Intraday Video that is a “Must See” (September 22, 2015)SP-500 SPY SP-500 IBB SP-500 BLUE AGN ALXN RE XME DBC OIL XOIL.X XLE XOP OIH IBB RIG HAL SLB ALK GPRO AMBA DXYO SP-500
This is a market right now, it’s actually behaving “According to Hoyle.” It’s really not particularly surprising, and here’s why. I’ve talked about this recently. This bearish wedge pattern, and I’m taking liberties with this because things aren’t exactly lining up. This is kind of a bearish wedge where you get higher highs, higher lows. They’re converging, and after a big decline like this, the typical resolution on this, because you’re not seeing such extensive rallies. You’re no longer seeing rebounds like this, so this revels that there’s some selling pressure. This didn’t even get back to test this resistance level here, prior support, or here. So this is a pattern that’s bearish. It doesn’t always resolve to the downside, it very, very rarely resoles to the upside. I can’t even think of an example, though I’m sure there is one. It either resolves to the downside or just gives a lot of choppy sideways consolidation. This is a downside resolution.
I don’t want you messing around with this market right now. The shorting opportunity, it would be if you had a “flux capacitor,” go back and short here. But going forward, really the shorting opportunity might even be later today or in a day or two when you get this next snapback rally. And there typically is one, it’s kind of like there always is one in this volatile market. But this is a really, really bearish development, this move today. Lets look at it in the SPY where we can see volume here. You can see how choppy this has been. Volume, again, this is at 12:15 Eastern time when I’m doing this so there’s still plenty of trading to take place. But this is a key trendline break, and we’re going to get to some of the other indexes and stocks. I actually have a couple of things to say that will probably surprise you. This is something, again, you just don’t want to mess around with.
Here’s what I want you to ask yourself when you’re considering this, because if you’re watching this video there’s probably some kind of tendency within you to gamble. You think it’s trading, but it’s not. It’s really just gambling because you want in. It’s like the opening bell rang and you’ve got to do something. But when you add sitting on your hands to the list of possible somethings, suddenly you know what to do. So we’ll go into some sectors and stocks in a second. One thing I want to show you, again, as I do this, and I want you to look at the 5-minute chart. This is the SPY, this was this morning; there’s some buying going on here. This thing hit bottom at around 11:00, and has been bouncing along there the rest of the day. Now, I can’t say, and I’ve made this type of call, or whatever you want to call it, before and been half right and half wrong. So you just can’t make this kind of call.
What I’m saying is, “Oh! So this is the bottom and now we’re going to get a snapback into the close, so buy them now.” Sometimes that happens, sometimes it doesn’t, which makes me nothing more than a gambler and a charlatan if I definitively declare that this is the bottom. It’s not, necessarily. It is a key low. So let me get to the S&P and here’s your key low; the low of the day, 19.32. Still in the “great depression” back then. So keep an eye on 19.32, I’m going to go ahead and set a price alert here. I’m putting it here at 19.32, just for today only. Watch this as a key level because I’m telling you, if the S&P starts trading down below here you’re likely to see a big “flush” into to close. If it stays open then you can look at stochastics and you can see that they’re actually giving you a nice positive move. So we may or may not have seen our lows for the day.
But this, ultimately, because you only make money going forward, this is ultimately what I’m planning for. Whether it happens today or tomorrow, this is the wedge, right here, so this would be the resistance, basically right in there, somewhere around there. So I’m looking for any rally. We’ll see one because stocks, unlike what you saw here, they don’t just go down every single day. This was a big dump. You don’t see that very often. What I would expect is some kind of rally and it’s going to be a really weak rally, lots of supply, folks saying, “Get me the heck out of here!” And then ultimately a roll over. So that’s really what I’m looking at in the major indexes. Again, the reason I’m sending this out today is because I think it matters, I don’t want you messing around in this market today.
Members, listen to me, this is what you pay me for, get your monies worth, don’t mess around in this market. If you’re a really, really short-term trader then you’re probably to busy making money today to watch this video. To the rest of us mere mortals, you just don’t want to play around with this. I can go through the other indexes but they don’t matter, they all look the same. Lets look at the IBB. I mentioned yesterday, and actually in this mornings note too, this is the end of biotech. Hope springs eternal. Let it spring somewhere else. I’m telling you this is the end for biotech. This confirms it just over the last couple of days. I’m as serious as a heart attack looking for medication and not being able to find any.
