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The pot sector resumed its climb today after a 4 day consolidation.
After a huge 2017 (up over 50%), in 2018 the Pot ETF (MJ) had given back almost the entire 2017 gain, but suddenly it took off again in mid August with the announcement that beverage company Constellation Brands had taken a big additional $4 bil stake in Canopy. It was off to the races again for the sector, with a 50% gain in the Pot ETF over the past 3 weeks.
This is like biotech back in the good (bad) old days :o) Fun to watch and great entertainment. Looks like the Pot ETF could soon test the previous high near 40 (currently ~35). I'd watch for the RSI to hit 90, which is where it peaked before (RSI is currently 71.29). This time it might blast even higher, but if the ETF hits 40 it'll probably be time for a retracement..
SNES broke several support areas (1.20 and then 1.00 and the 200 MA). Support now should be the band from .75 - 1.00, so it may consolidate in that zone for a while, and what happens next should depend on news flow. If .75 doesn't hold then next support would be the .50 -.75 band, based on the chart anyway..
Fwiw, it will be interesting to see what happens next with ARYC. It's consolidating after the big run up, so will see if it can stay above the rising 50 MA.
The gold miners have really gotten pummeled with the big drop in gold this year. Looking at GDXJ, it broke support at 30 and looks like it might have to test the 2016 low around 27.50 Likewise with GDX, which broke support at 21 and might be destined to test its 2016 low also (18-19).
Gold breaks support again, next stop 1200. Ditto silver, next stop low 15s.
ARYC hits .103, backs off to .097 and forms a doji. Next we'll see if it has a correction now or perhaps there's another 10-20% left in the current move. It's easy to be objective with these charts when you don't have a position :o)
SNES continues its sideways consolidation. The rising 50 MA is support (1.37), though if it can't stay above that then 1.20 is next support and then the 200 MA (1.09).
The SNES chart is looking somewhat tenuous as it pulls back and tests key support, the range from 1.20 to the 50 MA at 1.35. Next support would be the 200 MA which is currently at 1.09, and below that is 1.00 which will need to hold or next support is down to .60-.75 area.
The ARYC chart continues to look good, pointing toward .10. Currently at .059.
The ZTE chart does look interesting after the big drop. They were trading with N. Korea against US wishes, so a lot of unknowns surrounding the stock. Might have a dead cat bounce in the near term, but high risk.
Gold/silver weak. Good chance that gold could test 1200 soon.
SNES had a 'golden cross' today (50 MA crossing back above the 200 MA). The golden cross is generally bullish, but is often a lagging indictor that can sometimes signal a coming pullback/consolidation after a big recent move. Looking at the chart it wouldn't be surprising to see SNES consolidate back to 1.50 or into the 1.20-1.50 area. Just a guess though, and will depend on the news flow.
The ARYC chart continues to look interesting. If it can get thru .05 in the days/weeks ahead, then there could be a move up to .10. It might have to consolidate for a while under .05 first though, as happened during its 'stair step' climb in 2017.
No traction evident for gold/silver. Every time they move up to key resistance there is a smack down, which looks like the usual price suppression mechanism. Good time to gradually accumulate if one doesn't already have the 5-10% metals position recommended by Rickards as disaster insurance.
Fwiw, Bitcoin broke down under 6000 this week. Since peaking in December it had formed a bearish descending triangle over the past 6 months, and broke key support earlier this week. I follow the Bitcoin 'ETF' (GBTC) loosely, and next support is 7.50 (currently 8.65). If that fails then there's the wide 5.00-7.50 range, and could be looking at 5.00. GBTC had a 'death cross' in late May.
The SNES chart is looking good and appears to have it's sights set on 2.00. Once thru, 2.50-3.00 should be the next target. It should also put in a bullish 'golden cross' by next week (50 MA crossing back over the 200 MA). While this is a lagging indicator, it reflects the recent bullish move.
On the penny stock front, ARYC looks interesting. Over the past 2 weeks it broke out from the .02 resistance area and so far has reached .05 after some wide daily swings, and today settled at .045. The next resistance should be the band from the .06 - .10 (trading range from late 2015), so that's the near/mid term target to watch.
TEVA is also looking good. After its big 2016-17 unraveling, it has bounced back and looks to be eyeing 30 in the near/mid term. I thought it might be getting ahead of itself somewhat, but the recent announcement that Berkshire Hathaway took a big position and then added to that position has helped the recovery a lot.
