Sep 232014
 
AON daily Sept 23rd

AON daily Sept 23rd

AON (Aon PLC) was added directly as an Active Short Trade back on July 25th immediately following the breakdown below this multi-year uptrend line. Following the initial thrust lower, AON bounced, largely in sympathy with the broad markets & financial sector,  to make a perfect backtest of the trendline from below. Following that backtest, AON went on to break below this minor, sub-uptrend line which formed a bearish rising wedge-type pattern just below the primary uptrend line. At this point, AON still offers an objective entry or add-on to an existing position with a stop-loss calculated using a 3:1 or better R/R (risk-to-reward ratio) based on one’s average cost to the sole profit target of 77.08, about a 12% drop from current levels.

click here to view the live, annotated chart of AON

Sep 232014
 
BXS daily Sept 23rd

BXS daily Sept 23rd

As mentioned yesterday, I plan to update the trade ideas this week & hope to remove all the trades that have either exceeded their suggested stop levels or no longer look compelling from an R/R or technical perspective. My intention is to have all trade ideas updated by tomorrow. However, as I’m seeing increasing evidence that a long overdue significant correction in US equities may be close at hand, I am going to turn my immediate focus on highlighting some of the current trade ideas that still look compelling at this time, starting with BXS (Bancorpsouth Inc).

The live chart to the BXS Active Short Trade was updated along with several other Active Trade Ideas last week. BXS has just recently turned lower after back-testing the neckline of the Head & Shoulders pattern that is still very much in play. BXS was added as a Short Setup back on July 17th & went on to trigger an entry later that day. This trade hit the first price target (T1 at 20.54) for a 12.8% gain on Aug 1st with the typical reaction (bounce or consolidation) from there, which resulted in the recent backtest of the neckline. As BXS is still within close proximity to the neckline, this trade still offers an objective entry or add-on to an existing position with a stop on a solid close above the neckline. As T1 has already been hit, followed by the expected reaction off that level, my expectation would be that the upon the next drop to the T1 level would provide little, if any support with T2 (19.33) as the most likely stopping point for the next move down in the stock.

In addition to prices rolling over following the failed attempt to regain & close above the neckline of the Head & Shoulders pattern, note the bearish posture of the MACD. The MACD line (fast line) is starting to turn lower (i.e.- a bearish crossover is pending… also easily referenced via the MACD histogram) after making an extended run up to the zero line. The zero line on the MACD often acts as support & resistance and that has been the case with BXS, with the stock price in an uptrend when the MACD is above the zero line & a downtrend when below.

click here to view the live, annotated daily chart of BXS

Sep 222014
 

With most of the major global equity indices recently breaking below key uptrend lines and/or bearish chart formations, complete with negative divergences in place, the U.S. markets are most likely not far behind. Most of these chart were published in the August 6th “Around the World in 60 Seconds” post and live versions of many of these charts, along with the major US indices not shown here, can be found under the Live Charts page. Remember, despite the apparent resiliency of the US markets, we are still just a bad day or two away from smashing through the primary bull market uptrend lines (generated off the March 2009 lows) on both the S&P 500 & S&P 100 as well as the Nasdaq Composite & Nasdaq 100 while both the small caps (both the Russell 2000 & S&P 600 Indexes) as well as the mid caps (S&P 400 Mid-Cap Index) have already just recently broken below their primary bull market uptrend lines. If & when all major US equity indices have ALL fallen below their respective bull market uptrend lines, all of the ingredients are in place for a very swift and powerful decline so regardless of how many times you have heard that over the last few years, just make sure to have a trading plan in place whether you are bullish or bearish.

While my personal trading activity has been extremely light lately and hence, very few new trade ideas or broad equity market analysis, I have started working on update the trade ideas and plan to remove any stopped out trades along with those that no longer look very compelling in order to add some new trade ideas. For now, I’m still giving gold & the miners as well as the agriculture ETFs a little more room as those are intended as Long-Term Trades/Investments although I continue to prefer to wait for decent evidence of a reversal before adding any more exposure into any of those positions.

