EXPECT PULLBACKS

Markets dont go straight up or down

  ( yes I’ve seen the $USD and Oil Lately    )  Well actually,  they haven’t been 100% straight up or down either. We expect Pullbacks , consolidations,  dips, etc . Even the straight up dollar move wasn’t straight up , as you can see here in my Jan 2 chart, there were dips …

 

Pullbacks  happen all the time, and the key is to examine them separately and look for opportunity. Lets discuss pullbacks …

I will discuss SPX QQQ etc Bounce expected at the end of this report  (if you want to scroll there first)

As I began researching for this report, I realized that THIS is by far the hardest report to write about. WHY?  I wrote a report a while ago called  “All Bottoms Look Different”.  So when there is a sell off or even a slight dip,   they may act a little different each time .  I usually offer a BUY POINT and a STOP…A Low Risk Entry on positions and the BUYER can then determine from my reports bullishness or Bearish tones. Raise stops? Sell at a price projection?  buy & Hold even with the expected dips?   THAT IS THE HARD PART.  LET me explain…

Right now the current mentality  for the QQQ, SPX, DOW , etc  is  fear.  Fear of MISSING THE MOVE.  Fear of Missing Gains.  The mantra is   ” Hey the markets are selling off,  I’m BUYING THAT DIP!,  or “I’m Holding on to my positions, Dips always bounce back!”

When it comes to Miners ,  everyone has been conditioned with Fear too.  Fear of losing gains, fear of a slam down.  A 1 day dip and I see panic.  Many peoples mantra is ,  ” A RED CANDLE…I’M OUT!”  or  ” Why didnt you tell us to sell?”

There in lies my problem. I EXPECT PULLBACKS in Gold / Silver  / Miners–  along the way to higher prices , but must every red day be sold?    No.   I am expecting weeks of gains,  but with pullbacks along the way .   In the past –  Yes, I have seen DEEP dips and  yes , VERY SHALLOW dips too .     What kind of a run will this be???     I am not THAT Good.   It does look VERY BULLISH in many ways , and as I studied the markets last night and this morning ,  I realized that there looks to be some character change here .   Time will tell,  and some cycle guys claim that an 8 yr low is ahead of us.  We’ll see,  I am seeing interesting things that I will have to look into further as time goes on. 

 

For now  –  I am going to show you various bottoms at meaningful lows  (ICL’s) again  and

-I want you to look at every RED CANDLE and tell me ,  if you sold then,   WHERE WOULD YOU HAVE GOTTEN BACK IN?

 

LAST MAY 2014…If you sell at each red candle- Honestly – where do you get back in?  (Answer is likely higher)

 

 

Last DEC thru MARCH run.   Where do I tell you to sell in advance?  Where would you get back in? (Since the next day was usually GREEN, many would jump back in – higher).

 

Those above charts were the last 2 ICL’s.   They Seem a little stronger on their runs higher than some other bottoms .  Hardly had a pullback .  Yes,  if you owned it  (especially leveraged or in JNUG/NUGT )  each red candle hurt your emotions, right?  Panic .  All I can say is sell if you want to lock in profit, sell if red candles are intimidating,  No harm in that.  But you can see from the 2 above charts,  buying & holding Miners  (not leveraged) for weeks despite dips paid off.   I pointed out yesterday that most lows had 8 weeks  ( 2 months) of  upside.

I posted this – We are at $20 and I’m being asked where to sell.

 

A few other Bottoms show that they had bigger dips.  I’m showing you this because IF YOU ARE LEVERAGED ,  They hurt more. Again, they ran for weeks , so even with deeper dips, where do I tell you to sell and then get back in on all the individual stocks? They run differently , I have even seen some sell off intra-day and recover each day  (sideways move) .  So these lows were volatile,  deeper dips,  still made higher highs later.

 

Look at JUNE 2013  lows / recovery.  It dipped DEEP into August, then rocketed higher. Then day 14 was the high.

 

 

I have said that this low resembles the 2012 lows.  A double bottom like now .  look at that second run up,  I expect something similar now.  See RED candles? Where do you sell & where would you get back in? It basically rode the 10 sma (9 was shown)   so It may be difficult to consider it Trade-able.