MU is sitting right at/near resistance (62) and looks like it'll make it thru, if not right away then after a pullback. That's one heck of an uptrend.
If you look at the RSI (Relative Strength Indicator) you can get an idea when it's likely ready for a pullback. In the past when the RSI has gotten above 70 for a week or two, the stock has pulled back/consolidated, and after that the uptrend continued. Today the RSI rose above 70 (70.47). In recent up legs, it got to around 80 prior to the pullback.
SNES is hanging in there so far, and is testing the 200 MA as we speak (1.18). It traded as low as 1.12 today, but then moved back to the 200 MA. After such a huge move, I wouldn't expect the 200 MA to hold. Most likely it'll pull back to 1.00, and then next support levels on the chart look like .90, and then the band from .60-.90 (the 50MA is .56 and rising). A pullback into the .60-.90 band might be a good entry/re-entry point for folks wanting to go long. Depends on the news flow though, and they currently have that ~30 day timeline to hear from the California regulators.
One contrarian play I've been following loosely is TEVA, the big generic drug company. After crashing from 70 to 11, it's been in recovery mode, boosted by the news that Berkshire Hathaway has taken a sizable position recently. It's sitting right at key resistance ~22 and looks about ready to continue higher. Once thru 22, the next resistance area should be up around 27 (there's a big gap to fill, from 22 to 27). The company isn't out of the woods yet, so I'd expect volatility in the quarters ahead, but looks like a good stock for a recovery over time. Having Berkshire in the stock is a big plus. It also had a bullish 'golden cross' several weeks ago, when the 50 MA moved backed up above the 200 MA.
The DJIA is sitting right at the 200 MA (23,749), so that's the first support level to watch. Next will be 23,500, which is roughly the Feb and March lows and is also the base of the bearish 3 month descending triangle formation. If that fails to hold that would open the way for more downside.
However, the other main indices don't look as bad. The S+P is also close to its 200 MA (2620), but would need to fall to 2575 to reach the base of its descending triangle.
The Nasdaq looks better and is well above its 200 MA. While it hasn't formed a descending triangle, it has formed a possible head + shoulders which is also bearish, but it needs to drop to 6850 before getting too worried (currently 7075).
The Russell looks the best and is still up near the 50 MA, and has formed a neutral triangle with a possible upward bias.
If the DJIA breaks support, watch the S+P. Depending on what happens with the S+P will determine whether to short or not. Broken support for the DJIA and S+P doesn't necessarily mean the beginning of a new bear market, more likely it's just a deeper correction within the longer term bull market. In that case going short would be a shorter term trade.
The main charts are close to testing their rising 200 MAs. A month ago the 200 MA was breached several times by the S+P, but each time it rallied back above. The DJIA has now nearly completed a bearish descending triangle that formed over the past 3 months, so the big question now is whether that will hold (23,500). The QQQ and Russell are in somewhat better shape chart-wise.
One scenario that wouldn't be too surprising would be the DJIA and S+P falling thru current support and then having an extended period of sideways consolidation at lower levels.
Looking at the charts objectively, the huge move since the election (almost 50% for the DJIA) still needs a bigger retracement. This doesn't mean a crash or new bear market, only a more meaningful correction and consolidation which would be healthy.
A definite breakout for the US dollar, now up to 91.5 with next resistance at 92 and then the 92-95 band.
A stronger dollar can put pressure on the emerging countries with dollar denominated debt, and also could make the Chinese yuan-dollar peg harder to maintain and thus increase the chances of an eventual yuan devaluation.
It also puts pressure on the metals, so this could be another opportunity to accumulate on weakness.
Fwiw Lindsey Williams' insider source said to hold your gold/silver but don't expect anything huge on the upside in the near/mid term. After the Trump election he said the market would melt up, which it did, and he sees 30,000 and possibly up to 40,000 or even higher should Trump get re-elected.
Personally I wouldn't be surprised if Trump gets impeached sometime after the mid-term elections, and he's not likely to 'do a Nixon' and resign. In spite of his cozying up to the Neocons, it's not clear that this will be enough to save him, at least based on the relentless attacks by the media. It looks like they're truly out for blood, so impeachment proceedings in 2019 wouldn't be surprising..
The US Dollar could be breaking out after putting in a flat bottom over the past 3 months (trading band from 88-91). If it can get thru 91 then next resistance should be 92 and the wide trading band from 91-95.