Sep 222014
 

The first chart below is a 10-year weekly chart of GLD (gold ETF) showing illustrating the scenario that would have gold prices temporarily breaking below the mid & late 2013 lows before reversing. Such a move could serve as a powerful, stop-clearing, short-selling bear-trap, providing the necessary fuel to finally take out the three previous reaction highs put in over the last year or so. If this were to be the case, that might take GLD down to about the 110ish area, about 6% or so below current levels. Of course that is just one of many possibilities and I would continue to put nearly equal odds that gold reverses just shy of the 114.50ish double-bottom lows from last year. Zooming down to the 60 minute time frame, GLD continues to drift lower within this falling wedge pattern with bullish divergences still in place. The recent volume surge may indicate seller capitulation. A solid break & close above the wedge would an early sign of a possible trend reversal.

Sep 222014
 
AA daily Sept 22nd

AA daily Sept 22nd

AA (Alcoa Inc), which was added directly as an Active Short Trade a week ago today, has broken below what appears to be a bear flag pattern. Bear flags are continuation patterns with a projected measured move roughly equal to the length of the flagpole (i.e.- the sharp move down from the recent highs leading up to the pattern).

This updated daily chart also lists the suggested buy-to-cover levels, T1 at 15.23 & T2 at 14.05. The suggested target levels on short trades are placed slight above the actual resistance/expected bounce levels in order to minimize missing a fill, should the stock reverse just shy of the actual resistance level.  A link to the live, annotated daily chart of AA may now also be viewed by clicking here.

Sep 192014
 

I’ve covered gold & the mining sector quite extensively lately so I figured that with SLV breaking below it’s mid 2013 & mid 2014 double bottom lows today, I will focus on the “other” shiny metal. By all accounts, today’s price action in SLV (Silver ETF) is bearish… a breakdown below a well defined, uber-watched support level on above average volume. Sell signals don’t get much more clear than that. However, as with gold, I would not be the least bit surprised to see silver break down & even trade below that key support level for several days, possible even several weeks. Assuming that gold & silver are in the latter stages of the cyclical bear market that began in 2011, such a break of support could prove to be a very bullish longer-term event, serving as a wash-out move to shake out the last of the weak-handed longs & usher in a new wave of short selling, the latter of which could provide the fuel for a strong short-covering rally should silver manage to regain this broken support level. Ditto holds true for gold although the “shiny-er” metal is still trading somewhat above its comparable mid & late 2013 double bottom lows.

In this weekly chart of $SILVER (spot silver prices), I have outlined what I believe to be the three most probably scenarios for silver. The first & most likely scenario would be a reversal from at or very near current levels, with today’s break of support being reversed relative soon, by the end of next week latest. That allows for a little more downside in silver as well a gold, which would likely bring to gold to a test of the mid/late 2013 lows. The second most likely scenario (which I’d have to give nearly equal odds to the first now that support has been lost) would be for a half-decent washout move lower that could last as long as a few weeks, although probably not much more than a week or two, bringing $SILVER down as low as the 16 area. Such a move would still have very strong bullish divergences in place on the weekly PPO & RSI, as well as some other key indicators. The most bearish scenario would be that the recent consolidation in silver prices since the late June 2013 lows was simply a bearish consolidation pattern (a large descending triangle) in a much larger bear market, possibly even a new secular bear market. If so, prices are headed much lower over time and may work there way down within this large descending price (bounded by the blue & red downtrend lines).    Note: $SILVER is an end-of-day (EOD) chart, with prices updated each evening. The live, annotated version of this chart is also available from the Live Charts page.

$SILVER weekly Sept 19th

$SILVER weekly Sept 19th

Another reason for allowing a little more wiggle-room on gold, silver & the mining sector before throwing in the towel would be my take on the US Dollar. The inverse correlation between the $USD & gold, along with an analysis of the dollar, was recently covered in this Sept 10th update. The 10-year weekly chart of UUP (US Dollar Index ETF) is similar to the monthly chart of the $USD from that previous post and also shows UUP at the same multi-year downtrend line resistance as $USD. Besides the fact that the dollar has Continue reading »

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