ARE WE ABOUT TO BECOME BEAR SNACKS

NOV 3 2014     GOLD & MINERS are at the mercy of the Bears.  Since Breaking to new lows, many articles are now pointing out that all support is broken and its a LONG WAY DOWN.  I am now reading that  we are so close to 1000, that a good FLUSH  could cause it to give way to $800.    In my last report I mentioned that I heard something similar in the XLE as it broke to new recent lows and broke support too.  Many wrote that  it could crash down   ( Those alerts / articles  were loudest right before a strong reversal).  

 AUDIO-  (click the link, click  download , click open and return hereto follow along)   Metals link click here

I drew this chart on OCT 10  (Click to enlarge) . Honestly-  I was getting extreme sell off readings and  I DID NOT EXPECT IT TO BREAK SUPPORT,  but it has.  I thought instead that we might get a trade able bounce and then possibly TEST support?       Please use the audio, it saves me time.

 

So now that Support has been broken, is it a bottomless pit? Lets look closer.  

 

 

First off I should say, you can get hurt tying to catch a bottom. Death by 1000 paper-cuts is a term experienced when one keeps buying because selling looks to be reversing, and you get stopped out again and again. We do want to avoid losing principle, so that we have “Dry powder” to deploy If and When a real strong reversal comes in.

Trade responsibly or you risk principle and  sanity 

 

First let me re-state that a break to new lows and below support doesnt always mean “We are going to CRASH to the Bottom”.

 

Again here is XLE as it broke through support and made new lower lows. (Click to enlarge)

The PANIC and extreme bearishness caused a reversal as selling dried up , shorts covered and a rally followed bringing price BACK ABOVE SUPPORT.

That is a shake out / recovery

 

SO for the sake of another visual example …what would you expect here?  It crashed below support on a WEEKLY basis. 

 

 

When everyone bails out it can become a waterfall sell off, but since this had been selling off for so long already, most sellers were out and shorts had to cover when that downside thrust flushed all the sellers out. It then did a reversal.  This one SLOWLY started to recover and re-gain support . There werent a lot of BUYERS rushing in, but it didnt flush down the toilet as thought when the bottom gave out.  Sellers dried up.

 

 

Is it possible that we could see that in Gold / Miners?   The selling & sentiment is already so extreme , that  I am thinking  “Yes”… so we should be alert & look for it, in the same way I was watching for Energy to reverse .

 

The above chart is to show you that breaking support does not automatically mean a waterfall crash,  especially is selling if getting long in tooth – sentiment in that Metals and Miners become of of  FEAR & HATED.  It could be that a final FLUSH of capitulation happens- where everyone throws in the towel at once & shorts have to cover.  It can be a reversal,  but also  there definitely could be more selling. Let me first post the BEARISH looking side of things, to keep us alert to the downside possibilities .

Triangles have targets, and if they play out…this is how it could look

 

GLD – Target near $92 ??   Breaking support   (listen to audio)

 

 

GDX –  target near $13!!?

 

 

As noted in the last report – In $BPGDM , we are already at extremes seen in 2008 and the June 2013 lows . This shows how much MINERS have been hated and tossed out already.

 

 

 

 

GG MONTHLY – shows 2008 lows near $15 with a high volume candle currently being tested.  (AUDIO)

 

 

 

So GG also broke below support at DEC 2013 lows – However…ZOOM IN on GG DAILY last Friday . It actually reversed in that sell off

 

 

GG is the largest holding in the GDX, so  I wanted to look at other large holding and see if they all look dreadful or not.

 

ABX Monthly- broke support on lighter volume

 

 

ABX WEEKLY –  broke support on lighter volume / this CAN indicate a false breakdown due to panic.  “Throwing the baby out with the bathwater”

 

 

ABX DAILY – attempted a reversal too, on CAPITULATION VOLUME?

 

 

Am I saying “Start Buying Miners here” ?   NO!!    I am saying to watch for “SIGNS” of a real reversal.  We need to get back into the trading range , back above support. 

ABX above on a daily had nice  evidence of High volume selling/  capitulation , flush out type selling, but we need to see a recovery too. 

 

For the type of DOOM I am hearing about SILVER, some of these little silver stocks are still ok looking.  Yes EXK broke from its higher lows pattern, but this isnt as  UGLY as SILVERS doom articles would indicate it should be.  It should be under $1 based on the “Miners are all going bankrupt” type folk lore I’m hearing.   The price projection is below zero, so it fortells bankrupt, but at THESE RARE EXTREMES…You should look for the “RARE” T/A –  The shake out.

 

 

 

HL –  Broke support of OCT lows, but from $2.25 ,  couldnt the Large CAPITATION VOLUME easily  have pushed it below $2?   Yes, It could have crashed it from $2.25 to $1.50, but here it sits at $2.18?  It just  bounce off of the trendline & form a doji.   It bears watching  along with a few others too.

 

 

Finally…there are ENDING patterns that in the past  “MIGHT” signal the end of a down trend  (or uptrend). Let me show you 2 , One is a GAP DOWN.  The other is a GAP HIGHER.   if you see them today –  You can watch nd see if they follow through.  (  THESE MARKETS GET FAST & CRAZY – DO NOT BUY UNLESS YOU THINK YOU KNOW WHAT YOU ARE DOING AS A DAY TRADER ). 

MANY MINERS gapped down Friday and closed as Doji’s.  This is called an abandoned baby, it would require a gap open today that does NOT close the gap.  It leaves the lows behind, since all sellers left the stock on Friday  (Exhaustion)

 

 

Also known as a 3 gap play…Very rare but leads to exhaustion of the move & a reversal of direction.  For example, after a long run up,  the equity  gaps open day after day for 3 days straight.  Usually a top.  After extreme selling, if a stock gaps down, down, down (3 straight days) – it often becomes exhausted of sellers and shorts cover and the direction reverses.

 

GDX – currently has 2 gas down  (but the first gap is small,  the last candle a doji…its harder to GAP all the way down to open below Fridays lows.  SOME of the individual Miners may , however.

 

 

This is just a post to tell you what I am thinking.  I admit that I didnt think we’d break to new lows , break below support.  I got EXTREME readings in my indicators that are very rare, they happen roughly 2x a yr at ICL’s, at meaningful trading lows.  With THAT in mind, I dont look at this as a terrible moment for Gold & Miners…I think we are close to a HUGE snap back rally.  Reversion to the means is normal,  extremes in 1 direction can lead to opportunity in the other in trading. I just wanted to share this with you and let you see what I see.

We have some sharp traders & investors reading here…using your own risk / reward and trading style combined with a few of my ideas ( Observations, possible entries, ‘stops” etc ) I am hoping that you find it helpful and actionable  to see what I am seeing-    

 

I will keep you posted in future posts too. Thanks for following along!

 

~ALEX