Am I Comfortable In Shorts Here?

Nov 23  Weekend report (Sunday 5 p.m.)

 Someone asked me to let them know when I’m comfortable shorting the Gold/Silver market in the next few days, especially since The $USD Popped Friday.   I’m glad you asked! While there always may be some ‘short term’ success in a short position from day to day… I still  believe that it will end badly for stubborn shorts in the next few weeks.  If you have been reading my reports for the past 2 weeks then  you know what my thinking has been.  Not only does it remain the same, but I believe we could get an accelerated move upside after a few minor dips in the coming weeks and I would NOT want to be caught in shorts out in those waters.  Let me show you why…

Recall that In this  Friday  Nov 7th report here –   http://www.chartfreak.com/2014/11/07/scary-yet-beautiful/    ( And the following  wkend report)  I called the GOLD lows Pre-Market.

( Audio link here : Nov 23 wkend report –  Click the link, click “Download”  then click “OPEN” & return here to follow along )

SO 2 weeks later, with those LOWS still in place, I want you to note this $GOLD / $USD CHART last May 2014 :

Once the GOLD lows were in, In MAY the dollar popped and GOLD resisted.

DID you notice that on Friday this week the $USD popped, and $GOLD went up too?

Notice also on the above chart  what Going short on a reversal after the lows lead to pain.  Also …

In the DEC 2013 lows, important to recognize that the DOLLAR And $GOLD both ran up together for a short while then too. $GOLD ran up $100 with the Dollar still Popping & showing strength. And do you see a GREAT low risk place to short Gold here Dec lows thru Feb??  Sure it dipped and popped, but timing those dips would be difficult  (likely even  costly)

On the above 2 charts, the first leg up off of the bottom had people calling it “Weak & Shaky ” and a “Bear Flag”, but they werent digging deeper and looking at internals like we do here.

During the second leg up was IMPORTANT to be LONG, Not SHORT.  Look at both of those 2nd legs up. The above chart of the DEC lows  – It had  15 days UP starting Jan 30ish, and the down days were really sideways.

IT WAS NOT COMFORTABLE IN THOSE WATERS WEARING SHORTS. 

$SILVER looks ready to break out & could rally strongly!

Yes, as time goes on, CYCLE FOLLOWERS know that dips come in the form of a 1/2 cycle low and a Daily Cycle Low.  These dips are normal dips and IF GOLD lows are in as I have been saying, they are “Buy The Dips” opportunities. As seen above, they can be quick and hard to short successfully.    It is True that the JUNE 2013 lows had a vicious deep dip, but I tend to think that back then after a $1800 to $1200 sell off, EVERYONE was easily shaken out.  I am seeing ACCUMULATION now.  Things  may hold up better .

Chart Below : Notice how MINERS RAN UP from these lows. Was it low risk or beneficial to  SHORT THEM?

Let me show you what I expect is ‘possible’ if we are due for a 1/2 cycle low here. Just an idea based on my past experiences and NOT to be etched in stone.  I show this to give confidence to buy the dip if you do see selling & this happens. It will show you possible support .  If supports are broken and recovered, you could buy that too.

GDX -I posted this in my last report to show that a dip to the trend-line could happen  – Basically  dont fear it.  (mislabeled it)

As time goes on, it may be more of a sideways dip, showing strength and not letting those  “SHORT” out  or those on the outside waiting to get long in.

The 10 sma is rising and so is that trend-line, right? SO a sideways move may play out like this.

Please notice that I drew colored arrows to show how similar this sideways move has been to the one a week ago, filling a tiny gap & then running upside. THAT would be your 1/2 cycle low and new surge above the 50sma. The DAILY CYLE LOW would then come later as a “Test” of the 50sma.

Another way to view GDX & GDXJ (Click to enlarge)

GDXJ I have 2 possible differing views of trend lines, bear with me. It should be resolved in time.  (Click)

GDXJ more likely (Click)

Monthly reminder of what I’d like to see at the end of NOV  ( On target & coming up soon its the “SHAKE OUT”)

I’m going to show you my chart of the dollar.  It looks UBER bullish, but the formula’s that I have on the left are telling me that its a false break out & will drop soon.

VERY STRANGE, but matches that GOLDS lows are likely in for now. This chart blows my mind.

Just quickly…End of the year buying can push these markets higher, but its tough to say exactly what is likely to happen at this point.  Recently they looked ready to roll over. FEAR is not out there again, as displayed in the VIX &  People are very bullish on year end buying (and not selling now until early next yr , to avoid paying taxes on recent gains). What do the charts indicate?

1. Markets could have a year end sell off , but I wouldn’t dare short it here. RUT, IWC & IWM are in a consolidation phase  (charts below)

2. The markets could have a year end Buying rally,  but they are at resistance points overhead.

3. Recent consolidations could cause a stellar rally in the year 2015 – But we need more evidence.

Here is the QQQ  (NASDAQ) as  of Nov 20  (last week I mentioned that it was pushing at resistance & volume light-ish, it could drop or even “Pop” & then drop).

QQQ now on a weekly. NOTE:  It Broke out & reversed.  OFTEN,  this is a “Failed Break out” & continues down

IWC & IWM are both a “Bullish Consolidation” that could break out upside,  or could continue consolidation ( which is down for the next move)

SO I turned to the VIX to see if there is Fear or Confidence. Interestingly, The VIX is near support. So it too is in flux.

-Will support hold or break down?

-Will the Vix turn upward again, sending the mkts into a correction?

It seems likely despite the crowd think that a year end rally will take place. Again…we are in the middle of a decision  

As for sentiment (Thank you tickersense.com)   last week was definitely neutral in newsletters.  THAT is neither Bullish nor Bearish

So in summary for the Markets and Metals…we have a shortened holiday week in the United States , so usually we expect a light volume market that is fairly easy to push around.

I am BULLISH Metals and as for the SPX, DJIA, NASDAQ , etc the trend is up. Surprises keep coming to the upside, so its not a recommended “Short” without further confirmation. It has been very resilient.  The VIX is nearing support, but could go either way too.  12 is semi – complacent but it got as low as 10 often  this summers.

I do not recommend shorts in the Miners Gold or SIlver as shown above. Surprises could also start coming to the upside in Gold. It seems to be more of a BUY THE DIP set up the way I am seeing things.  I think we could ride along the 50sma or dip down a bit slightly – building steam to break up through it.   Whether we dip into a 1/2 cycle low  here or run up for a few days breaking through the 50sma and then dip down and “Test” it on a daily cycle low…the 2nd daily cycle could become a stronger rally…more on that  as this plays out and I can get a feel for how things are moving along.

So stay tuned, and as always …Say Alert/ Stay Frosty! 

~ALEX