FED WEDNESDAY July 29
Keeping in mind that anything can happen on Fed Wednesday, Lets look at some Pre-Fed Charts and a few possibilities.
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SPX – Nice reversal at the 200sma. It look like it wants to go higher, but can it finally break to new highs?
NASDAQ – The NASDAQ has been making higher highs and the reversal at the 50sma looks good for higher prices. Watch the blue line above as a potential target. A little Fed follow through would be helpful.
$TRAN – The TRAN caught my eye with this reversal. It has been unable to recover the 200sma since breaking down, but this move looked like a good start. Can the FED make it or break it?
SSEC– Even the recent drop stopped on the 200sma again .
WTIC – Reversal on Oil, but the 10sma has been holding it down. Lets see if OIL can push back above the 10sma, then it may have a chance to run to the 50sma.
NATGAS – ( Pardon the typo on the chart) Volume increased on the reversal back above the 50sma. This consolidation has been brutal for traders, but so far it is a series of higher highs. I’m also still watching the big picture from the weekend report too.
GOLD , SILVER, & MINERS
Nothing has changed except that we have finally reached the possible Fed Reaction.
There isn’t much more that I can say. I have been expecting the LOWS and a summer rally from there. We are very oversold, C.O.T. is very bullish, Sentiment has the metals extremely hated, $BPGDM is at Zero, etc etc. The question is, even with this set up, could Gold drop in a knee jerk reaction from the FED?
With past FED WEDNESDAYS , we have seen high volatility. It seems that today we could get either
door #1 – Gold shoots higher
door #2 – Gold drops quickly or
door #3 – Let me explain.
I’ve decided to point out a possible 3rd scenario . I want to point out that it’s probably less likely, but it’s still a possible KNEE JERK reaction that could take place in Gold. I want to point it out so that we aren’t caught off guard in the event of a fast drop in price.
GOLD – Yes, Gold can still just take off upside, but is this is a bear flag type set up? A FED COMMENT could cause a quick flash sell off. What might happen if that occurred?
This idea exists because I cannot see a prolonged downside with the current conditions. In the event that Gold sells off with the Fed Speech…
Imagine a quick $60 sell off to that $1033 mark and not only would no one dare to buy it, but most would get stopped out. That is actually a perfect scenario, isn’t it? Would you buy it? Gold then launches higher Thursday, leaving everyone behind. With all of the surrounding evidence, Gold is set up to go higher. How it gets there remains to be seen.
GDX wkly still looks like this. $BPGDM is still Zero. Miners may not drop as much if Gold does react to the downside.
SO any possible Fed Reaction in Gold remains to be seen. Gold could blast off, or drop, but I dont think it will stay down for long if it goes down. Most know that I bought the reversal in Miners Friday, and I did so rather heavily. I took some profit in my initial JNUG purchase Tuesday, just in case we do have a knee jerk Fed Reaction downward. You can do the same if you wish pre-Fed today , but I also kept a position and will add on a drop or rally after the dust settles. Again, miners may not sell off all that much, even if Gold does. It’s impossible to say exactly what will happen, but the set up leans very much to the bullish side for a rally in Metals and Miners very soon. Enjoy your Fed Wednesday if you can 🙂
Thx Alex! So 2 questions: (to avoid scenario #3) would you change your stops? Move them a little more below Friday? And would that be your cue with miners diverging from gold if we get scenario #3 or would you still wait for more confirmation? Thanks as always
I’m not going to try to avoid scenario #3, I have to respect my stops. I took some profit on my position yesterday and I’ll take some loss if I get stopped out . Id Gold sells off to new lows and Miners do not break lows, that would be very bullish I.M.O. We are still close to the lower B.B. & well below the 10sma.
I mentioned scenario #3 because I just want readers to be aware that if GOLD sells off to the $1033 area rapidly, & then reverses higher again, that may be all we get downside. If I see a reversal & I was stopped out, I’ll probably re-enter miners.
I would love to see a sell off to that area by 2:30 & have it just sit there for a while, and then reverse higher moving into the close. That would be perfect, but they rarely give me what I want.
Thanks for your report Alex, let us know -say around 3.30 pm- how you see the Gold and Miners, make just a very short summery. See you then.
Again, thank-you-so-much.
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You know what to look for Geurt. You let me know about 3:30 🙂
You are so incredible nice Alex.
