05 Feb Weekly Forecast and Opportunities – Bull Set Ups Abound
This week we cover forecast updates on The SP 500, Gold, Biotech, and Oil. The uptrend of the SP 500 remains intact and we have had a longstanding 2333 and 2406 target for this advance of Intermediate Wave 3. Gold looks bullish, Oil is close to a breakout, and Biotech is turning up.
Why do we use Elliott Wave Theory as the backdrop for our forecasts? Because when analyzed correctly it removes the day to day noise, allows us to focus on amazing 3X ETF swing trades at opportune pivots, and keeps our foot on the gas in the right sectors at the right time. These forecasts in Gold, Oil, Biotech, and SP 500 are the foundation of our work in swing trading for high rewards with low risk.
We will be launching a Gold Trading product this spring that will focus 100% on Gold, Futures, 3x ETF’s, and some miners here and there. Details to come later.
In addition we lay out our latest watch list. All great traders work off an active Watch List, and at SRP we try to provide the best lists every Sunday and then update them as the week moves along. The time spent making a strong watch list can be saved by being an SRP Member.
Market Forecast Analysis: SP 500, Gold, Oil, and Biotech, Financials
- SP 500 continues in Major Wave 3 with 2333 and 2406 targets intact
- Gold rallied past 1220 resistance, and should work to 1256 area
- NUGT up 25% from our 4 weeks ago Bullish Chart prediction
- Biotech surging late in the week, SRP members up 18.7% on our LABU 3x ETF trade in 8 days
- Energy stocks have lagged last many weeks, they could turn up on Oil breakout
- Financial Stocks have been consolidating, XLF ETF close to large move
SP 500: Int Wave 3 of Major Wave 3 continues- 2333, 2406
Our latest chart shows the multi month patterns, this is the best way to keep the noise out of your analysis. The day to day charts we do focus on in our morning pre market reports, but the weekly charts show the big picture. We do not vary our forecasts much at SRP, we focus on weekly and big picture trends. The daily moves we use simply to calculate short term pivots and key areas to watch, but otherwise our intermediate forecasts do not change without a good reason.
10 week line used to show clarity of uptrend on weekly chart below- Dave
XLF ETF- Financials trying to break out of 9 week base
Gold Update- 1220 taken out, now 1256 on tap, NUGT update
We like Gold to run up to 1256 as the next pivot of resistance on this rally from 1124 lows. The recent pullback to 1180-1184 range was a relatively normal if not shallow 38% retracement of the 1124-1220 leg of the new Bull cycle. When Gold took out 1220 this past week it confirmed the continuation of the uptrend off the 1180 pivot. We had projected NUGT ETF to hit $13.70 many weeks ago when it was $9.50, so that remains intact.
Our NUGT prediction made 4 weeks ago to SRP members on January 10th. Yes, Elliott Wave theory was a big part of this call below. Note our $13.70 notes on the chart at $9.31. Our projection work is powerful for 3x ETF traders.
NUGT is at $11.89 as of Friday’s close, a 25% gain from this chart 4 weeks ago.
Oil Update- 8 week base pattern appears bullish, ERX ETF may finally move soon
Oil has been spinning in the 51.50-$54 ranges for awhile, but if you zoom out to the weekly chart view, the noise is removed. A breakout here we have been discussing as possible for a few weeks, patient Energy Stock traders may see a pop soon. This is a difficult area to forecast for sure. Foreign policy, drilling, and other factors make day to day moves volatile. Weekly chart though shows a different story of bullish consolidation. Our target for 2017 has been $69. We want to see $50.70 hold.
Biotech Update- XBI pops late in week as projected, benefiting our LABU Swing Trade.
We remain 1/2 long this ETF with 18.7% gains going into the weekend at SRP.
Last week in this report we showed an XBI ETF chart on Biotech with multiple bullish patterns forming. Early in the week there was a brief washout in the Biotech stocks and our LABU position dropped to $34.30. We had a $34 stop near close of market in place, so we held. Later in the week with some good news from Trump, the sector popped and the LABU 3x ETF rallied from $34.30 to $41.50, heading towards our 41.50-43 target we laid out at SRP at $35.50.
