Bought and hold that from $4.53 and tripled my money soon.” So I wanted to show you something very familiar to us now.
CNX DAILY – This was not just an easy ride. Patience in the consolidation phases was needed, sound familiar? I am showing you this to give you the visual of the day to day volatility in those consolidations. We rode consolidations in CLF, VALE, AKS, SID, and now AA. Also some energy stocks are jumping around and bucking us up & down, but longer term the recovery can be quite rewarding. Just use stops and remain alert. Look at the weekly chart above again 🙂
CLF – Do you recall this chart 1 month ago at $2.60? We probably all wish we could just go back, load up heavy, and ride out that consolidation phase knowing what we know now about CLF. It wouldn’t matter if it dropped 35 cents and then recovered, knowing what was ahead when it recovered.
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SO again, ENERGY . Many stocks are recovering and OIL is early in the daily count for the 2nd daily cycle. Sometimes it takes a little sideways consolidation before the brek higher comes along.
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OAS – Roughly $4.20 to $9 since recommended. This chart was from the weekend report. Did it get crushed when OIL dropped 4% today?
OAS – It did drop quite a bit, but it’s still a good looking set up. It went on sale today, but it would have been a scary buy until it moved a bit higher as the day went on. Even if someone didn’t buy it yet, it can still be bought here. Reminder: IT MIGHT continue to consolidate.
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MRO– When first mentioned $14 was a resistance zone ( Keep that in mind).
This was in last Fridays report, has anything changed?
MRO Monday – Went on sale and recovered quickly. Volume was rather light, but that also means that it sold off on light volume when Oil was down 4%. Since resistance was at $14, it may be building energy to break higher.
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ERF March 1st- Notice the measured move to $4.
ERF – It ran to $4 and consolidated into a Bullish pattern. I recommended buying this consolidation, because OIL sold off for 9 straight days and this did not.
ERF Monday – After completing another measured move, it dropped today with Oil and reversed higher, actually closing up 6.5%. This has now moved from $1.84 to $5. Great gains.
Finally LGCY– This energy stock moves in huge swings. It is scary at times, but this big picture is helpful if this is going to recover too. It was actually over $30 in 2014.
LGCY dropped to the 50sma and started moving higher Monday morning. It also ended up green for the day. Still a bullish looking base.
So please note that in every chart of a stock that recovered, it was NOT straight up. There were many boring consolidations. Mondays drop could be considered part of that process.
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As a part of this lesson, I also wanted to show TCK. What a great looking run, but it too got a bit scary at one point in the consolidation.
Jan to Feb – $2.56 to $7.25 – NOT straight up. Notice the sideways boring moves and volatility.
Then it got stuck under resistance and went sideways from $6-$7. That’s about 10 days or 2 weeks of trading.
TCK Monday – Sideways for over a month now and I even warned about a possible H&S , but it never played out. TCK is now breaking out, possibly for a strong run out of this consolidation.
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Finally – I found a new stock ( New to me, I have never heard of this company). Hudbay Minerals. They released earnings on Feb 24th , and the stock went higher. Their next earnings release is April 29th. They are mainly Copper Mining. Gold & silver also.
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HBM – ( HUDBAY MINERALS) – I bought it as a trade since it bounced off of its 50sma and it just kept climbing. It has a long consolidation and a possible inverse H&S , so I will hold on to it until it tells me to let go. I see TGD, VGZ, AUMN, GSS, etc still running strong, so I will try this one until it lets me know that it doesn’t want to run.
HBM close up– I think it may be ready to break out, so someone here also may want to trade it also? Just remember that it is a Copper / Gold Miner and could get caught in a pullback if Gold drops. You could use a stop under the 50sma, or just sell a quick POP if we get one. So far, trading in certain Miners has worked out well.
Like GSS in this chart from the weekend report. It continued higher Monday too.
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I hope you enjoyed this Energy Sector Review. Best wishes and thanks for being here!
NOTE: It’s just $95 for a full 3 months of membership, a fraction of what one stopped out trade is likely to cost you. Consider joining ChartFreak and receive hundreds of chart setups and ideas. See >> CHART FREAK – QUARTERLY
~ALEX
Public Post: Energy Charts of the Day
WTIC– Another slow motion sideways move, but this looks like a Bull Flag that wants to break higher. Will it before the FED Decision? Maybe.
Oversold Oil
The Dollar has been strong for a long time, and the markets have gone up with it. Also Metals have dropped with the stronger dollar. This is the dollar. Is it going to BREAK OUT?
