There’s A Chance There Is A Change

I was away from my desk Friday and upon returning to the charts on Monday, I am seeing some changes that I want to discuss. Lets start with our regular  market review. Lets take several views of the markets,  both bullish and bearish,  while remember that  ELEPHANT IN THE ROOM discussed here last week.

SPX

But we keep this in mind too as we remember that Elephant in the room…

 

SPX WKLY –  This indicates that we need to expect selling in the markets this week.

The VIX is saying that the markets are complacent too. They are prone  pull back in the VIX 12-14 area.   SPX had a reversal candle at the top,  the VIX had one here at the lows.    As a trader ,  I would have tried shorting the SPX if I had been in front of the screen.

My NASDAQ consolidation chart last week showed that it can run higher

 

NASDAQ WKLY –  Still room higher, but that dreaded wedge   🙁

 

( IN the back of my mind ,  my MAY 15 chart shows the OCT spike down as a simple break below the longer term blue channel and more upside bullishness could continue.    In other words,   Blue channel could override Wedge pattern.  The TRANNIES do not support this currently )

 

So what is it all about?   Its all about the DOLLAR.  Many think the dollar has started its next leg up to new higher highs and that has been when OIL, GOLD, the CRB, NATGAS, etc got crushed in the past and will likely again.  (  I may disagree).   Also  the markets ran higher along with the dollar.   SO new highs in the Dollar means what?  New lows in the OIL? GAS? NATGAS? CRB? etc .  THAT is where things may not match up the way I am seeing things.   THAT means we need to watch how these things unfold.  So Lets take a look at …

 

$USD –  in my past reports I said I was watching how the dollar reacts to various targets.   The chart below was May 19 I pointed out the 34sma. It was VERY oversold.

We are at target #1 .   No longer oversold on the daily, but the wkly is still quite oversold.  We may see the Dollar pause here.

 

 

USD WKLY – Strong reversal . If this was an ICL for the dollar, it could become very strong and damage Metals and Commodities,  so we need to keep that in mind. 

 

Interestingly ,  OIL didn’t react to the Strong reversal in the dollar So far .  (Gold & the CRB have a little).

Look at the UUP WKLY.    This looks very bullish as it too approaches the overhead resistance on a wkly basis, however….

 

The daily UUP shows declining volumes on this pop.  Buying at this point has lightened at resistance , but that could be holiday trading.  It doesn’t matter, we need increased buying or we will pull back,  so I am watching this.  It is no longer oversold.  A small dip / sideways move may build strength to break higher.   It also may allow a pop in Metals  ( 1 more pop?) .

 

FXE  (EURO)  I expected the 10 WMA to support a drop.  I pointed that out in my EURO chart that I tweeted.  We are there. A pull back in the dollar would support a bounce here in the Euro  (And possibly  OIL, GOLD, CRB, ETC).  So far it is a 50% drop from March lows to highs.

 

 

WTIC –  Has been very bullish . We caught the whole move in OIL/ENERGY / NATGAS really , and just I dont think it is over yet.  A pullback to the 10wma is healthy, but even with that strong reversal in the Dollar , Oil didnt close down.

 

THE XLE WKLY ( Bull flag, wedge?).  This doesnt look bearish , but it is overbought.  

 

And DAILY  (break out from Wednesdays chart that I posted in the Thursday report). Oversold.

 

NATGAS–  After Wednesdays trading  I felt that NATGAS could drop further showing this chart from Wed.  Price was $2.91 , we could drop near the $2.80 area.

NATGAS WKLY –  made new highs this week and reversed closing for the week at  $2.91,   down only 10cents for the wk.  This with the dollar surging higher .

 

NATGAS  could drop to that $2,75-$2,80 area and still remain very healthy

 

Big Picture CRB WKLY – found support,  was held below the 10 WMA for months. Recovered the 10WMA and is dropping there now.

CRB WKLY CLOSE UP-  Finally breaks the 10 WMA in April.  See if it acts as support here.

CRB daily –

 

Early last week I said I was watching COPPER, because it shows serious weakness . It was very overbought & dropped fast when I wrote that. It is now easing up & oversold. Dancing with the 50sma again.

 

GOLD/ SILVER/ MINERS

As we look at the next charts,  there appears to be a new Elephant in the room.

