Yesterday HUI did exactly what we asked it to do in order to remain normal to the current plan. It dropped into the 224’s, filled the gap and has not made a lower low to the last green arrow. So it remains in a baby uptrend. I would not get too concerned about reading a rising wedge into a 30 minute chart, but it is inserted regardless to again play Devil’s Advocate.
The daily chart from NFTRH 285 tested and held support yesterday. Could this be a bear flag forming? Yes it could be. The volume on the GDX ETF has been declining as the rebound has gone on. That is not a positive.
For reference, here is the daily chart from NFTRH 284 showing all normal so far but the index is below a thick convergence of moving averages.
HUI weekly has fulfilled any minor downside we had projected in filling the gap on the 30 min. chart above. I do not want to see any new probing through 225. *See the admin note at the end of the update.
As it stands now HUI is well on plan, but as perfectly as the weekly chart below is operating, let’s not forget that the ‘symmetry’ plan is more personal art than traditional TA. Regardless, thus far it is working.
Bottom Line on the HUI and Gold Stocks
Nothing has changed per NFTRH 285 analysis, but the sector needs some thrust now to neuter the possibility of a bear flag. HUI tested but remains above important support at 225.
Said potential bear flag is a negative for now as HUI rises on uninspiring sector volume. On the positive side, there is more and more terribly bearish stuff showing up out there even though this correction always was going to happen and it has dropped the sector to logical support. We’ll just let it play out and accept whatever the market decides.
US Stock Market
You know, it is not lost on me that the only way I have consistently made money this year has been in the small trading account and mostly on the short side of various individual stocks. This despite my usual orientation as an intermediate swing trader. *Again, see admin note.
The Dow is not broken despite the eruption of bearishness. There is talk of a double top in the Dow, but it did tickle a new high last week. This is just a minor reaction so far. A loss of support would probably target the 200 day moving averages and a sub-30 RSI.
SPX has the same general status as the Dow. This is a battle to hold the 50 day averages. If it does, then the shakeout could provide serious upside energy. If it does not, then an approach toward the 200 day averages and RSI 30-ish looks likely.
NDX should not make a lower low on a daily closing basis and especially on a weekly closing basis or the technical damage would go beyond the ‘routine’ correction variety for the US markets. This is a leadership index and leadership involves upside and downside.
US Stock Market Bottom Line
Watch NDX. We’ll continue to monitor the unbroken Semiconductor sector as well. Believe it or not, the ingredients are still in place for a big upside blow off and corrections like what is happening now are almost necessary ingredients for such blow offs.
That is not a prediction or even necessarily a preferred plan. But until the market is broken it is not broken. As such, be aware of the possibility that the jitters going on right now could provide the thrust for the bull’s perhaps final flourish.
Yet we noted above that the Dow and S&P 500 can technically decline to their 200 day MA’s and still remain okay. But that would likely involve the NDX making new lows before any rebound. That would be a negative divergence possibly to the remainder of the bull.
Here is the deal folks. If it looks like a duck, walks like a duck and quacks like a duck… it’s a duck!
As noted above, lately I have been quacking like a short term trader as opposed to my preferred stance as an intermediate trend finder and trader. All that has been working for me is trading this market.
As pertains to the gold stock sector, if HUI holds the parameters I am looking for above okay, no harm no foul. I have some favored positions that I would like to hold through a projected bottoming process.
But if the gold stock sector proves that it’s got more downside than the weekly chart and its lovely symmetrical mirror image allow for (225), then I am going to call myself a duck and trade the dickens out of the gold sector as well as regular stock sectors (that are looking increasingly volatile) from the bullish and/or bearish side as applicable.
This would be who I am (if directed by the market). But I ask you to please be who you are. Trading and investing are all about knowing yourself.
IRA (in which direct shorting is not allowed)
Trading the IRA would involve routinely buying and selling GDX and GDXJ, treating them like nothing other than in-day or in-week vehicles until the market settles down. Also the likes of DUST and JDST would be used for stand-alone bear trades as applicable.
The same would apply to the regular stock market. With the incoming volatility it appears that a steady trend is over. It looks more likely that there is either going to be dynamic downside (short the bounces) or dynamic upside (play the blow off) ahead.
Aside from ETFs, individual stocks would be traded as well when I find constructive chart situations from the long side.
Brokerage (in which I requested from Fidelity that margin privilege be revoked)
This would have the same limitations as the IRA, but this account would not trade as frequently or intensely as the IRA. It would seek to be in alignment with whatever the markets bring, but would default to a status of ‘capital preservation’.
Trading (small account with margin privilege)
Shorting of individual equities would be the main theme here as charts such as the recent CTCT or SSYS appear, whether the big market goes bullish or not.
Impact on the NFTRH Service
In the event that I change my personal focus, there would be little to no impact on the service. Nothing is going to change. A weekly letter and in-week updates (incl. the Key ETF updates, usually on Wed.) will continue as usual.
There might be some minor inconvenience for the relatively few people who care what I hold in the portfolios, because those items would be gone until I can see the potential of a new intermediate trend or a gut wrenching ‘you just gotta buy it’ bottom washout.
But NFTRH will continue to manage macro markets exactly as it does now. Meanwhile, the time and energy saved in not having to do the portfolio segment each week would be devoted to things that actually matter, including trading opportunities. In place of the labor intensive tables that usually go there would be some words about what I have done during the previous week and why, along with thoughts on the coming week.
Please understand that this would not be some kind of trading service (a sort of ‘Trading with Gary’ thing) because I think that is a fool’s endeavor. But when I see something like a bullish setup in AAPL (a failed trade – they happen) or a bearish setup in CTCT (worked out well) they will be highlighted as ‘trade ideas’ for those interested to consider.
Being the writer of a 25 to 35 page macro market report and intensive related in-week updates, please do not expect me to micro manage any of these trade ideas. They would be 100% your responsibility as I probably would not even participate in many of them. I just love charting and the current market environment looks like it could be setting up to be a chartist’s (and trader’s) preferred environment.
So assuming that I do change my mode of personal operation (this looks likely with the regular market and is possible with the gold sector) I actually think the service will improve because it would be provided by a writer who is not fighting himself and the service would be more in alignment with the realities of the current market environment.
Thank you for hearing me out on this! :-)