Ugly candles are all over the place. Going through my public list I see the market’s personalty with today’s price action has probably changed. My last S&P 500 chart annotation states I have a neutral bias. I now think a neutral, slightly bearish bias is more appropriate. It remains to be seen if the pullbacks are going to get bought or if this will end up being the start of a correction. The problem with corrections is, they all start as small corrections and it’s only in hindsight you know if it was a buying opportunity or the start of a bigger correction. So far it looks like controlled selling but we could build something like a rounding top here. The next 2 weeks will be telling.
Up-to-date S&P 500 chart on my public list.
So why am I not outright bearish? I’ll try to explain that by means of a simple comparison of two stocks. ARUN – Aruba Networks and APKT – Acme Packet. Both are on my public list and both are part of the Semiconductors Overview Chart. The problem with being outright bearish and shorting single stocks is obvious. The risk of picking a top is extremely high as quite a few stocks like APKT have put in huge gaps to the upside. Remember, the path of least resistance with uptrending stock is ‘up’. It may sound obvious but it isn’t. Just think of how many tried to pick tops and got burned. The same applies to picking bottoms. So outright shorting a stock like ARUN seems the obvious thing to do. But the risk of getting caught on the wrong side of the trade if it gaps up is not worth the risk. The only way to mitigate this kind of risk would be to short indices or ETFs.
On to the charts:
- ANO – Anooraq Resources: Big down day along with SWC – Stillwater Mining and PAL – North American Palladium. No real surprise here. ANO’s trading behavior raised a red flag a while back and PAL put in a gap down shortly after that, raising another red flag. Platinum Sector Overview Chart.
- AVL.TO – Avalon Rare Metals: Still no separation move off the Moving Average 200. The stock needs a catalyst otherwise it looks like it will continue to drift down. Rare Earth Sector Overview Chart.
- BXI.TO – BioEXX Specialty Proteins: The stock has lost its momentum here. No separation off the recent BXI.TO private placement price. Overall the stock looks tired.
- CYD – China Yuchai: The ascending triangle looks a bit optimistic. The stock can barely manage to trade within the pattern. China Automotive Sector Overview Chart.
- GDXJ – Market Vectors Junior Gold Miner ETF: GDX held up much better than GDXJ. In an ideal bullish environment you want Silver to lead. The junior miners to outperform the senior miners and the miners overall to outperform the price of gold. We are not seeing that right now.
- IFN – India Fund: Similarly to the Shanghai Index that started lagging, IFN is showing first signs of weakness and doesn’t look like it will be able to break out to the upside. It’s still too early to tell though. India Sector Overview Chart.
- KIV.V – Kivalliq Energy: Held up well during the day but the closing price is ugly. Uranium Sector Overview Chart.
- MRZ.V – Mirasol Energy: Stock is going nowhere. Stock needs more time to build pressure in order to fight through overhead resistance that has built up.
- MVG – Mag Silver: Neutral bias. New Silver Miner ETF.
- PKL.TO – PC Gold: Volume continues to dry up. Doesn’t help much though as price continues to drift lower. Everybody is waiting for drill results to get released.
- TAO.V – Tag Oil: PP needs to close. High risk New Zealand Oil and Gas play. No need to rush things with that one.
- TRR.V – Trelawney Mining and Exploration: No tradable pattern. Stock needs more time to set up.
- WLC.V – Western Lithium Canada: Most of the Lithium Mining Stocks are having a hard time right now. WLC.V’s overhead resistance has proven to be a performance killer. Wait until the technical picture improves. Lithium Sector Overview Chart.
- WLK – Westlake Chemical: Awful candle. Obviously chemicals are not benefiting from sector rotation as I originally thought. Chemicals Sector Overview Chart.
Administrative note:
The last 5 days or so, around 6 pm EST my website is either down or encountering longer than expected load times. I’ve contacted my hosting company. They are aware of the problem and it will probably be resolved within the next few days. Thanks for your patience and continued support!
Please note that today Stockcharts.com will be down for maintenance from 10 pm – 11pm EST.
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Have a great evening!
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