Low Liquidity

  During times of low liquidity,  it’s  easy to rock these boats back & forth , but it’s not always easy  to get them sailing smoothly in the  intended direction.  When the tide rises , or the flow of liquidity returns, however, they can begin a journey of smoother sailing .  During weeks of holiday trading, its similar in  the markets.    low liquidity can cause volatility and rock things back and forth, but it’s not always clear which direction things really want to flow.

  Today is January 2, and it’s the first trading day of 2015, but I’m not so sure that the liquidity will return until next week.  Until then ,we may have more volatility and things may not look very clear, but there are some interesting developments to look at.  As I write  (Pre-Mkt) Futures are up nicely for the DOW, SPX, and NASDAQ,  while GOLD shot down to $1169 , Silver is down .10 , and OIL has dropped to new lows.  The $USD is again strong, up to $90.85!  I still think next week will clarify the true direction of these markets, but notice this…

The dollar is at new highs in Pre-Mkt  at almost $91., yet Even with the continued Dollar strength…

GOLD is well above its lows. In the recent past each new $USD  high had GOLD at new lows . This shows a BIG change I.M.O.

Technically – you can see that even a drop to $1160 or deeper doesn’t change this chart

That is encouraging for the bullish view of GOLD & MINERS,  but even more encouraging than that is that often in the past   MINERS lead Gold when they are about to move higher.

Wednesday we saw GOLD down $17  (Chart above ) ,  yet many miners ended the day Green. GDX right now seems stuck between the 10sma and the 50sma.

Notice a few Miners looked strong Wed with Gold down $17.

IAG closed Green

FSM green, above the 50sma, nice volume

MVG – Up 10.4 %  Wednesday ,  up 30% in 3 days!

With GOLD selling off as deeply as it is  this morning,  we’ll have to see if the Miners can hold up as they did Wednesday. The dip in GOLD has taken out what would have been the daily cycle low. This cycle is either extremely long or it could fail.  I really think this cycle looks so much like 2012.  I showed this chart of GOLDs lows in 2012. It just hung around the lows for weeks/ months and drove people out of positions.

So far,  we had a nice “Stop Run” in GOLD this morning.

This thought does come to mind   (Read the chart below ) .  Cycle-wise the chart is tough to read, because that odd DEC 1st day was a low & a high.  I haven’t seen any cycle guys change the count for that to be a Daily Cycle low in itself, and thus we’d start counting from then on  and we could be nearing a dcl for a 3rd cycle to start?  I don’t want to confuse things,  so looking at GOLD & MINERS from a technical analysis view point,  they look good.      TECHNICALLY , this gold chart is fine.  Even A drop to the trend-line would be normal and that could be GOLD $1158.  Especially the way MINERS held up Wednesday.

If GOLD continues to sell even lower today , I would watch Miners closely for clues. GDX  &  GDXJ  pre-mkt   are  still above the 10sma.   That is good.

Are they holding above the 10sma again (  Both GDX  &  GDXJ ) ?   Some individual Miners shown in charts above are still above their 50sma,  are they dropping below that now? You have your stops in place,  so we honor our stops.    Sell if you are uncomfortable.     My stops are not tight stops,  a dip below the 10sma can recover,  but a close below the 10sma would be uncomfortable again.        Try not to get too emotional if you have positions.  I will not be easily shaken myself,  unless I see Miners really selling off .  Better to be safe than sorry ,  but have a plan based on the facts , not how you emotionally feel. Again,  Miners below the 10 sma and not recovering could be a warning sign.  WED they held up well.

I will have a weekend report that will discuss SPX, DOW, QQQ and metals and Miners and OIL.

~ALEX