Crude is Right Near the End of this 3-Wave Structure …

Lots of people waking up to the move that crude and energy stocks have made since I talked about a possible swing low in energy stocks back on August 29th (see post here and here).  Like happens often, the market pundits and talking heads starting recommending the sector as we push into resistance levels/zones (i.e., the SLOT).  Here is how I see the charts …

Crude Futures – Daily Chart

Crude is pushing right into the measured 1.272x target for the 3rd wave of the move coming off of the low made this past summer … I see 3 nice waves to the move and three minor waves in the bigger wave 2 and the terminating wave 3.

So for traders that don’t trade crude futures, how do they capitalize on this end to what could be only the first leg higher in crude in a bigger commodity rally that could play out over the next several years?

S&P Energy Sector – Daily Chart

The light blue warning candles that my software is painting, warns traders of an extended move in price away from the slower moving averages … the “return to the mean” effect is telling traders to take profits here in the short-term and/or sell some short-dated at-the-money or near-the-money calls for XLE or ERX the leveraged bullish ETFs for the energy sector.

3x Bullish Leveraged Energy Sector ETF – Daily Chart

The January monthly $40 calls for ERX can be sold for just under a dollar today …. I will look to sell some of these as well as looking for intra-day moves to the downside, as the intra-day moves lower are likely to be bigger than the shorter-term moves higher.

Cheers … Leaf_West

Is GDX Breaking Down or Making a Final Thrust into Support?

I have an audio alert set on GDX right at the bottom of my SLOT support zone (78.6% Fibonacci support level) … it activated this morning.

GDX – Daily Chart

As we head into the FOMC interest rate decision next week on December 13th, the market is almost 100% sure that rates are going higher … if that happens, the US dollar should receive a steady bid, and that would lead to a decline in US$ priced commodities like gold.  If that happens, gold miners will be sold and as the chart above suggests, price will begin to trend lower.

What if the Fed does not raise rates?  That would definitely be a surprise to the majority of the market participants, and likely lead to a huge short covering rally in gold and gold miners.  Price for GDX will have completed 3 pushes down into that support event, and be a great level to trade long off of.

I have had my trading hand slapped a couple of times of late, and the best advice I can give anyone here is to sit tight and wait for the FOMC meeting next week.

Cheers … Leaf_West

US $ Update – September 8, 2017

There is lots of talk on the business channels today about how bad the US$ is performing this week … the business channel pundits are great at looking in the rear-view mirror to tell us what has just happened – that doesn’t really help traders make money, however.   I prefer to look ahead and anticipate what may happen next.

I did that back on March 19, 2017, when I wrote a post about my outlook on the price pattern on the US$ on my old blog site and posted it to StockTwitts and Twitter …

 

Obviously, the link to my old blog site no longer works, but my thesis back earlier this year was that we had likely made a top in the US$ strength, right when everyone was wringing their hands about how strong the US$ was and how that was going to hurt the economy going forward.  Most traders and ALL tv-pundits/economists look at the past price movements of a stock/commodity etc and extrapolating them in a straight line forward.  They don’t bother to consider the wave structure of price movement.

Here is the updated monthly chart for the trade-weighted US$ … Continue reading