 

Lastly  2008 lows.  These were volatile. Everyone talks about how Miners double & tripled  quickly in 2008,  but how many dared to ride it is the real question.

See it struggle at the 50sma in late Nov , then a run up in DEC & dip back to the 50sma in Jan. Then struggles & breaks the 200sma  in Jan/Feb , then a dip.   Where to sell?  Where to re-enter?  Tricky.

 

ALL OF THAT BEING SAID…I am going to show you how I trained myself to BUY & SELL MINERS .  In this lesson you must sell and walk away. No regrets if it runs higher,  you locked in gains and you Move On to another trade, perhaps  another Miner setting up / pulling back.

 

LESSON:

This is a CDE BUY & SELL

1. Lets say you bought CDE near the lows recently. It runs up & pauses or dips –

2. You measure the length of the 1st run up after  the ‘pause / dip’  lows to highs .  Thats  A-B .

3.Take that length and add it to the lows of the dip after the next leg up starts.

4. Set a “Sell” at that price projection.   After the sell, WALK AWAY . No regrets if it goes higher, you locked in gains A-B-C-D.

I have done this trade repeatedly over & over  in my trading life.

 

SO WHAT DO WE SEE IN  GDX?  We just broke resistance and have a nice base-  BULLISH. We could FLY or go sideways and even tag the 50sma next.  Right now I think we just go to the 200sma soon & then pause, because we have a strong base . I WILL NOT SELL THE DIPS,  I recommend BUY THE DIPS at this point.

When I say ‘Buy Dips if you own nothing currently’ I mean that when MINERS dip to the 50sma they broke above , or maybe the 10 sma, they could be bought.

If we are getting a dip today, I will put that in tomorrows charts.  Possible “Set ups”

 

GOLD LOOKS BULLISH  ( at resistance, could pause)

 

WEEKLY GOLD ONLY AS OF TUESDAY – What I see is far more BULLISH than it looks.

 

I bought GORO yesterday, because it broke out   (Looking at Gold, we may have a pullback today,  I’ll have to see if this  tags the break out or goes back inside. I will hold it anyways above the 10sma  )

I like lagging MUX

 

 THE MARKETS

Lets talk about the MKTS.    I had seen weakness weeks ago & called that a break to new highs might be a sell, and QQQ might not even make new highs.  As I watched how They sold off yesterday and volume increased,  I am seeing a difference in how these markets are acting.  A  warning sign until further notice.    What I am seeing is MKTS are due for an oversold bounce,  BUT I WANT TO WATCH IT.  It might not be the typical BUY THE DIPS  (Except for a nimble trader).   It might not last.   I now see negative things and this may be a “short the bounce”.    IT takes time for these internals to show up ,  so  I will post further as we go along.

 

This is an update /  Review

Saw weakness in QQQ, reported it DEC 30

We dropped –  We are due for a bounce now /  Might be short-able instead of buy the dips.  ( TZA?)  ( Day traders can buy dips ).  Watch how we approach the 50 sma (not shown) or 10sma.  I am focused on Miners

SPX WEEKLY  ( could recover since its only Tuesday on this chart.  Watch the bounce)

 

IWM –  Not as strong as it was , but still not really ugly

 

SO for now ,  I am not worried about red candles and dips in Metals and miners. I watch them to see if they are going to get bought up.  The other day we sold off intraday at lunch and some got worried,  but these charts above should show that PULLBACKS are to be expected. As for the equity markets,  I need to look at individual stocks and see how they are acting.  When I look at PCLN, IBM, GOOG , etc –  I see weakness in those former leaders.  it COULD just be a healthy corrction and then onward and upward,  but for now I am seeing thing internally that indicate that this sell off could escalate and GOLD/SILVER and MINERS could rally.  Remember that when MINERS & METALS start to dip,  the bears jump in and short them and say  ” I TOLD YA THIS RALLY WAS A TRAP!”    Then when the big money steps in to buy at cheaper prices,  the bears must cover and the rally powers higher.  That is what I expect for now as I see things. 

In the markets , everything is subject to change ,  so we stay frosty / Alert.  One of the biggest changes that I see now , however,  is that the DOLLAR again is making new highs,  the Metals and Miners are strong. Thanks for being here ,  dont fear the dips and …

TAKE NOTE OF THIS:

~ALEX