What’s The Big reveal?

In case one couldn’t tell , “It’s A Fed Thing”.   I thought that maybe it would be a little quiet leading up to the Fed declaration on Wednesday and then we’d see a little fireworks, but its a Fed Thing.  Things started shaking up long before Wednesday.   Lets take a look.

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SPX WKLY –  from the weekend report, the weekly looks a bit bearish.

SPX DAILY – from the weekly report. I did mention that we could bounce off of support, but will it get that far?

Todays reversal looked quite convincing, so has my thinking changed?

SPX – Well it needs watching after a bounce. Todays reversal ( and if we see any follow through on FED Wed & Thursday)  could really suck the bulls back in, but recall that in my prior report we saw weakness in everything. IWM, RUT, XLF, QQQ, DJIA, ETC. all looked to be weakening.

Many were shorting the market or had stops in place, so this reversal played out like a nice stop run too. 

So we’ll see if rapid short covering pushes through overhead resistance points,  or does the Fed decision hurt the progress.  I’d stay on the sidelines personally until we see how this plays out, but so far it has been rolling over.

USD –  The USD pulled a small reversal today too. It could break higher from this wedge, but that doesn’t mean it flies a lot higher. It is very hard to believe that that one day drop  in early Dec was a false move.

$WTIC – Another reversal. The timing fits for a daily cycle low, but the prior rally was capped by the 20sma. I do expect a solid bounce soon,  but we’ll see how it moves from here.  A sideways move would likely reveal continued weakness. 

XLE – The Energy sector has completed the H&S , held the lows,  and put in a reversal. Energy may bounce here. 

NATGAS – From the wkend report – had bleed out into a waterfall type decline.

Today may be the capitulation lows.  A Gap higher leaves a bullish chart pattern and a short covering rally should occur.

GOLD – SILVER – MINERS

 I expected that Monday may be a bit slow, and I also thought that we might pull back going into Wednesday.   After an hour or so of trading, I decided to get some things done, so I left for the day. I must say that I was surprised at the look of GDX today when I returned.  We will discuss that in detail after a look at GOLD & SILVER. 

GOLD – Mixed reviews on this move.  Technically, nothing wrong.  Cycle-wise, it is not acting corrctly. 

SILVER – Silver is still breaking down to new lows. In the weekend report I pointed out that GOLD found its summer ICL (lows)  1 month ahead of Silver.  Is this a repeat?  We do see divergence and at least the Silver COT should be improving.

GDX went to a sell today as it drops into a dcl. I didnt re-draw this, but trust me, it broke. 

GDX – There was a question as to whether this was a channel or a rising wedge? Either way, it broke down through the 10sma and the lower trend line. GDX is dropping to find a DCL.   The KEY is –  How will it get there?    This chart points out a steep heavy volume drop that then went sideways in Oct to show that a 1 day drop is not the end of the world.  

  So lets look at Bullish possibilities  and Bearish possibilities and understand that getting stopped out today may be the safe way to go until the Fed thing is done.

GDX – Bullish possibility. A dcl can come at anytime . GDX is on day 17 and one can form anytime. Miners have held up well lately.  So this could happen around the Fed Day this week and  GDX would be fine. 

GDX –  This is with Bearish follow through.  Read the note on the chart.  GDX Sept lows were a stop run. We could see that again and get a late ICL. 

DUST was selling off and looked bearish, until today.  This looks Bullish.

I am not getting Uber Bearish –  but short term I am wondering if we are going to sell down and get a stop run in Miners and get an ICL in GOLD, SILVER & MINERS  all at once.  I am not very bearish because so far many of the miners that I have specifically mentioned still look fine.

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SA –  Down only 2 cents today and still looks very good.  It has had many steep 1 or 2 day drops and then recovered.

NG – Down 3 cents and still at highs.  Notice that it had some slam down days right before taking off, so GDX could do that too post Fed.

AG –  Down 9 cents with Silver at new lows, AG is still looking bullish.  We know that that can change, but again, Silver is hitting new lows.  5 days ago it also  had a slam down day below the trend line like GDX , but never sold off. 

NEM –  A component  of GDX,  NEM still holds higher lows.  NEM also had a slam down day in early November and it only went sideways after that.

   The COT for Gold remains Extremely Bullish –  is this one last shake out before the Fed?  Honestly only time will tell.

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  These are tough markets to trade or invest in, because all sectors have continually been Popping & Dropping with every couple of days.  Break downs recover, break outs give it up.   Quite likely it will remain this way until after the Fed Rate decision is released.

  EX: I was looking at Solars and a few weeks ago and many looked great.    FSLR and SCTY got slammed a couple of days ago,  but today they look very bullish along with others in the  Solar area.  TSL, TAN, CSIQ, etc.  These are very volatile, but many are now trending higher.  This highlights the difficulty of the current markets.

  So what I am saying is  “There is nothing wrong with sitting on the sidelines to see how things play out, since the whip saw markets are not a fun place to be”.   In my weekend report I mentioned that I have looked at MANY things and I do see the big picture changing.   My gut tells me that the Miners will be ok, but right now they are suddenly reacting in a strong way to the downside and DUST turned bullish looking.  Why?   I dont know,  so I am going to have to sit by and see how things play out. 

   As mentioned before,  honor your stops and proceed with caution ( that may mean only small positions if you are trading). Right now it seems to be A Fed Thing.

~ALEX