UPDATE: Are We Still On Track?

July 20  –   Please read my last report and you’ll see how I was viewing things for the Metals and Miners market.  Then the next question is :   “Well, that report was July 17 and things got a little “whippy” since then,  are we still on track?”    The short answer is,  “Yes, so far it was a little whippy, but we are still on track.”   As a review, I was expecting Metals and Miners to begin a 2nd leg higher, similar to what we saw at the June 2013 lows ( 2 legs up) and Dec 2013 lows. Using the GDX and the December 2013 run up –  I used this chart (Below) to help us visualize what the move could look like.  Now I want to just do a quick update .

   Look again at my last report and I said that  If the Miners gap down Friday, you may want to add a position in one of your favorite miners, because they may reverse & start upward.  Well, Friday the miners DID gap down and stayed down almost all day, finally beginning to recover into the close with a reversal.   That was  (To me)  important because…

The weekly charts looked much better with that close moving price higher again.

Below you’ll see GOLD itself on the weekly, & for most technicians, we want to see the Weekly price close above the 10WMA.

 Also on this weekly Gold chart above, Notice that the start of the 2nd leg up in GOLD in Feb looks identical to now. After 6 weeks Up, there was a highish volume slam down one week.  This past run up we now have the same thing going on, so SO far we seem to be on track.

What about the Miners?  I see basically the same thing.  On the first run up in December Miners paused after about 5 weeks up, then had 1 RED week.

We have just run up for about 5 weeks from the May lows, and last week was 1 Red Week. So far, on track.

GDXJ – This is interesting. First off, I do hate high volume off the top. That is a warning for me, but on the daily it shows as heavy buying, so we’ll let time answer any question about that volume.  Noteworthy is the strength of this move.  When in a Bull run, you want to see Price stay above the 10 Weekly Moving Average ( 10 WMA) .  GDXJ doesnt fall below the 7 WMA.

   Chart above : After  the first run up from Dec lows, it dropped, tagged the 7WMA and rejected it, then made the second leg up.   We just did the same thing.   As always-  I dont want to get complacent so We have to be alert in case things change, but I am impressed with the GDXJ bouncing off of the 7WMA again.  So again….so far we are still on track.

Lets look at a couple more positive signs .Notice on the chart below that During that first run up in December 2013 thru Jan 2014, the run was so strong that Miners didnt even pull back 38.2% in that pullback . It went sideways and Launched higher.

Currently , we have seen something similar here. From its “Peak ” on July 10 to the drop it has not pulled back 38.2% yet.

I drew this chart MID-Day on the 16th  for a friend, and since then GDX stochastics, MACD, & RSI have all turned up with price moving higher That day, Thursday , and the gap down & reversal Friday. SO FAR- Its still on track.

Here is where I throw out the cautionary note. SO FAR things are still on track, but we may not go straight up here. I know quite a few got nervous last week with the selling. I got a few private emails with concerns during the selling.  Even using weekly charts it tough if we dont just go straight up from here, because it can whip saw and we have room to drop back down to last weeks lows without any real damage, right?   Hit last weeks lows and reverse up again, like last week on a weekly…it could happen. So everyone has to have in their heads a game plan. 

It could sound something like this :

“I know we could drop to last weeks lows in Miners and still be safe, but I just got in at Fridays highs and cant risk it, so I will stop out immediately if we gap down Monday and watch how it drops.   I can re-enter when I am comfortable that its just a shake out type move. ” 

     OR

” I will ride it to  “X” and if we go even lower, I need to get out to stay calm & wait for a recovery or just stay out until I see proof that a 2nd leg up is really happening”

  Right now, we are still on track & I think things look bullish, similar to Dec’s 2 legs up.  However:  we are looking at ‘likelihoods’ and ‘probabilities’ – No one can be 100% certain &  markets can change . We have some very active Geo-political events taking place around the globe right now at a feverish flux.   I say this because…

I will not be here on Monday,  I expect to be on-line ‘off & on’, but if someone posts questions here or emails me because Gold is selling off $15 or Miners are down 1%-  I wont be able to answer them right away.  So please have a plan that you are comfortable with already mapped out in your head and then trust it.  “If Gold Gaps down, I’ll buy it?”   ” If Gold sells off, I’m out until I get clarity”, ” I bought the may lows too , so I’ll ride this to XXX with no concerns.”  ,   “I’m not in, but I now see that maybe we will get a 2nd run, if Miners break  XXX,  I’m taking a long position.”  “If it gaps open Monday, I will wait & see if the gap fills before buying, it may be a bearish reversal”, etc etc   I dont want to confuse anyone – I am short term bullish , and I’m updating this to show that so far-  We are still on track.    Its just that its important to have a plan, there is and should be No Shame in stepping aside & protecting capital until you get a clearer picture if it gets cloudy to you.

I wouldnt be surprised if I saw another shake out with Gold below that $1292 area.  A lot of eyes are there, and probably some “Stops” could be run there,right below the 50sma.

I personally hope that Gold is down overnight and moves up sharply after 8:30 a.m. Eastern (When it always moves a bit faster) . Then maybe last weeks shaking was just another ‘shake out type move’ & the 2nd leg up can begin….Right on track! 

Best wishes to all, I hope this report was helpful!  Please pass it around , re-tweet it to friends,  etc  & thank you!

~Alex