“Uhh Ohh…” a doji bar next to the previous highs could be a sign of trouble. First, the previous two highs since March were at all time highs and are considered a formidable resistance. While today $SPY made a slightly new all time high, it closed as a doji bar. As I discussed before, a doji next to resistance has a slightly higher probability in forming a top. If it opens down on Monday and takes out today low, it may confirm a temporary top which can easily transform into a long-term top if the bear has its way.
Notice I’m using the $SPY chart this time instead of the Dow Jones chart. Seeing a doji formation today, I bought SP500 emini put option to bet on possible topping formation next week.
On the other hand, the market can simply open higher next week and break out of this consolidating range and go on to make higher highs. From the weekly $SPY chart below, you can see that the last three bars have long-tails. Long tails underneath means the bull is still strong enough to fight its way back up; it is not going to roll-over easily.
I should have looked at the weekly chart before buying the put option. What done is done so I’ll just wait for next Monday to see which way the wind blows.
$DMRC had a good run today.
However, from the weekly chart above, you can see the price is now banging its head against the down trend line. I believe at this point, $DMRC direction will follow the general market next week. If the $SPY makes new high, $DMRC will simply breakout of the downtrend line. And if $SPY goes down, then the down-trend line may stop the rally and price may correct. Nevertheless, price is strong this week and closed higher than all MA lines on the chart.
$LEU closed higher today but ended the week with a small red bar.
The good news is that price is still on top of the 5 and 15 MA lines. The overall trend is still up.
I sold $UEC today to lock in profit. There are two factors prompting me to decide on bailing out:
- – Possible double-top formation
- – Technical divergence on the momentum indicator (see the red trendline on the LBR 3-10 oscillator below the chart)
After recognizing the combo signals, it was easy for me to sell to lock in gain.
The closing red bar convinced me I did the right thing to sell today. With the proceed from $UEC, I bought back $AMRN and added to $NUGT.
From the daily $AMRN chart below, you can see the converging of the 5, 79 & 89 MA lines that sit directly below today bar. This is a powerful support per my book. Also, the fact that the weekly script# is now over 12,000+ is the catalyst that prompted me to buy back $AMRN today.
Can you feel the powerful force from the three MA lines converging into today close? The weekly chart below shows a green bar after four red bars.
A possible bounce from the Fib 61.8% retracement?
$NUGT opened down but I felt the drop was temporary and added more when price started to bounce off the daily 5 MA line.
When I saw the 5 MA line moving up to meet the 79 MA line, I knew I’d to add more. From the weekly chart below, it is quite obvious that the trend is up with a very nice green bar this week as confirmation.
One look at the chart and I know it is the right thing to add and hold $NUGT.
$LRAD had a neutral day but the weekly chart looks good nevertheless.
It’s a solid green bar bouncing off the 79 & 89 weekly MA lines. What more can I ask for?
From the weekly chart below, $CERS ended the week with a doji bar at the uptrend line.
While a doji at resistance can mean a possible top; a doji at support can also mean a possible bottom. Let’s see if price can bounce off the trend line next week.
Thanks to rallies from $LEU and $DMRC, the gains were able to offset losses from $NUGT and $CERS and still squeezed out 0.80% gain for the day. YTD gain is now at 16.7%.
LRAD, CERS, LEU, DMRC, NUGT, AMRN and 5% cash.
My 2 cents.
Categories: Daily trading Journal