June 15 – Relax, It’s A Fed Wednesday

This was my thinking from yesterdays report…

This is how Tuesday ended. We lost and regained the 50sma and today is Fed Wednesday. Will the 50sma hold or will this drop to the 200sma? Lets look at 2 more things.

The Nasdaq, which I mentioned looked weaker, did drop to the 200sma. Even though the Nasdaq look overall bullish…

And even TWTR looks like it is bottoming.

BKX – And in that first chart of the report where I mentioned Banking looking weaker than SPX, we see that the Banking index failed by dropping below the May lows. This signals real weakness in banking as we approach an interest rate decision. It can bounce, but it is likely to roll over soon and continue in a downtrend now. 

WTIC – As expected and getting close to a DCL. The timing is getting late using Cycles. When Oil finds its DCL, it should continue to rally. I am hearing on CNBC that Oil will now drop due to ( Blah Blah Blah). That means the drop is almost done. 🙂

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I am slightly torn.  I expect that Precious Metals have put in their ICL and have begun to run, and I especially see good potential in SILVER itself once it gets going ( I will explain later in the report).  The problem is that many Silver Miners are very extended.  Oil stocks are not extended in the same manner, so some of the Oil stocks may run again nicely, but I have to wonder if some of the Miners get over extended quickly and struggle to go a lot higher? I own MUX & VGZ and they already look close to a near term ‘peak’. 

That said, Lets look at just a couple of Energy stocks.

This is the weekly chart of CWEI. We have traded this fast mover in the past and it may be back at support.

OAS –  I have pointed out OAS repeatedly. It has held up well despite Oils pull backs.

BTE – This stock had the weekly base that I loved for a possible explosive move . This was May 7th  above  $4

BTE – Broke out last week with strong volume.

BTE – Since that strong break out, BTE has drifted back to the break out point. THis MIGHT drop all the way to the 50sma, or it may bounce around here and allow the 50sma to catch up. It may just bottom when Oil does.

BTE WKLY – Possible Inverse H&S pattern with a break out, so i am watching BTE closely.

SXE – SXE is not oversold, but it is climbing along the 50sm and may hold up well. It is on my watchlist too.  It would be considered ‘a low risk entry” here above the 50sma, but you would have to be willing to honor your stop if it drops below the 50sma. 

Precious Metals

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It is FED WEDNESDAY – I expect overall conditions to remain bullish for Gold and I have said that I believe we got the ICL 2 weeks ago, but Gold has run up right to today and that means you could see a couple of scenarios. Lets discuss it. 

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GOLD WKLY – This is a bullish looking chart. It could easily just continue higher. With Gold rising day after day, many wouldl not buy, because “I dont want to chase it”.  The contrarian in me says that it could just break out and  they could get left behind again. This is NOT overbought at all.

Gold Daily – Easy to see how a sideways move could put a shoulder on this pattern. It is Fed Wednesday and anything can happen.

SILVER – I look at silver and silver is no where near overbought on a weekly. It is still slightly above the 200sma so it could really have the potential to run and out perform Gold on the next run. That raises a slight problem in my mind.  Will Silver Miners power even a lot higher if that happens?

I do find it hard to find a lot of examples of Miners that were double the price of where the 200sma was, and continuing to blast higher. Note: If they did, they dropped quickly after. Lets discuss this area.

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AG- One of my favorite Silver stocks, what an exceptional run, but AG is over 100% above the 200sma. Can it run further?

Yes, it could go crazy and run to $20, but it takes extraordinary conditions.  We may have that with Silver and the recent bear beat down. I also see that by the time AG got to $22, the 200sma could reach $11, and then consolidate for a long time after. It is not a normal move to run like that until the parabolic phase, but it ‘could’ happen.

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 When I look at some individual Miners, they are NOT extended over their 200sma, and that is why when I started buying 2 weeks ago, I bought MUX, VGZ, GSS, GPL, EXK, EGO.  Some have done well (Very well already.  MUX & VGZ).  I sold EGO and EXK as this Fed day approached.

GSS put in an interesting reversal yesterday. It filled the lower gap and regained the 50sma all in 1 day.

I like the BASE and see more possible upside, so if Gold takes off higher, it is possible that GSS could benefit in the next run.

TRX – I mentioned this yesterday. It has had some problems geographically, but those are said to be being resolved. The chart reflects progress. I sold 1/2 of my MUX yesterday ( it has become extended ) and entered TRX strictly due to this base.

I had pointed out VGZ recently, because it was not extended above the 200sma after this recent consolidation. It was consolidating in the 65 to 90 cent area. Volume was pouring in.

I also showed this base, and these get explosive.

VGZ has broken out.  I am showing you this now, because it helps one to know what to look for and see the results too.  I had a price target of $1.14, but this can keep running if Gold breaks out.  I think VGZ will run to former highs like many Miners have, if it can remain healthy. This base wants to put VGZ back near $4.00.  Over 300% over time.  Read the chart.

This is why the current move could be completing. Knowing me, I would sell 1/2 and hope for a dip to buy.

TRQ – This chart was in yesterdays report. The chart showed a bullish high volume break out and is near the 200sma, it ‘only’ doubled from Jan to March .

In case you missed it in the comments section, Crystal had looked into it a bit and posted this. Good stats, but if the stock tanks, do not blame her or me : )  We’re  just reporting our findings and trying to help.  🙂 

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So what exactly will happen with the FED DECISION, especially since the BREXIT VOTE follows just 1 week later?  Usually all you can count on is volatility at 2 pm. to  the close and maybe into the following Thursday. I wanted to show the thinking on Miners, because I am Bullish on precious metals, but some of these have become a bit extended already. Will they run higher? They can, but I think chances favor seeing  the bigger %-Gains from some of those that may not have been ready to run back in January – April.  Some like AUMN are much higher risk, know & trade at your own risk level.  Small positions are safer obviously.  OIL is closing in on a DCL, and some Energy stocks are healthy looking, but not over extended. They too may be a better performer. I will cover more in future reports as things unfold and we see where we are.  Patience pays off at times.

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Finally, I mentioned that SILVER looks to have the best potential in the next run.  It is NOT extended over the 200sma, and if it takes off on the next run, the gains could be good.  In this area, you have AGQ & USLV as leveraged ETFs, and some use options on SLV, SIL if they dont want to buy the extended Miners.

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Of course we will know more after today, there are several possibilities, but I am bullish on Precious Metals as I have mentioned in reports over the past 3 weeks now. The General markets are really in a tricky area with the BKX break down. Time will tell, and then comes BREXIT next week  🙂 

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~ALEX