TA-wise, the time to consider going short would be when key support is broken, which currently is in the 23,500-23,600 area (the 200 MA is 23,601 and rising). So that's the area to watch.
If key support fails, the TA rules say either 1) go short immediately or 2) wait for a re-test of 23,500-23,600 to fail (which would then be resistance instead of support), and go short if the re-test fails. Next support would then be the 22,000 area, then 21,000, then 20,000.
Personally I'd be leery about shorting, and would instead just go to cash and stay on the sidelines. The way the chart looks now the market might keep recovering or at least stay in a holding pattern. Tough to say, but while the big institutional traders
may be going to cash right now, the big time shorting won't start unless/until key resistance is broken (23,500-23,600).
The gold chart looks promising and has formed a bullish ascending triangle over the past 2 years, and a quasi inverse head + shoulders over the past 5 years, also bullish.
It's sitting right near key resistance (1365) and looks like just a matter of time before it breaks out, even if it has to test 1365 a few times before getting thru.
The silver chart is not as good, more like a flat line bottom, but it had a big day today. Staying above 17 would help, and then next resistance is 18. Key resistance should be 20 (2016 highs) and getting thru that would be huge, and chart-wise would put silver where gold already is.
With all the problems piling up, the metals could soon be back in favor. Rickards says a big Chinese devaluation of the yuan is increasingly likely. On the other hand, it's possible there's a perception that world problems are receeding, peace is breaking out in Korea, etc, combined with gold price suppression by central banks, and then the gold liftoff could be stalled.
Looks like the DJIA futures successfully tested 23,000, which is close to the 200 MA (22,740 and rising), and then bounced, so a good sign (for bulls) in the near term anyway.
So could see a recovery back to 25,000 or higher in the near term. Alternately, it might re-test 23,000 and the rising 200 MA before going into recovery mode, consolidating in the 24,000-25,000 range, after which my crystal ball gets fuzzy lol..
A key question will be the activity (or absence) of the cavalry (PPT/Plunge Protection Team), who may have arrived already. When/if the big collapse comes (planned crisis to bring in the SDR), they will presumably not arrive.
Bitcoin is testing the November trading range (6000-8000), and it tested the lower 6000 boundary today. 6000 also represents support from October, so we might see things try to stabilize around these levels. Alternately, there is a support band in the 3500-5000 range from the Aug/Sept period.
Ethereum has held up better, currently testing the Dec/Jan support band of 600-800. If 600 fails then next support band is 400-500 from Nov/Dec.
Litecoin - if 120 doesn't hold then next support would be the 80-100 band from Nov/Dec.
Key support definitely broken now for the US dollar, so next interim support is way down at 85. At the current Davos meeting, US Treasury Secretary Mnuchin reportedly said that he welcomes a cheaper dollar.
That's good for gold, which is testing near term resistance around 1350. The gold chart bottomed in late 2015 and since then has formed a bullish ascending triangle, with 1350-1375 as the upper boundary. From a TA perspective, getting thru that would officially confirm a trend reversal and a new uptrend in place.
Could be stiff resistance at 1400, and I figure that's where the gold suppression mechanism might kick in. But with the dollar breaking key support dramatically and having a long way to fall, gold should be testing 1400 soon.
Meanwhile the stock 'melt up' continues. The big corporate tax cut could propel the DJIA up to 30,000, but the chart is starting to get a scary parabolic look to it, and the N. Korea situation isn't going away. Too early to short, but a showdown with Kim Jong Un could be 3-6 months away, or possibly right after the Olympics (?) The stock market seems oblivious to the risk.
The US dollar breaks key support today on the futures chart (broke below 90), although still holding 90 on the regular chart, barely. Once 90 is definitely broken, the next support level is way down at 85 and then 80. So not good for the buck. With the Fed raising interest rates the dollar should be stable or rising.
On the bright side, a weaker dollar should take some pressure off China's need for devaluing the yuan, as it makes it easier for them to maintain the yuan/dollar peg.
But on the ominous side, Rickards said that on Jan 1st the IMF instituted a mechanism by which foreign countries can start converting their dollars into SDRs. That could explain the dollar's weakness in the face of Fed tightening, and could be part of the reason the Fed is so keen on raising rates - to ameliorate dollar weakness as they transition countries away from the dollar and into the SDR system.
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