A couple of things that were not well covered by the
media last week were
that steel (SLX), and Brazil (EWZ) made an attempt to break higher, but failed,
and coal (KOL) has broken out of its long term channel.
that steel (SLX), and Brazil (EWZ) made an attempt to break higher, but failed,
and coal (KOL) has broken out of its long term channel.
With the
expected economic boost from the 2014 World Cup and the 2016
Summer Olympics, we have seen Brazil put on a good show lately. Now the
Brazil ETF (EWZ) is hitting major resistance, which failed to break out the last
8 attempts. The more times a trend line has been tested, the more likely it
will be broken. If we hear any news about Brazil in major media, I think it’s a
cue to sell the news. Brazil was not the only good show in town, Turkey has
also risen +20% in the last two weeks and it's now also facing resistance; I
have a strong feeling that it will break through. I haven't really been following
the development in Ukraine and Russia, but I expect it to be the main headline
again next week, and it will be the time to sell Russia after its ETF (RSX) back
tests previous support.
Summer Olympics, we have seen Brazil put on a good show lately. Now the
Brazil ETF (EWZ) is hitting major resistance, which failed to break out the last
8 attempts. The more times a trend line has been tested, the more likely it
will be broken. If we hear any news about Brazil in major media, I think it’s a
cue to sell the news. Brazil was not the only good show in town, Turkey has
also risen +20% in the last two weeks and it's now also facing resistance; I
have a strong feeling that it will break through. I haven't really been following
the development in Ukraine and Russia, but I expect it to be the main headline
again next week, and it will be the time to sell Russia after its ETF (RSX) back
tests previous support.
Inflation
index PPI is due on Friday. Will that give a boost to commodity prices?
From last week's action, precious metals and miners (GLD, SLV, GDX) attempted
to grow some inverted shoulders. The weekly charts look great, but we might
see some sluggishness on Monday and Tuesday, and then soar violently mid
next week. Other commodities such as wheat (WEAT) and coffee (JO) are also
looking bullish next week. Steel failed to break out on Friday, which made me
bearish in the short term. If we are combining the bearish country (Brazil) with
the bearish commodity (Steel), we get VALE, a good short candidate for next
week imo. Coal broke out of long term channel. If this coal rally is real, we
might dance around nowhere for the whole week, and if this rally is wild,
coal stocks will go sharply higher early next week.
From last week's action, precious metals and miners (GLD, SLV, GDX) attempted
to grow some inverted shoulders. The weekly charts look great, but we might
see some sluggishness on Monday and Tuesday, and then soar violently mid
next week. Other commodities such as wheat (WEAT) and coffee (JO) are also
looking bullish next week. Steel failed to break out on Friday, which made me
bearish in the short term. If we are combining the bearish country (Brazil) with
the bearish commodity (Steel), we get VALE, a good short candidate for next
week imo. Coal broke out of long term channel. If this coal rally is real, we
might dance around nowhere for the whole week, and if this rally is wild,
coal stocks will go sharply higher early next week.
I don't
have a lot of trend following setups Monday to Wednesday as I think
we will start the week with a counter trend wave. I might just day trade the
counter trend and take losses quickly if the situation turns the other way…
the trendy way.
we will start the week with a counter trend wave. I might just day trade the
counter trend and take losses quickly if the situation turns the other way…
the trendy way.
Week:
Trend
long ideas: Wheat (WEAT, ZW)
Trend short ideas: Russia (RSX)
Mon -
Tue
Counter
trend short ideas: Brazil (EWZ, PBR, VALE) , Steel (SLX, X, AKS)
Wed -
Fri
Trend
long ideas: Precious metals (GLD, SLV, GDX, GDXJ)
Charts:
WEAT:
28dma is
the major line. It printed a perfect hammer candle on horizontal support
and major line. Pure price action suggests we go higher.
and major line. Pure price action suggests we go higher.
Russia: It bounced back to previous support, and was quickly rejected. It could be
the perfect back test before it heads south.
Brazil: That is a major trend line. I could pull back to $41.7, form another shoulder
before it could grow legs.
PBR: Got stuck at resistance. Frist stop, $12, 34.
Steel: Basic Material sector failed to break out, steel included.
VALE: Brazil + Steel! First target, $13.8.
Coal: Breakout on the weekly.
I will come back on Wednesday to review some precious metal charts!
Thanks for reading and have a great week!
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