Here’s the weekly chart. MASSIVE move up. MASSIVE move up. PULLBACK to the 200-day or 40-week moving average. Yippee ki yay we’re off to the races again. This time big massive move down. A week or two later we get back above the 50-day moving average. “It’s all good in the hood.” This is a lower high, it’s a lower high. If you’re a “biotechian”, and we have a few of them in “Stock Market Mentor”, I will say this, be interested in biotech. Strive to learn about the companies you are trading. Don’t sit there like a fool and just hold stocks that you are rooting for, that have given you nice paper profits in the past. Don’t be that guy. Again, if you’re a “biotechian”, Great! Fantastic! Those companies are so interesting and the research that their doing, the drugs that they’re coming out with, those that don’t go up 7,000 percent, it’s great! Be a fan of the biotech sector, but don’t pick stocks and just think that they’re going higher, and higher, and higher.
I’m sitting here telling you, this was a shot across the bow. Everything went down with the rest of the market, but this was an indication, that institutions were no longer buying biotech. By the way, it was an indication that institutions were no longer buying anything. This was an indication that institutions are no longer buying the S&P. They’re no longer buying stocks. This was a massive move down. Unlike here, which showed a rebound and new highs, this was a REALLY weak rebound. So we look at the IBB, again a weak rebound, right to the 50-day moving average. I’m telling you, and you can thank me later, YOU DO NOT WANT TO BE IN BIOTECH! Now, we get a bounce in the next day or two, and I know I’m going to see some “tweet” from somebody who says, “You idiot! You’re wrong.” And this and that, whatever.
I don’t pay attention to you guys. You’re going to get some kind of snapback but this tells you, this weak bounce tells you that institutions are no longer buying this sector. They are distributing it. If you think you know more than the institutions, then be my guest to fade them, but this is not where you want to be. I want to look at some stocks here. Bluebird ( NASDAQ:BLUE ); we were looking at this yesterday. Distribution, I think some members dumped this stock yesterday. The 200-day moving average was the key line in the sand. That line has been crossed over, sand kicked in the face of the bulls, you don’t want to be here.
Allergan ( NYSE:AGN ), higher low, sure. Up today? Sure, barely, but that’s fine. But this is still a lot of resistance here. A lot of resistance. Use this opportunity to sell if you’re long this stock. By the way, other folks did, which is why the stock went up as high as $292.50 and is now down $6.00. So this is under distribution as well. Alexion ( NASDAQ:ALXN ). No! You don’t want to be here. You haven’t wanted to be here for a long time. “Oh, but Dan, support is right here at $155.00.” Okay, that’s great. But do you really want to be trading this stock? Really? Really? Are you a true believer? How about Regeneron ( NASDAQ:REGN )? This is kind of like the IBB. Nice uptrend, but a breakdown that if the institutions were still sponsoring, if they were still interested in biotech they would have pushed this stock back up above the 50-day moving average and it would have stayed there. It didn’t. Instead, institutions are saying, “Hey man, this stock is back up to the 50-day moving average. I’m out of there.”
You can see the higher volume spikes. This happens when institutional investors are active. They’re red. They’re selling. You need to be doing that too. Lets look at metals and mining ( XME ). You don’t want to be here either, it’s not where you want to be. This is not a bottom, it’s just a perpetuation, if that’s a word, of the downtrend. Commodities ( DBC ), maybe they’re basing here, but I look at this and to me this is my inflation ETF. When they start ticking higher, that’s when I’m going to start wondering if the Fed might take action. But there’s no inflation and it almost seems like an inverse thing. You’d think that this might prompt the Fed to act. It’s really not, it’s just a gauge of inflation. Raw materials, it’s not working.
Now, lets look at something that maybe you want to start looking at more. Oil. Here’s the tradeable instrument, at least what I follow. This could be a pending breakout to the upside. It’s still in a downtrend, absolutely in a downtrend. I have to point out, yesterday Dennis Gartman was on “Fast Money” and he said that he thought that oil had bottomed. Frankly, I generally don’t like to listen to other people because it just makes me lazy and so I’d rather form my own opinions. But he’s a guy that’s worth listening to, because he was the one that somewhere back in here, or maybe it was here, I don’t remember and it doesn’t really matter. He was calling for much lower oil prices and he was absolutely right on that. So now when he’s saying that this is a bottom, a lot of energy investors, oil investors, will listen to him. That could be part of the reason for this strength here.
