Momentum gone. Yep, it's a bear alert.

My Elliott wave interpretation of the S&P 500 2 months ago was wrong and the index put in a new high up to 3.4% gain since my last post.  But upward momentum has been lost and many stocks have given sell signals according to stochastic cycle analysis on the weekly charts.  Weekly 50 moving averages have turned down or are flat on some blue chips among others.  These include CAT, GM, HPQ, IBM, JNJ, KO, MCD and QCOM.  These should lead the pack down.  The pattern in banking stocks suggests a terminating diagonal triangle which also suggests a strong drop, but their 50 MA's are still trending up.  I can't exclude a blow off top. Any run up to new highs would be exciting, but should be short lived.

I suggested oil stocks would make a 10-20% run up last post.  They made about 8-10% and now are looking pretty weak.  SXL bounced around up to 44 but has continued it's drop as I predicted and it's got more to fall. The arrows on the chart are one's that I drew on February 28.

One of the dollar store stocks is looking strong. FIVE maybe going to new highs above 50. Now at 38ish.  I have a stop in at 33.

Summary: Upside potential limited.  Downside likely.
Trade at your own risk. I am not a professional.

Some shorts likely.

S&P 500 may be about to enter 3rd of 3rd elliott wave style with a target of 1990.  Probably a month with some volatility likely.  Specific choice players on the downside are BBY and BA.  BA has an especially classic look for retrace down to prior 4th wave triangle apex at 130, though it may have a fifth wave to 160 first.

SXL made the initial drop I previously mentioned but now may stall around low 40's.  In fact oil stocks look poised for 10-20% run up  if  they close this week and early next week strong. HAL to 55, CVX to 116.

OWW winner, SXL going down. Silvers may be bouncing from Retrace.

My target for Orbitz was $13-15 but since Expedia has offered to buy it for $12, we will settle for the 11.55 current price and exit.  My advisor said it may be in limbo while details of the buyout are settled. Anyway, that was a 35 % gain on the stock from the $8.50 buy price and better on the 7.5 options bought for $1.3, sold at $4.00

I mentioned oil stocks in the last post and they have been doing a rebound upward as I thought, but took a turn down in the last week.  As a group, I am not sure if they have some more back and forth in a 10-15% range for a few more months or if they are ready for the next leg down.  However there is one oil stock that looks perfectly poised for a 30% drop.  SXL (chart below) has a beautiful 61.8% retrace in classic A-B-C Elliott pattern to the 46 level. It has confirmed a turn down with weekly and daily oscillators.  The target is $30-32 in 3-5 months. Shorting is an options play for me so I am going to pick up some April 45 puts at around $2.50. Depending on what path it takes, they will be worth $5 -10 by mid April.  Risk management will have me sell half of them for $5 and let the rest ride to $8-10. This is a 90% trade. The stop is if the stock hits 46.5 which would probably cut the option price in half.  So risk a 50% loss for about a 200% gain.

The silvers ran into some resistance mid January and have been on a leg down since then, though Hecla is holding up well relative to the field. I have tight stops on my miners which are at a support level but have yet to fully declare whether they are ready for a 3rd wave up or need one more 10% drop.  Either way, HL is a long term play and is looking good.

Winning hand so far.

Orbitz has moved up as predicted on my last post.  Recommended at 8.50, now at 9.95, up 17% .  Target is $13-14.

Hecla continues to climb with the rest of the miners and the metals.  Up from around 2.80 on my initial post to close at $3.26 today for a 16% gain since 12/21. Target initially about 5, long term above 12.

Oil stocks look to be in a retrace upward. look for around 2 weeks of Exxon and Chevron and the others moving up.  Then I'll be looking for a turn down again.

Orbitz and Hecla

Two lovely set ups for low priced stocks.  Orbitz (OWW) has been consolidating for a year and a half in what looks like a 4th wave triangle.  It has trendline and 100 week MA support as well as upward momentum on multiple time frames. Buying anywhere from $8-9.  Stop at $7.15 and target of $13-15 which should be good for a 50% gain.

Hecla (HL) has had steady or increasing earnings as silver has dropped about 50% over the last couple of years. $2 has been solid support which includes 15 year trendline support. Average weekly volume for the last several years has been around 40 million shares. Last week it was 125 million and the Friday volume was 79 million, approximately 10 times the average daily volume. Stop is at 2.19. Target is $9 which would be a triple, but it has potential for even higher than that.  It's got some hurdles in that most moving averages are above it, but my gut says that it will be slicing through those fairly easily.  

In my last post from July I predicted Gold heading down from the 1350 range to 1000.  It made it's way to 1130 and has meandered higher from there.  Hard to say for sure if the low is in, but I think silver and gold are at or near intermediate term lows so watch for their rise over the next year as well as many of the miners. 

I am not a professional. Trade at your own risk. 

Gold dropping to 1000 highly likely, but not right away.

There is a high likelihood that $GOLD is tracing out a consolidating triangle pattern and reaching channel resistance that would result in its long term downward trend that started in 2011 continuing. This is not confirmed at this point in time but appears to be setting up.  If this is correct, then $GOLD will find stiff resistance at 1375-1385 and we will see weekly momentum and cycle indicators turn down.  What is particularly sweet about this is that exits from triangles are usually sharp.  In Elliott wave parlance they are called thrusts because they move so fast. The way I charted it, gold is finishing the E wave.  However, it may still be in a C wave which means the triangle could drag on for another year.  There is also a possibility that it is not a triangle but a 1-2,1-2 and gold will continue upward toward 1500 but this is less likely. We will just have to wait and see.  If it does turn out to be a triangle, you will be looking at a 25-30% move in a relatively short time period and that can spell very good
m-o-n-e-y.

That is a sharp retrace.

IBM put on about $7 in two days for a nice win.  This is an example of how every once in a while an Elliott wave pattern is useful.   It is now at resistance around 188 - 190 so taking 80% off the table.
AXP is still in play to go to 98-100. stop at 94.
MCD was the slow mover with a down day today to trend-line support.  Therefore, this is now a good risk/reward ratio. Should spring up to 105 in a couple of weeks.  Stop at 99.5 minimizes loss.