A Matter Of Time

Lets talk about timing.

So far the markets are acting as expected for an equity market that has found its ICL.  The Excessive Bearish sentiment , Put / Call Ratio extremes , the Vix and Various set ups pointed out here in early July were all calling for a contrary reaction.  Not what the crowd would expect.  I expected a rally, but waiting for it each day seemed like time was being warped.    I still see the Precious Metals under similar circumstances, but as you wait for an inverse reaction , it seems like each day is a week.  Lets review this thinking.

Here is one of the many charts that I used to say that I expected a meaningful low in the equity Markets. This was July 6th.  Extremes comparable to OCT & Feb lows were in place, but when would we see a rally?

SPX July 15 –   Notice that after July 6th, we dropped to new lows July 7,8,9. Three  days felt like forever, but now they are forgotten.  The rally continues to have follow through.

Keep the above in mind, and we’ll discus it further in the report.

$USD – I have been looking at the USD and thinking that it is a bullish set up, but not so sure that it can push through the 98 area.  Today there is an  ECB RATE decision , so that could give it fuel needed, but here is what I see as of Wednesday night.

SO I check the UUP for strength or weakness, and right now…it shows a weak break out. I’d expect a roll over, but lets see what that ECB decision does this a.m.  It may add fuel to the dollars run.

$WTIC – Oil reversed at the 10sma.  I have questioned this bounce. Oil is still oversold, but it needs to get above the 10sma to move even higher. Maybe we see a tag of the 50sma if it does?    I may short that move based on what I see at that time, this cycle should be a failed one & should drop, maybe a double bottom.

$CRB–  the CRB looks like oil, and it was rejected  (so far) at the 10sma too. The MACD didn’t turn up at all with the recent 3 day move higher.

NATGAS-  I liked this set up and mentioned buying ( or add to current position) the break out or the Test of that break out.  This was JULY 10 stating that.

The move is playing out bullishly.  Waiting for NATGAS  seemed like forever too.

GOLD SILVER & MINERS

Here is where waiting for a move feels like a time warp now.  Trust me, waiting in this position gets tiring.

GOLD _ You know what I am waiting for, but using cycle timing, Golds Daily Cycle Low  (or ICL) can come on day 24, 29, 33?  we’ve seen them all in the past.  The question is, will we just get a reversal candle or a quick drop,drop,drop like last October? Yesterday did not drop below the $1141.60  (March ICL),  but pre-market we did.  I prefer breaking prior lows  as a stop run & even a yrly low,    so  $1130.49  would be the ultimate stop run.

We made a new low yesterday, so that was day 27, and today is day 28 with a new low Pre-Mkt. If this went to day 33 or so,  that is another week, keep that in mind.   Often a drop into a DCL or an ICL can be a flash drop,   but I personally wouldnt short this, though it could be rewarding.  The lows can flip higher fast in short covering.  I would hedge , if I had long positions, until we get that reversal and follow through.    I pointed out recently that in March,  Gold undercut its first low , but Silver didnt.  So far we have the same undercut in Gold.

Silver still has that higher low, but look at that stochastics.  It has plenty of room to drop if Silver gets selling.   Note: Platinum was down $15 in Pre-mkt

GDX –  I noticed that in OCT the miners did that bear flag and volume was extremely light.  Out of no where a flood of quick selling dropped into an ICL.  I cant tell if we are just going to get one of those quick stop runs? A drop below Nov lows and recover quickly for a reversal candle on the weekly chart?  Or a capitulation drop.   Just to be safe, I would hedge if you own Miners.

GDX WKLY- I wanted to look at that OCT area on a wkly chart, and I do see similarities in RSI and stochastic placement. I traded NUGT last week and basically sold for a small loss- just because we didnt take out the 10sma on GDX daily. I would have held if we broke through the  10sma . We need that upside break out for more confirmation of a DCL

We are close.  Cycle timing doesn’t extend much more than this , the C.O.T. levels have turned bullish with Smart Money closing heavy short positions, Extreme bearish sentiment, etc.   Much like when the Put/call ratio was high for the spx, bearishness was everywhere and the Vix was at prior highs.   Signs were in place.   At this point in time for Gold,  a Cycle low is due anytime.  Let me give you an illustration.  You or your wife is pregnant. The doctor says well in advance that your due date is July 15, 2015.   July 15 comes and you’ve gained 24 lbs , swollen ankles, tired from just walking to the kitchen for ice cream & pickles, etc ,  but no baby is born July 15.  Would you conclude that the doctor was wrong, you are not pregnant?  Would you go out and do a few vodka shots, because the baby didnt come on time?   No, the signs were there, you’re still dealing with swollen ankles and exhaustion and apparently a good kick here and there, but the waiting is the hard part.  Do what keeps you comfortable until the baby arrives  (I do NOT recommend vodka shots for comfort).

We are close , it could be today or it could still be a few days out.  At this point,  the birth of a new cycle can be a FAST explosive drop or even a fast move higher  (Short covering) , thats why I do not recommend shorting at this point (vodka shots) unless you are hedging.

I may not have a report Friday Morning, but if something interesting happens, I will post an intra-day alert or update.  Tomorrow,  just so you know what to look for,  think more in terms of weekly candles  in Gold and Miners.   Do you see buying into Friday?   Do you see candle #1 –  extended selling today & tomorrow ( maybe more downside & reversal next week)?   or Candle #2 with a decent tail going into Fridays close  (possible reversal candle & a low) ?   

Not to scare anyone, but worst case bearish scenario for example .  We are on day 28 , We could get a low today,  OR if we see a day 34 low?  Thats next Thursday ….it might even look like this candle that I have drawn in a capitulation slam/reversal.   I have to go by what I see , and with that COT #,  I just cant see smart money missing this…so its less likely,  but anything is possible in the Gold market.

Thats it for now,  the equity markets are surging out of their ICL. INTC had good earnings and is popping,  NFLX soared in after hrs, there are a lot of bullish charts out there , as shown in prior reports.  Best wishes to traders , and hang in their Precious Metals traders/ investors.  We are close, but each day feels like another week, it is like a distorted time warp.  That said, The Gold / Silver markets still have signs that they will give birth to a great buying opportunity.  There is an ECB mtg this a.m., it may cause a final flush in Gold, or a reversal low. Patience will pay off.

~ALEX