What I’m telling you is, you want to start looking at oil stocks. Look at the XLE. By the way, just as a general note, lest someone misinterpret what I’m saying, I’m not pounding the table saying to put your money in oil stocks or in energy stocks. I’m not. I’m just pointing out the fact that these had hit an extreme low, this may be sniffing at a bottom here and it’s worth watching. The XLE, it’s still too early to tell. XOP, looks a little more “basey”, looks like it’s working on a little bit more of a base. To early, you want to be looking and see when this moves above the 50-day moving average, and if it stays that way. The oil services ( OIH ), same thing. So this actually has just kind of been drifting sideways for a while. It’s been broken down. Stuff like the IBB, it hasn’t been broken down, so this isn’t drifting sideways, it’s topping out.
Again, do you see the difference? This is what bases look like when they first start. This is what tops look like when they first start. And you don’t find bottoms at the tops. You just find a lot of hope. I don’t want you to be that guy that slides down the “slope of hope” with some stocks. Lets look at some energies here. RIG, if this level holds here this is a stock that definitely warrants doing a little “drilling down” so to speak. I couldn’t help that. I don’t know why I said that. It was a stupid pun, but there it is. As long as this holds above the 50-day moving average, I think this is a stock that you can look at. And by the way, when I look at RIG, I look at Halliburton ( NYSE:HAL ), it’s trending down. I look at Schlumberger ( NYSE:SLB ), a higher low. These make me start paying more attention to these energy stocks. Particularly Transocean ( NYSE:RIG ), a driller. So I’m not putting my money in these right now. I’m just not. But I’m sure watching them for any kind of turn. Because again, this is what a bottom looks like ( SLB ).This is what a top looks like ( IBB ). The only thing that’s unknown on both of them is time.
Now, a couple more here. Alaska Air ( NYSE:ALK ), this is why you don’t buy potential breakouts in choppy markets. This has been a choppy market. The stock never brokeout through 82.00, it had tried several times. And so there’s a temptation to say, “Oh, well this time it is, and volume was heavier than average, and it’s not as bad as Friday. But then everything was down, option expirations. So yes, I’m going to buy.” You don’t want to get sucked in because this is a volatile market. A synonym, in my view for volatility, is chaos. A lot of up and down motion, not really any predicting which way it goes, which is why it’s volatile as opposed to money making. So this is one you kind of want to stay away from.
GoPro ( NASDAQ:GPRO ), this is actually encouraging. On a really lousy day in the market this is up 2.4 percent after printing a new low here. So this is one you can look at. Look, I’m not a GoPro ( NASDAQ:GPRO ) guy. The last thing that I’m going to do is strap a camera to my head and walk around or do whatever. Anything that might be interesting, I’m not going to video tape it. This stock has already fallen. It’s basically taken a haircut in market cap, just over the last couple months. From here it’s really been taken out to the woodshed. It lost almost 70 percent; at some point the stock has to turn around, this may be the bottom. If you’re buying this stock just make sure you have a tight control on it, which would be a stop-loss just a little bit below 30.00. Ambarella ( NASDAQ:AMBA ), one of the big suppliers for GoPro ( NASDAQ:GPRO ), also looks like it’s hitting a bottom. Be careful about this. I’m not pounding the table saying go out and buy GoPro ( NASDAQ:GPRO ) and go out and buy Ambarella ( NASDAQ:AMBA ).
I’m just pointing out that today, when stocks are so horrible, This is a stock that’s up; it didn’t really get to a new low here. GoPro ( NASDAQ:GPRO ), it’s a stock that’s up relative to the open and relative to yesterday’s trading. So these are a couple that I want you to look at. But generally speaking, this is my biggest position ( DXYO ) and I like it. I like being in cash in this kind of a market. Because when the bottom comes, and it will come, this is not that, and this will not be that. When the bottom comes I will have plenty of cash to put to work. I would rather not make any money now, I would rather not make any money this week, next week, week after that, week after that. I’d rather not make any money then, because I’m not trading, so of course I’m not losing any money, and then make a bunch of money when the S&P finally does give us a low, an obvious one, and it will be obvious. Again, this is not that ( S&P 500 ). I would rather make money then than just be trading around, being hyperactive and slowly giving my money away now. I just don’t need that kind of entertainment.Free Chart