BIG DROP in the DOW

Talk about a turn of events. From holding the 20 SMA to crashing through the 20 SMA and the 50 SMA. DIA is sitting right a support at the moment but on a SELL signal. Oddly CEFL held its
20 SMA giving 3 out of 4 green lights with The Money Flow Trading System. I am now fully invested at 2000 shares. The way the indexes closed I don’t have warm fuzzy feeling about the new BUY signal holding long. But I trade the signals not my feelings.

CVX and SAND finished the day in green, up 1.41% and 2.37% respectfully. Precious metals (UGLD,USLV) also finished the day slightly green. Our fast money trades look good, nothing to do now but wait and see how it goes.

Exciting Day Playing out in the Markets

Ok, so looks like a boring day, but far from it! I mentioned last week about the UUP (bullish dollar fund )
that looks like it might be topping out. The TSI signaled first, then the ADX trend strenght turned down, then yesterday we got the DMI bearish crossover signal. The green light for me will be the 5ema/20sma crossover. 3 out of 4 of my check list say lower dollar. That said, its been really strong rally so I wouldn’t get to excited, likely profit takers. But just a pause could give us little room for precious metals (GLD,SLV) and even stocks to make a move higher. I am long UGLD 3x gold ETN long USLV 3x Silver, long CVX and SAND. All these trades need UUP to sell off or at least slow its bullish roll.

CEFL is setting up for a bullish buy signal. I doubt it will happen today, but its close and possible if get late day rally into the close. I will keep eye on it. I am 1/2 invest as we been on sell 1,000 shares long. Soon as I get the 3 of 4 bullish crossover I will put on the other 1000 shares. Today I received $340 dividend payment. Brings my total to $1.41 per share YTD. Just shy of $2,000 in total dividend payments YTD.

ADX/DMI – Spotting a Trend Less Market

If you have downloaded a free copy of The Money Flow Cycles you know I use the ADX/DMI indicator as part of 1 of the 4 check list for a good trade. The ADX/DMI indicator will not only alert you to trend change but also a trend less market. The indicator is two indicators in one. The ADX line tracks trend strength, raises on strong trend regardless of direction and drops on weak trend. It also will warn you when a move is over extended by breaking outside the DMI bands. If the ADX raises above the bands tells you the current trend is over extended you should to lock in profits. It tends to signal early so also check TSI and RSI. If ADX drops below the bands this is a signal that there is no trend at all and your locked in a trading range.

This is your warning that the moving averages can’t be trusted. If ADX is below 15 I don’t get too excited about a 5/20 crossover (1 of 4 on the trade check list). Notice the Natural Gas Chart below.

ung3-23

Spend time with the indicators you use. Learn to hear the message they are telling you. There is a lot to many indicators then just buy and sell signals. I use 4 indicators. Each tells a part of the story and pick up where the other leaves off. We can never be certain but we can weigh the evidence and take the trades that put the odds in our favor.

In the Nat Gas chart above ADX and support resistance levels tells me we are in trading range. But moving averages and TSI i use have signaled BUY. So I BUY then realize there could be some whip saws action so to try to avoid this I place the stop loss order BELOW support. This stop is little further out then I would otherwise be happy with. But I must let price, market structure, and indicators tell me what is the right move not some hard fast %.

Happy Trading!

Gerald

Are commodities about the break out?

It’s been tough haul for commodities and related stocks for a while now. Take one look at US dollar chart you can see why. When the dollar is strong commodities are weak. Just the way it is. Here is a chart of the UUP which is a bullish dollar index fund.

uup3-22

That is what you call a strong trend.  The bullish chart of UUP is the exact opposite of the DBA chart (bullish commodities fund) as it stands now, the dollar looks to be pulling back, is it a pause to refresh the trend of is it turning over?

dba3-23

Time will tell. Remember anyone giving you a prediction is guessing. Watch the Charts. When the 5 EMA crosses the 20 SMA , TSI and adx confirm that is your signal. Click here if you would like a free copy of my trading system The Money Flow Cycles .

Yesterday was the signal for many short traders to cover in commodities and long dollar traders to lock in profits. Silver had nice day and is now on a BUY signal for me. I actually got long Thursday when price closed above 20 sma confirmed by TSI and adx. That is 3 of my 4 confirmation signals and plenty to initiate a trade.

slv3-22

 

Any pullback this week, which is likely and normal I will add to the trade as long as the 5/20 hold. If they don’t I’m out.  I am long Nat gas through UGAZNat gas finds its self range bound. In the Money Flow Cycles book there is a chapter on range bound markets. Two Weeks nat gas been locked into a predictable range. Not my type of trading.

oil3-20 nat3-22

I am long with the $.05 below support as my stop. The moving averages are trying to aligning correctly, triangle forming, the days are getting tighter in range. Look for a break out one way or the other very soon. OIl still a SELL no bottom picking wait for the indicators to signal.

Which way? Who knows. With dollar taking a pause, up most likely. All I can do is let price tell me. CEFL we are in a 1/2 position (1,000 shares)  dividends be paid Tuesday. $.34 = $340 Fast money Tradeslong SAND and CVX – so dollar dependent though… huh!

Education Moment – The Breakout

Ok, I just posted a copy of my book on this, its free if you want to read it, and you will see lots of charts like this chart I am posting here. This is a classic Money Flow breakout. The 5 ema blast through the 20 sma, the TSI signals buy, MACD signals buy, ADX signals buy. The last 3 signals have been right on the money. I want to draw your attention Jan breakout. I bought call options on the SLV had biggest trade in years. Well over 500% return in few weeks. Will this new trade result in the same? NO clue…I just react I don’t predict neither should you…

USLV3-20

P.S. See the note I made on the chart…this concept isn’t a hard and fast rule, more art then science you might say. Moving averages act like rubber bands and will pull price back to them.Take the easy money when you get it.

sand and cvx

nice open across the markets…I mentioned yesterday I really liked sand and CVX… notice same chart pattern. notice the blue circles and the trend lines under the indicators. All pointing to move up in price. How far? No clue, take the trade, place the stop, ride it till signals time to lock in profits.

sand3-20

 

Same basic set up with CVX support around $100.50 ish overhead resistance around $111-112 ish, nice trade

cvx3-20

 

Side note, Nat Gas is moving nicely, UGAZ up 8% as I type this.