It’s Not A Straight line

We all know that the markets don’t move in a straight line, and lately the volatility has made the path to successful investing a bit trickier. At times it is best to get a longer term view of where things are headed, so the wiggles or shake ups don’t knock us off course. Lets look at some charts.

SPX – This summer I was looking for that drop in the markets.

The question is , is it done?

I think a bounce will get everyone bullish again and many will praise the buy the dips team and endless bull market moves again.

This week we have a recovery in process.  As of Wednesday, this is how good the SPX Weekly chart looks. The PATH that I am looking at is playing out and 1 thing that I am really interested in is , ” Will people keep buying Friday and hold over the weekend? Will we get some selling Friday?”

SPX– If it holds, it is a beautiful reversal candle, but the damage is done in my opinion.  I expect further downside in the future.  I may even recommend shorting a tag of the 200sma if we see that in September.

SSEC- I  want to point out the ‘Temporary’ support in the SSEC sell off at the 200sma. Their was a recovery in progress there too, but the bullishness fell apart. THIS is similar to what I think we will see in the US markets for a recovery.   I’ll have more in the weekend report.

USD – People think that the past 2 days shows DOLLAR  STRENGTH and fear that it will hinder Gold.  Internally I still see weakness. I will let you know if that changes as time goes on, but so far the path that I think we will see is that the dollar will roll over again.

OIL –  Again  a possible $33.55 target?

OIL –  Relentless selling.  A close above the 10sma would be encouraging. Not a buy yet, but a sweet rally should follow and I will be looking at some Energy stocks at that time.  If you look at some now, they POP 20% in 1 day on just an oversold bounce.  They could become great %- gain trades.

NATGAS – This turned from Bullish looking  to Bearish , back to Bullish and then , “Oh, we’re in a triangle.”  It has broken down at this point, but isnt selling off quickly, so I don’t see this as a short or long candidate right now. It is oversold, but it is also weak.  Natgas reports come out on Thursday.  What day is today?  Maybe we’ll get some clarity.

GOLD,SILVER,  & MINERS

What can I say? Does anyone remember the theme of yesterdays report?  The waiting is difficult day to day,  and in our comments section we see eager traders  (myself included)  just watching for signs of a bottom forming.  I still expect a second rally phase, and timing wise it could start at anytime.  The cycles used to measure the precious metals waves or phases have been stretched lately, so that should be  in the back of our minds.

  Gold cycles used to average roughly 20 to 28 trading days from low to low. The recent length has been in the low 30 day area.  We are on day 24, so we could see the lows soon (Anytime now), or this could easily stretch on to next week.   IF IT DID , I would expect less sell off and maybe more sideways as shown in this prior chart.

GOLD  Aug 26 –  will areas of support hold, or will it drop like the Miners have? $1109 is still acceptable.

SILVER  –  Silver broke down.  I am not touching it yet, but we may look back and see this as a nice buying opportunity if it recovers  ( I think it will).  I want to see $14.33 recovered by the close Friday to get a warm fuzzy about this possible shake out.

Remember what I said about SILVER Aug 18?  It drops back to lows in the first daily cycle, but in the 2nd daily cycle?  The 2nd rally phase is often explosive  ( see AUG 2014).   I would imagine many are shorting this break down, adding fuel to the fire. 

GDXJ  Aug 26 –  In Novembers 1st daily cycle we undercut the lows bounced and came back down again.  The basic indicators like the MACD and RSI looked quite similar to what we see now. You can see that cutting to new lows in Miners didn’t negate the 2nd rally phase through January, and this is the path that I still expect up to this point.

So the waiting is still the hardest part.  We are waiting for a swing low and we may even get a false bounce here & there as time unfolds.  When I started writing Gold, Silver and the dollar futures were all green.  Is Gold going to put in an early swing with smart money seeing that the dollar has weakness?  I almost doubt it.  I would say a false bounce  and little more bouncing around would allow the daily cycle for Gold to stretch out a bit longer. 

To identify  the start of a new daily cycle we look for a break and close above the 10sma and a trend line break upward gives further confirmation.  It would look like this.

  For newer readers here, I do not always have a Friday report.  What I put in Thursdays reports often doesn’t change much and then the weekend report will cover the past week and what we are looking for going forward.  IF Gold starts to rise quickly breaking above the moving averages in the above chart, I would  write about that Friday, but I think the dollar has a little more upside and Gold may sell off a bit more and bounce around.  If you are new here, please read some of the older reports to better understand what I am seeing. Also note the comments section below the reports.  That area has a lot of good conversation as the day goes by, you may want to check that out daily.

The waiting is the hardest part, but patients in trading and waiting for a proper low risk entry can be quite rewarding in times like this. Thanks for being here.

~ALEX