Actually…. was your job a weatherman before ???
See you later.
In this instance, where everything appears so bullishly aligned to the contrarian, why would one have a sell-stop rather than a buy-order below the support, knowing full well that a stop-run is the likely scenario?
btw .. devil’s advocate question, rather than aimed at anyone in particular 🙂
That is an option for the experienced, and for those that understand the current set up & odds of it being bullish for a rally. Many may do what you said on their own. What I mentioned ( A stop sell) may allow one to get out almost break even and re-enter at lower prices. For leveraged plays like JNUG or NUGT, it may be more comfortable. When buying Miners stocks, your thoughts may be best.
Also when I write a report, I have to lay out the possibilities and explain a safer scenario. There are many who may not fully understand the set up , the implications of the current C.O.T. readings , $BPGDM, etc and may not understand that if Gold dropped and closed lower, it’s likely a shake out type move. If I didnt even mention scenario #3 and Gold dropped after the Fed to $1033 and closed there, I would get a lot of emails mid day , and I cant answer those mid day .
I’m thinking that In real time, Stops would be run and no one would dare to buy.
thx Alex.. good answer!
Yep, that’s as good an answer as you could give for this situation. Tricky as always getting in at bottoms in a downtrend.
Thx! Fingers crossed and stops set…all up to Janet now. 🙂
I hate Fed Days!
I am planning on adding a 3rd tranche on GDX above the 9 day SMA ( my preference 🙂 ) or at the 1033 level which ever comes first. My calls are Jan. 2016 so time is on my side.
Did I mention I hate Fed Days! 🙂
Anyone notice AKS the last two days? Quite the pop.
Us Steel as well!
And check out ‘Boom’. It lived up to its name today
Currently US$ up and energy/PMs up. Noted. Is $ sustainable here? I’m thinking not.
Energy is tempting me to Buy …….. stop below Mondays low.
Wutcha ya all think ?
First hour after FED not usually prudent. Even by tomorrow morning. But seems few weeks of strength in comms and PMs likely
Agree……tempted non the less. I may buy 1st tranche though by end of day.
Risk Reward very good. imho
Worth a 1/4 or 1/2 size then wait to see what the majors do tomorrow morning?
1/3 tranche, 1/16 USO Calls, order in not filled as of now.
Canceled order JD, will wait for tomorrow’s action.
Hmmm….$tran cracked 50dma and down trendline. Maybe we go up from here now for awhile?
I was watching for that & was surprised to see that string recovery. Especially after this mornings chart in the report. It has been rejected a lot there.
Very volatile moves after 2 p.m. . One minute it looks like Gold & Miners are taking off fast, then a quick reversal / slam down. Then it runs up again, then drops…over and over. Battle of Bulls & Bears.
I am watching DUST with a 10sma, and GDX / GDXJ and their 10sma. Nothing has changed much so far.
I dont think it’ll be clear until we get further away from the Fed Statement hr.
Worth keeping eye on? ANRZ. Perhaps coming alive. Up 30%
CDE is so weak… bought it on Monday morning (still underwater)….
Yeah, def disappointing. I’m adding tomorrow on CDE. As long as we stay above recent lows should be ok. Drops below and will have to exit.
Let me know by 3.30 pm. You said.
What I see Alex…. it’s all over the place. I’m still thinking it MUST go up.
How do you see this development?
We didnt get the possible slam down from any FED SPEECH – that was the worst case scenario. From here, it looks like the same set up and many miners are up 6% or more ( TRX, NGD, SSRI, etc).
I think the set up is safe
I agree Captain…….can we break the 10 sma though ?
As of close, GDXJ has closed above the 10 sMA (19.65 vs 19.61) so i added more
That is definitely the next important target and I am thinking we’ll get a surge day very soon. Eaxh prior low meanders around and then suddenly bursts higher.
CHeck out TRX.
Take a look at GDX:$GOLD chart updates. Wanted to post but haven’t had opportunity, sorry. Looks like coming off a bottom. Lots of movement in junior miners, but notice that gold really has gone absolutely nowhere.
Thinking of taking a long postion on GLD but hoping for some movement north first. Keep hoping we wake up one day and it’s up $20-30. I think 1 big pop could both cause shorts to cover and then get folks to jump in. Them we’d have something going.
There is ‘lingering’ at the bottom then there is malingering and loitering. Let’s get it together, gold!