OK, here is where it gets tough.  Here is where it gets tricky.  If you’ve looked at charts this weekend,   what would you write here for GOLD SILVER & MINERS?  A flat out crash from here, based on the C.O.T.?  Many using cycles know that we could easily drop based on cycle timing,  and it could drop for a good period of time.  Many others simply looking at the DOLLARs strong reversal know that GOLD / SILVER could plunge to new lows if there is follow through to new highs of the Dollar.  Read a few blogs and I see BEARISH posts everywhere,  people are short / buying DUST / JDST  ,  etc .   I can see bullishness in DUST & JDST  daily & weekly charts too, but right now it’s a mixed picture for me.   I am seeing things as both Bullish & Bearish really.  So lets just review those charts and watch to see how things play out.

Lets start with our worst nightmare if you’re bullish Silver.   Allow me to introduce a new Elephant in the room.

 

The SILVER C.O.T.  –   smart money is  Betting Short.  Dumb money is long.  This reading is higher than previous tops.  GOLDS C.O.T. is also more bearish than last week.

 

That C.O.T. reading is higher than prior tops, so you have to just respect that. 

The SILVER charts however do NOT look  bearish yet to me.  SO is a sneak attach smack down coming?  Lets look at the Silver charts first .

2 SILVER WEEKLY charts – Long term

SILVER has broken out from a trend line when it topped in 2011 down to lst Novembers lows.   This would be very bullish. Also it broke above the 10 Weekly Moving Average .  Please note also that we are not as overbought  (Stockhastics) as prior tops were over this 3.5 yr bear market.  Odd.  A drop in the Dollar at resistance that I pointed out could POP silver to overbought.

 

SILVER WEEKLY – I decided to drop that trendline down and we still broke out recently .  Is that C.O.T. simply showing a quick slam to test the break out ? If the dollar pauses at resistance and drops this week,  SILVER could pop & suck more longs in and get this overbought.

 

SILVER DAILY-  This chart does NOT look bad.   Look how light selling has been in SILVER with that DOLLAR SURGE last week.  Isnt that odd? Here is the part that I said was tricky and difficult to gauge for me.    Compare the next 3 charts.  With the Dollar surge last week,  Notice Fridays surge- Did GOLD & SILVER plunge?

Friday the Dollar surged,  Silver held the 10sma

GOLD –  This is how GOLD reacted to such a strong surge in the dollar Friday .

GOLD WKLY

 

GDX WKLY –  closed above the weekly 10 WMA and sold off on light volume , but Fridays holiday may have affected volumes.

 

GDX DAILY–  dropping to the 50sma with the dollar pop.

 

HUI–  This one is slipping.   It needs to move higher this week or it may be  breaking down.  The MACD & RSI are failing.

 

The THEME of this article mentions that there is a chance of change.  We need to stay alert to these possible changes,  and I am discussing the C.O.T. report and the strong reversal in the Dollar possibly changing the expectations for Metals  & Miners.  The reversal in the Dollar was expected,  and a lack of real reaction to the downside in OIL / Metals/ Miners is what I was thinking too.   I have been pointing out strong looking Miners that look to have genuinely bottomed.  See last weekends report.  Recall the charts I’ve shown of   ABX, NEM, LSG, RIC, even recent surges in juniors  BAA, GSS, EGI, TRQ, etc.    They have acted beautifully lately,  but what will happen if the Dollar was to surge to new highs and run to $1.10 or $1.20 over time in a new ICL?    Miners have bottomed well ahead of the metals in the past and we may be seeing that type of accumulation these days.  Thats why  I’ve drawn  these observations…

 

Still 65% OFF OF NOV LOWS.

BAA – It didnt notice the USD surge this week.

 

  So the Dollar is on the move,  The Metals C.O.T.’s are showing that smart money is very short the Metals.  If metals sell off,  Will Miners sell off to new lows?  Will they double bottom?  Will they hold up and be accumulated as metals fool the masses?  Time will tell.   This is a light volume holiday week entering the summer and if we get a pullback in the dollar and metals move higher,   those also may just be false moves.   These are changes that we need to be aware of.   I am not shorting here without more proof that things will play out to the short side.  I want to see more evidence. The equity markets really look like they want to pullback too.  This week should clarify any changes that may be coming our way.   Thanks for being here and I hope you had a great weekend.

 

ALEX

Side note:  I recommended  AA, CENX,  X, AKS, STLD  a while back ,  and I see some wanting the CENX  trade as a double bottom type buy .   USE A TIGHT STOP if you have.   I reviewed it this weekend and want to point something out .

  First  AA and CENX are no longer a buy according to the way I was looking at them,  and   THIS chart of ALUMINUM shows a possible drop for both.  A better entry may be in the future.