Old Age Ain’t for Sissies, and Neither Are Commodity ETF’s

We played UGAZ for leverage long on the initial breakout in natural gas a few weeks back. Since selling into the spike, I have missed the subsequent two pops higher. Each pop, however, has been faded, adding credence to my thesis that natty remains in breakout out, but is consolidating it initial thrust higher.

Today, natty is reversing lower hard, creating a “bearish engulfing candle.” I am reticent to look for a major top here, which is why I am not too interested in shorting it via DGAZ as many are. Instead, I am more inclined to let the consolidation play out and look for another long entry.

But it is a good reminder to you and to myself that these commodity instruments are monstrously volatile, best used as trading vehicles, and high beta ones at that. If you are too sensitive to each tick, you are in for a rough ride. You are simply trying to pin down a good entry with a well-defined stop, and either nail the winning thrust higher or quickly stop out of a loss.

Old age ain’t for sissies, and neither are commodities.

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Boeing is another one of these stocks which had been brilliant movers to the upside since the very end of 2012, only to suffer from its own success as 2013 progressed. Specifically, the uptrend became too steep and unsustainable. Beyond that, the one-way nature of the trend created zealots out of bulls in the stock, lending itself to extreme complacency and outright exuberance. While that is almost to be expected with a momentum stock like DDD, to see it in a mega cap like Boeing made the 2013 bull all the more intense.

Updating the daily chart, first below, you can see the steep trend finally snapped off, with an earnings gap down followed by even more follow-through. While the stock is too oversold to short here, the monthly chart suggests more downside is not only possible but is probable. Note the extension of price away from its 20-period monthly moving average on the second chart, which is still considerable. And, mind you, that 20-period monthly is still above the December 2012 primary breakout level, which is when I suggested the stock as a long-term long investment idea in this blog post.

I would keep any long trade attempts in Boeing to a bare minimum and with a tight leash for now–If the stock does not fully correct in terms of price then it needs time to digest the excesses of last year.

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Courtesy of The PPT algorithm, here are the most current top five readings from my “12631 RELATIVE STRENGTH” custom-made screen, identifying which stocks are exuding some of the best performances to the market at-large at any given moment.

I look for stocks whose Daily PPT Hybrid Score surges, while the Weekly Hybrid has been negative over the past week. This can often yield stocks which are emerging from consolidations.

Members can click here to view and save the screen.

Sorted for at least 500,000 shares of daily average volume to ensure liquidity.

Please click on image to enlarge.

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The 30-minute updated small cap ETF chart still shows a downtrend on this timeframe, though we know things are getting a bit steep. Still, the controlling feature here is one bear flag after the next, until bulls can truly reverse it for more than a few exuberant moments of bouncing.

If that happens, keep an eye on two relative strength performers on the biotech/healthcare space. CBM was a name I mentioned yesterday here and in 12631, and DEPO is along the same lines in terms of impressive action on a relative and absolute basis.

What are you trading this morning?

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DDD, much like our COP example from the other day, also puts long-term extended conditions into perspective. On the daily and monthly timeframes, respectively below, note that the daily shows price gapping down below the 200-day moving average.

Typically, this is quite an oversold condition. And while a relief bounce may ensue, the monthly chart for the high-flying 3D printing stock suggests more downside is coming now that the rubber band has snapped back—Just look at the fact that price is still above its 20-period monthly moving average, for example. For a while now, I had been noting the stock was as close as any to a dot-com parabolic move.

Elsewhere, gold and silver are acting well this morning (and natty gas, again) as the algo’s have a field day with the many twists and turns we have seen in stocks since the opening bell.

This is still a corrective tape and I am respecting that, as well as the potential for a washout lower.

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It is either a genius play, or a foolish one.

Bit Indonesia and Turkey have gotten worked over as much, if not more, than any emerging market over the past year or two.

I am flagging the IDXJ and TUR ETF’s for you, if you are a buying-the-blood type.

On their respective weekly timeframes, below, you would be looking for current support levels to hold valiantly via a close near the highs of this week.

What do you think? Buy the blood or take a pass, with the danger of a further crash too high?

Elsewhere, what are your top watchlist stocks this morning?

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