It Is Not An Illusion

I had this chart in my weekend report. After this weeks selling, it looks more and more like a reality, and not an illusion.

SPX CURRENTLY – I expected a bigger bounce this week, but the 2 day bounce was sold off yesterday. This is a break down and a back test.

I did post this chart on DEC 14 warning that a drop to below 1900 was looking quite serious.

NASDAQ – markets were rejected at the 9sma yesterday. The Short term H&S pattern did reach it’s target, but CAN continue .

  Shorting has always been tricky for me.  I was looking for the bounce to move up convincingly to a resistance area, but it just continued down.  IT would be best to wait and see what the next DCL  ( or ICL) does at this point. I have mentioned some  ETFs that you can use as a trader and I know that some here have.   Congrats on a few nice trades.   SDS, SQQQ, TZA, HDGE.  I will discuss the markets more in the weeknd report. 

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$WTIC –  Oils break down may be a throw over type move, where it breaks down and recovers like a shake out.

Traders have played oil stocks on the bounces, and some have popped 20% day after day,  but this is only for those in front of the screens.  Fast trades.  Currently OIL  is oversold and has capitulation type volume, so we may get a good bounce soon.  As a reminder  you can see that  OIL has been capped by the 20sma.  Those wanting a ‘safer trade’ in OIL can wait for a real recovery above the 20sma.

NATGAS   –  Didnt change much yesterday.  Still healthy consolidating recent gains. No chart.

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GOLD, SILVER, MINERS

FRUSTRATING IN MANY WAY.  THIS CHART IS BULLISH IN MANY WAYS, but Miners are lack luster.  UGLD is a bullish ETF for GOLD if anyone wants to try a long Gold position. 

SILVER –  Silver has been lingering at Lows, and yesterday it puts in a nice move higher.  This chart would be considered Bullish at this point too, but again,  Miners stalled below the 50sma which is around $13.84.  If SIlver breaks out here,  USLV is a 3x long leveraged position for silver,  but Silver is VERY tricky until it breaks out & runs.  Buyer beware!

GDX- So here it is.  Gold has a very bullish looking chart, and GDX / GDXJ stalled under the 50sma.  I drew a channel that shows that it isnt ugly bearish,  but it needs to push higher really soon I.M.H.O.   It is finally at an oversold point.

This is what I am going to look for.  GOLD and SILVER were up nicely and GDX stalled.  If GOLD and SILVER are RED today, can Miners can hold up above recent lows?   Or will there be a continuing sell off  into a dcl?   Gold Green –  Miners Red yesterday.  I always feel that Miners lead the way, so the burst higher in Gold would be a head fake, but that GOLD chart looks near perfect,  so there is some kind of an illusion here.   A break above the 50sma in Miners soon is important and I’ll show you why. ( Read the chart) A break higher would be bullish.

A strong break down from here would target $11.  NOT my most likely scenario   with the Gold set up and C.O.T., etc etc ,  but the Miners lagging is concerning and all things should be mentioned to avoid Bullish Bias.

I wanted to post 3 charts of some Gold stocks that did run nicely.  I used to trade them earlier in the  2000’s when it was favorable to own AFRICAN MINERS due to the RAND VS USD .    I studied the situation back then and found that they had their expenses & paid workers in the RAND (Cheap) , sold their Gold in $USD ( Profitable) .  Cheap costs & High profits. It then became dangerous to trade African Miners due to things taking place over there affecting mining.   Apparently, it is favorable again?  You may want them on your list for a pullback. 

This was my chart of DRD posted here JAN 5.  I was saying to watch for the pullback after such a burst higher  …

DRD –  It formed a Bull Flag and broke higher yesterday. I missed it, but it could set up again over time .

HMY-  Also mentioned  recently , also broke higher yesterday.   Good for the watch list.

GFI – This is in the same group, so I am showing it here. It hasnt popped ( And may not) but it is climbing nicely. 

SO trading is fast and crazy, I’m waiting for further clues so that I can enter a trade for more than a day or two.   OIL  may bounce here, The markets can drop straight down or stair-step around, NATGAS is falling to the 50sma at $2.20 (possible support for another trade higher).  Some may take a trade there with a stop a bit below the 50sma.

I am interested in watching the precious metals from the sidelines for now and see how the current conditions resolve themselves.  As I write,  Gold & SILVER began rapidly  dropping. Watch the GOLD/SILVER charts above for support areas and we’ll see how miners react.    Sometimes just sitting on the sidelines until things become clearer can give one a clear head or piece of mind.  We can wait for a good set up to take a trade that we can stay in for more than a day or two. Best wishes and thanks for being here! 

~ALEX

It’s after 8 a.m. , I want to release this, I’ll go back and correct typos soon. Thx