1-13-2016 Observations

SPX –  Yesterday I was pointing out the reversal candle and we were expecting a move higher, but would it be just a bounce?

SPX – We will get follow through, so traders can trade it, but at this point I do not expect a return to the Bull run.  (See the weekend report for the big picture). Strong overhead resistance is pointed out, if the markets can make it to that area.

USD –  I’ve been looking for a double top for months now.  This was the Dec 18 wkly idea.

Here I showed how the left side peak ( Magenta box) looked similar to the formation now, so we would expect a break higher and double top.

USD CURRENTLY – we could break out, but it may be a false break out to draw in ‘longs’. I still do not see this going to 120 as many predict. At this point I see weakness internally.

WTIC –   Novemeber 13 – I had a weekly target of $26, when OIL was above $40.  It seemed crazy, but now it seems possible. 

WTIC NOW –  so we may get an oversold  bounce here, but it seems early for a dcl  ( they often run over 30days). If we do get a bounce,  watch the 20 sma, and the next drop may be THE FINAL LOWS.  ( See Big Picture chart in the weekend report).

NATGAS-  Is consolidating its strong move higher.   I called for a normal bullflag, but that broke down. I  have pointed out possible support areas ( Possible Inverse H&S too).   

GOLD, SILVER, MINERS

Yesterday threw a lot of people off, and I am no exception. I expected Miners to hold up better, but what we saw was a steep drop in the GDX (that tried to recover into the close), and many silver stocks got hit hard.  Obviously I needed to look into it and see if it makes sense , or is it way out of whack  (  I got stopped out of my late entry positions and sold the rest for now.  Sometimes when a trade that you take doesnt do what you expected,  you can take profit and just clear your head to see things clearly).

These are my current observations:

GOLD –  This is acting correctly and as expected. Lets review what we’ve seen.   Back in December I was expecting  a break out higher from the triangle and reported the Bullish COT, Likely ICL, etc

GOLD CURRENTLY –  We got that break out above the 50sma and triangle, and now a back test is possible.  This could be a normal drop into a DCL.  NOTE THE LEFT SIDE OF THE CHART.

1. Gold bottomed JULY 27.

2. Gold formed a small triangle. 

3. broke out and made higher lows, rather orderly like it is acting right now.  

Now look at SILVER & compare it to the above Gold chart at last summers lows. When GOLD bottomed on JULY 27,  Silver formed a shaky triangle, was capped at the 50sma, and broke down to new lows. We are seeing that again right now. THEN Silver broke to new highs very rapidly in its own time. 

So we see from the above 2 charts  that Silver didnt respect Golds ICL from JULY 27.  It marched to the beat of its own drum.  Now on to Miners. 

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GDX – GDX is acting better currently than it did with Golds Summer July 27 lows.  GDX broke to its own new lows on Sept 11 at that time (After a steep plunge). The steep drop from the past 2 days was unexpected, hopefully not a repeat of the drop in August.  It does call for caution however.

I dont think everything is predicting a huge break down in Gold, since we still have that bullish GOLD COT , ugly sentiment, etc.  At this point it looks more like one of those difficult basing bottoms, similar to last Summer July, August, Sept.   Yesterday Miners tried to recover, but the cycle count is at day 16, and that tends to be a tad early for a dcl.   GDX MAY just bounce around or drop a bit more and find a DCL  (Daily cycle low) as a higher low.  That would be great.   I would love to see the lows hold from November if the drop continues,  or the SEPT lows, but it will take time to see how this plays out.  Some of my favorite Miners showed a slight change yesterday.

1. We had a few Silver Miners drop to fresh lows.

2. We saw SA, NG, LSG, RIC, etc drop a bit more than expected

3. I think that GDX could bounce and drop to a dcl, or just continue to drop here.

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  So for today I am in cash and I need to see how things move going forward.  The big picture from the past weekend reports for the Markets , OIL, The CRB, GOLD , SILVER, and MINERS hasn’t changed . Things are lining up and the pieces of the puzzle still look to be falling into place.  Short term appears to be for traders that can be in front of the screen ,  use stops, protect investments from unexpected whip saw. 

 For now, Know your own trading ability and remember that  CASH is a valid position in uncertain times. I dont mind waiting for a trade to come to me.  I look for divergence at lows, positive indicators, etc. The drop from the past 2 days was unexpected , but not very damaging  ( yet),  except for some Silver stocks.  they MIGHT be doing a shake out. We still have a chance for a series of higher lows in GDX, but again it will take time.   I pointed out a few trades in yesterdays report for a market bounce. 

Final observation –  Strictly using technical analysis,  this is no longer very  bullish looking.  It looks set up to break down,  so I remain very cautious.  There is room for downside follow through on the stochastics.  Maybe its a shake out below the 50sma?  It will take time and patience to see.

Thanks for being here.  Remember that being stopped out is a valid trade that saves your funds,  though frustrating to give back gains. There is always another trade and it is best to wait for a proper set up.

~ALEX