Once again, using Elliott Wave Theory as part of our work we were able to stay long in the 3x ETF without freaking out over short term movements. Day to day noise ruins most traders, focus on the bigger picture.
Miscellaneous notes: Sentiment and other tidbits
Sentiment readings continue to run hot for the Bull camp. After this past week of trading we have a high reading in the Investment Advisor surveys of 61.8% Bulls and 17.6% Bears. This is well north of the high readings of a 3 to 1 ratio seen near pivot tops. We have pointed this out as actually typical of a Wave 3 up in the markets, and in this case the powerful “third of a third” wave pattern which we identified at SRP nearly 2 months ago. Look for this reading to peak as the Intermediate Wave 3 peaks at 2333 or 2406 in the SP 500.
NYSE Short interest is on the rise over the last 4 weeks or so. We actually identify this as a precursor to a coming pivot high in the market, kind of a shot across the bow to pay attention to.
“Strong opinions, weakly held”– A famous trader uses this as his tenet of how he thinks on trades. What it means is have some conviction in your swing trades, forecasts, and set ups… but keep your mind open to changing it if need be. The conviction part comes in where we rarely use intra-day stops at SRP, but we do use stops near the market close. Also, if we get a gut feeling that a trade is not working out or perhaps not breaking out as we thought… we have no problem cutting it loose and moving on. Strong opinions, weakly held keeps your ego in check.
Swing Trade Watch List: How to put it together
We try to work on an active watch list every week, and then on Sunday we tear it all down and start over. Any watch list that gets too long is probably not that great. Try to be discriminate and hard nosed when deciding who makes the cut for your list. Update the list during the week if possible, adding and dropping. At SRP we are 100% focused on Fundamental analysis as a key component to picking a swing trade in a stock. If we see a sector and chart pattern we like for an individual stock in that sector, we are then going to drill down and discard companies with poor fundamentals. Even if the chart is screaming to buy, if we do not like the analysis of the business , management, products, margins, balance sheet, PE ratios and the like we will simply choose to move along. This keeps us out of trouble 90% of the time, sure we miss a few stocks that pop… but we rarely get hit with the big loss. Focus on charts, but then drill down on the fundamentals.
Watch List for near term ahead: 15 names…
This list below is where we start, vast majority of these companies have strong fundamentals and decent charts. We will use this list to do further drilling and culling of the names but often this list we put out weekly turns up big winners ahead. At SRP we cant alert every swing trade idea on the planet, but we can give our members some help with initial research work to build their own lists as well.
Chinese Names
MOMO- SRP is long as of this past week, we think its worth $40 a share in time. $23 area now, nice base pattern. 100% growth of late with 25 PE run rate. Video is booming.
BABA- Growth returning, near $100 now and basing a bit. A breakout comes at $106
JD- Competes with BABA but professes to sell only legitimate products, not copies or fakes. Close to breakout, 200% profit growth last quarter.
NTES- We remember writing about this when it was $85 a share, now $260 area. At any rate PE Ratio at 20 with recent growth at 40%, nice 2 week tight base.
Growth stocks and other:
PCRX- We have been writing about this off and on as one of our 2017 turnaround ideas since about $37. Now $41-$42 and close to a breakout. The medical community needs Exparel as an Opiod alternative.
COMM- Data connectivity for Data Centers and more. Breaking out of 10 week base, on our list multiple times.
AEIS- Also on our list a few times, power conversion products. Broke out of base finally last week.
IDCC- Modems for all devices, 8 week base pattern. On list multiple times.
CAVM- 8 week base breakout, system on a chip designs, 100% recent growth
USG- PE Ratio 18, nearing highs.
DISH- PE Ratio 30, video on demand and streaming is a secular growth area
OLLI- As many retailers get wrecked by Amazon, Ollies offers bargain bin shoppers delights. Near highs post IPO.
NUVA- hitting highs
IPHI- 12 week base, on our list many times of late. Earnings due Monday for this high growth tech play.
AGX- 9 week base, involved in Engineering and Construction, PE 20, Growth rate 60, a Trump Play.