Abnormal Cycles Part 2

Part 2 of this mornings Gold report. I’ll start with 2 charts that I pointed out  recently in premium reports and in the public post yesterday, indicating some bullishness in the miners…

Sept 30 –  GDX buy above the blue line and confirmation above the green dotted line .  We are currently seeing that today  ( we need to close that way)

Why was this important? Using only Cycles, the volatile  movement in Gold and the Miners was causing concern and looked ready to fail.  While using some of the indicators that I have developed to monitor internals at the lows,  I was still seeing bullishness in a number of ways and technical analysis was also leaning toward bullishness, as seen above. I dug a little deeper to try to reconcile the differences and came up with this…

As mentioned in a prior report  ( and for newer members) , I did NOT get a sell signal in a very reliable indicator, even when GDX dropped to new lows.  It seemed to be saying that the new lows were just a stop run. 

Miners were so close to the ICL support line, downside seemed limited unless we get more upside first  ( or outright crash). Then I noticed that we already had strong flush type capitulation and now we are pinched tightly. That is Bullish. 

Add pieces to the puzzle:  Individual Miners that make up a big part of GDX have bullish patterns too. Though failing to gain the 50sma, they did not look bearish.   AEM and AU have nice set ups after consolidating, I’m watching for follow through.

Observing  Gold Cycles, I have noted in the past that Cycles seem to be getting shorter.  They were consistently 6 months apart from Low to Low ( 4 daily cycles).  We have seen 4 month spreads between ICLs lately, see Nov to March, March to July below.   I stepped back and I draw the conclusion that this may be due to Gold being squeezed too. It is running out of room to run.

Gold could break out right here and back test on the next ICL or head to the Apex in the next ICL.  If we only have a 4 month spread, Nov would be the next ICL.   This may end the bear market if we break out from the wedge.

Gold currently looks strong in a smaller time frame.  I am watching for a break out next week. Gold could pause for a day or two to scare out new buyers, but should break higher.  It may just run strong and fast. Many are now on the sidelines with recent action.

GDX today. This is mid day.  Looks like a break out and has solid volume.  This could run higher quickly too, with most buyers sidelined.

  This has been difficult and frustrating for all, with all of the Gaps higher and Gaps down in the A.M.   With that, I am still Bullish with the action that I see in Gold and Miners.  I have had buy signals in various  indicators, but cycle counts are causing concern-  I think they may be squeezed. The above chart in GDX is by no means broken, but because it hangs at the lows ( in a base),  timing is the concern when we think of cycles.   Limited time to break to new highs. Look again at the above chart.  GDX could run above the Aug highs in 1 week, we know that, right?   But…

Is it too late in the daily cycle at day 15?  No, with a possible 33 day daily cycle expected,  we could run up for 5 to 10 days and then drop into the daily cycle low.  No guarantee, but the charts remain bullish looking.  I have seen this before and will explain further in the weekend report.  I need to end this report here, so I will  further addressed abnormal cycles in our weekend report.  The idea is that the cycles are usually very accurate and smooth under normal conditions, but being squeezed into the wedge and triangle patterns that I am seeing seems to be causing lack of follow through immediately.  If we break higher, they could run quickly.   Many are staying away from Miners due to the recent volatility.  Understandable, and if these are final bear market lasting lows, you will have plenty of opportunity in the future.

GDX is again above the 50sma and so is Gold. Volume is supportive and solid, and I think GDX will close with near 100 Million in volume.  I believe most have been shaken out or stopped out and will not want to re-enter, therefore we could continue running higher next week.   Thats how it often works near lows.   The weekend report will discuss  things more in depth. Thanks for your patience with the 2 part report. I had a lot to do today and have been juggling a lot. I still recommend honoring stops if you are in, but lately the ‘gaps’ have been the difficult part to control.  Maybe a partial position today and if we gap down Monday, it may be a chance to add? 

Best wishes and have a great weekend.

~ALEX

P.S.  look at this weekly chart of GDX and look at your MACD.  It’s a HMMM moment for me.