Stocks on the Watch 12.13.15
I sometimes get a lot of flack posting bearish forecasts week after week. It’s not like I have control over the markets, but emotions run high when news isn’t considered “positive”. Why is bullish/bearish associated with positive/negative anyway? It’s only direction and as a trader, I like to trade in the direction of the trends.
The B12 Trader Educational Series teaches you how to trade in the direction of the 12 Markets that I track. I trade in markets instead of individual stocks because it’s harder to manipulate the price of entire markets as compared to individual company stocks. Using ETF’s to trade in and out of markets allows me to disassociate myself with a company I believe in vs a market that is moving in it’s natural ebb’s and flows. It also insures you get a global perspective which can be very insightful when you want to drill down into the minutia of opportunities that lie deeper.
Price breakdowns are traversing the globe while money is starting to flood into the more conservative investments such as Gold (GLD) and Bonds (TLT). As for everyone else, I’m calling it like I’m seeing it.
Good luck and good trading for the week ahead!
BRZU (Brazil) – Bearish
Brazil has been trading sideways between $22.50 and $16.00 for months now and though we had a small break below $16.00 support that was reversed, Friday concluded with a down day close below $16.00 and back into the existing downward trend lines. A gap down on Monday near $14.00 will signal the bear is ready to move. Brazil is a rather choppy market, so I’m personally looking closely at Monday’s price action.
DRN (Real Estate) – Sideways
Last week I didn’t have enough price action to determine a direction and now it looks like we are going to test a $66.00 support level next week. If it breaks below we can look for further bearishness, but with the entirety of last week sitting in the red, I think the chances are higher we’ll see a bounce off $66.00 back into the channel than we will a break below.
EDC (Emerging Markets) – Bearish
Last week I was calling for a bearish consolidation and the move down would be signaled by a gap down below $12.50 which we saw on Tuesday. With this rapid decline in price and the heavy volume leading into Friday’s significant gap down, I imagine some short squeezes will be lining up for next week and I’ll be expecting a slight pullback but the overall downtrend to continue.
EURL (Europe) – Bearish
Like EDC (Emerging Markets) last week I was looking for the gap breakout of the triangle to signal a bearish move lower and that’s how it started followed by down days until the market close on Friday. This is a rather steep move downward so I’m tracing out possible upper/lower trend lines in anticipation of a pull back before further downward movement.
GASL (Natural Gas Companies) – Bearish
We saw the 5-day breakout to the downside once $15.00 was broken and we’ve witnessed an enormous drop to the downside despite the small recovery. $6.75 is showing a small support level, but there is nothing but downside potential for this market until further notice.
INDL (India) – Bearish
In last week’s post I highlighted that we will see a strong move down if we break below the $12.25 support level on Monday. The break didn’t come until Tuesday but we are now sitting a solid 8% lower for the week and fitting nicely back in the existing downward trend lines so I’ll be expecting to see more of the same next week.
JNUG (Junior Gold Miners) – sideways
JNUG had a nice potential setup last week with it’s strong close on Friday, but come Monday, it was clear this wasn’t going higher. As the week has played out it appears we’re in a sideways channel for now. However, we have been very strong support for many months now in the $29 – $34 range. A possible breakout to the upside is still possible and there will be many eyes on this market as it’s been beaten up for years now, so keep a close eye for a possible breakout to the upside still.
JPNL (Japan) – Bearish
Site and wait and ye shall receive. Watching the sideways movements for more than a month and a half and Japan’s market finally gave us direction starting with an opening gap lower below $47.00 support. Friday signaled another huge negative for Japan with a large increase in volume on a big gap down to end Friday at a new low not seen since October.
RUSL (Russia) – Bearish
Last week I was tracing out a rare expanding triangle but needed confirmation with a gap break down (seeing a pattern here?) below support of $13.50 to not only follow the expanding trend lines, but also break out of them. Russia tends to have very strong pull backs, so I’m waiting to see if we will get a test back to the $13.50 level possibly next week.
SOXL (US Semi Conductors) – Sideways
SOXL bounced off resistance of $30 last week and is heading down for a test of $24. Like last week, I’ll be looking for a bearish confirmation if we break the $24.00 support level.
SPXL (S&P 500) – Bearish
SPXL failed to break the $92.50 resistance level and has now broken out of it’s triangle consolidation on very heavy volume and breaking the low from the 11/16 low of $80.40. I think Monday will be a fight between the bulls/bears to see if they can create a double bottom support level which would make this into a sideways market like SOXL (US Semi Conductors) but I think continued downward movement is more favored due to the large volume going into Friday’s downward move.
TMF (20+ Year Treasury Bonds) – Fake Breakout / Consolidation
I normally don’t make such a bold call without confirmation, but I’m very skeptical of this last breakout of this long term triangle consolidation. The last two attempts to break out of this triangle were done on large blow off moves higher. I don’t think we will see a sustained moved up next week, but a bullish move I believe is the least likely of the possible outcomes for next week.
UGAZ (Natural Gas) – Bearish
Break out your Fibonacci rulers, your pivot points, your oversold oscillators and averaging-down-buyers because the bottom pickers are coming out of the woodworks! I advocate trading what you can see in my Educational Series because no one can pick a bottom but they certainly will try. Sure, you can make money if you can do it, but you can make more money just waiting a short period of time for a build up of evidence that a reversal is in play.
Natural Gas is in a clear down trend and will be until there is evidence so call it otherwise. Be careful of all the “bottom callers” because they have been trying to pick this bottom ever since October and have lost large sums of money as a result.
UGLD (Gold) – Consolidation
Gold had a strong start on Friday but failed to capitalize and has slowly declined since. We’re still hovering the lower long term 2+ year trend line so I’m thinking the percentages are much higher price will increase before it breaks that lower trend line. More waiting and watching next week.
UWTI (Crude Oil) – Bearish
The gap down below Friday’s close of $6.00 pretty much set the tone for the week on a very rapid decline. As always, the short sellers and bottom buyers will most likely push this up somewhat but the trend is clearly down and will most likely continue to do so into next week.
XIV (Inverse VIX) – Short Term Bullish Reversal
As I was highlighting last week, the consolidation was about to wrap up and we saw the clear move to the downside starting on Monday and all the way to an explosive move lower on Friday. We’re now testing a strong support level of $23.00 so I would expect a short term reversal, but picking direction after that will be a coin flip. The move on Friday is a blowoff move so expect lots of chop in XIV next week.
YINN (China) – Bearish
China is sitting on a 5 day in a row bearish move. It’s outside of the downward trend lines so I am going to be watching for a quick reversal back into the trend lines sometime between Monday or Tuesday most likely. Last week I called for a gap down below $19.00 to start off the trend and Monday successfully delivered. Now that this move could be over, it’s time to wait and see what else develops.