Weekend Review Feb 28

We reach the end of the month on Monday, so Monthly charts will come in to play too.   Right now we’ll take a look at how things are playing out using weekly and daily charts.

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SPX WKLY  –  The pullback so far as been almost textbook at 38% from the 2012 lows.  I’ve been pointing out a possible H&S pattern as it formed last fall, so we keep that in mind. I’ve been expecting a bounce here for weeks, and so far it is struggling with volatility.

BIGGER PICTURE

If you have been with me for 2 months or more, you may recall that I was looking at Quarterly charts too, for clues of a break down. This chart was posted saying that a close under the moving averages was  a warning & I would keep an eye on it for.

I just wanted you to see that that drop recovered on a quarterly basis.  SO- If this holds by the end of March, we would actually have a possible recovery. This would just be a ‘handle’.  I will be watching this at the end of March.

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That is a worthy side note, but right now I still see concerning weakness.

The NASDAQ has no divergence so far, as it struggles on the drop.

BKX – For 2 months  I had mentioned that I am concerned with banking . I posted this a month ago.

BKX–  We still see no promising recovery in banking, but we’ll keep an eye on it. Strong resistance at the 66 area.

DOW MEGAPHONE? Just a thought.   I know this looks like it would be a devastating crash, but it could slowly work its way  down like it did 2000 to 2003, or it could get it done fast with a banking crisis like 2008?

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USD – I’ve pointed out a double top in my opinion. This would be (and has been) good for Gold.

USD DAILY –  Cycle-wise, the dollar is in the timing to roll over.  If it breaks higher, it could become right translated.  I look at the Euro and it looks ready to bottom, so the dollar should drop.

WTIC-  I have mentioned that I think that Oil is bottoming here  ( at least temporary).  It is volatile and difficult to trade, until it makes a believable break higher.  

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NATGAS – Oversold,but it just keeps dropping.  It has been too difficult to trade, unable to catch a bid.

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Precious Metals.

GOLD – Bullish so far.  This is a ‘bull flag’ and can run higher.

I drew the next 2 charts up and posted it in the public report Friday.

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The weekly shows a possible larger bull flag.

I will discuss the COT later

SILVER – Silver has under performed during this rally, silver stocks have not.This looks more bearish than Bullish honestly.

If you look again at the Gold Bull Flag,  it could bounce around inside that flag, moving all the way up to $1250 area. As it does, you might find Miners holding up, and individual miners may even travel higher , showing their own strength, the way SBGL, HMY, etc have,

GDX– We are at the end of the month. This is beautiful for the longer term.

GDX DAILY – If Gold moves higher, Miners could too. This chart looks like it wants to pull back.  It is normal to expect a dip here. Targets are shown,  but this pattern could also turn into a running correction. They are uphill consolidation periods that relieve overbought conditions.

It is helpful to Study former lows and not guess at what we may expect.

Here is something to consider.  I see people who have missed this move dying to buy the pullback ‘this week’ …   as though it will be easy for anyone to just buy and  ride it for the second leg up.  Markets do not always act as expected.  Notice how the miners performed in 2000- 2001. 

Very bullish looking , but notice that it had 3 weeks higher and then 3 or 4 weeks sideways, then a run followed by 4 weeks of sideways flagging.  Also both NUGT and DUST would fail there, because it is a month of sideways. Could happen to us now ?    It could.

XAU 1993 –  Study the move out of the lows here too.  We see a nice 20 day run higher .  It took 1 month to gradually pull back.   Lows are just not that easy to trade.

I wanted to point out that the COT has returned to where prior highs /  tops came in.   Many see that and call for a deep pull back right now. 

Yes, That COULD indicate that a pull back is imminent, and it usually has in the bear market rallies.

  Is this just another a bear market rally?  Is it the start of a Bull?  Does that affect things?

Notice that the COT in 2008 peaked as shown at former highs at the red line.  Then Gold crashed down in 2008.

After GOLD bottomed and started running back up,  the COT eventually reached  those levels again in Sept 2009 ( And there were some dips along the way of course).  Notice that the COT indicated that commercial shorts  just remained at the level that prior tops formed for Sept , Oct, Nov. 2009  Was Gold crashing in those months? 

In Sept, Oct, Nov 2009 Gold just continued higher and higher. That is why I say that the COT is not an exact timing tool. I use it for bottoms more than tops. It just calls for caution at these levels,   it alone is not a sell signal. 

Monday we will see how the various sectors end February.  I still expect higher prices in the equity Markets.   Oil  looks to be putting in a bottom, but it remains volatile and tough to trade.   Precious metals are due for a rest, but there is no telling at this point if one will come now or will it be later? As shown, it could  just meander sideways too, frustrating those that missed the rally. I have been pointing out individual Miners setting up as possible trades.  I have mentioned that after buying the lows in January,  it was best to sell partial positions to lock in gains, but hold some positions and watch the rising 8 ema.  That has worked out well so far.   You still have skin in the game as they say.  Going forward we just have to see what the markets want to do. The story will be in the charts.

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~ALEX 

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I’m going to release this at 8 a.m.  and then go back and look for typos.  It would take too long to proof read, and I want to give readers time to look it over before the market open.

I mentioned that I liked what I was seeing set up in TAHO , the mining company that is buying LSG.  LSG had bottomed in 2013 .  I Didn’t say that it was a buy right now, it just ran a nice a-c = c-d move on the daily, but I do love the big picture set up if Gold has returned to its Bull stage.   What did I like?  Stare at this chart of ABX  or also NEM.  See the weekly base?