Not Always An Easy Climb

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When a climber begins his or her ascent, they are full of energy and the start of the climb may be easier than when they near the peak. As the climb continues, you may see him or her periodically rest, shake out the tightness,  even drop back and pursue a different path to the top.  I often see that same thing happen in the climb of various stock market sectors, and Precious Metals and the Oil sector is experiencing that now. They remains bullish long term in my opinion. We will discuss that briefly, but first…

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SPX – SPX put in a reversal on Thursday just as it started to lose the 50sma. We’ll see if there is any follow through to its recovery today. 

SPX 6-16

 

WTIC – This was June 14 and we were on day 50, so it was getting late in Oils daily cycle.

WTIC 4-14

WTIC – That would make Thursday day 52 and we have a trend line break and possible support on the 50sma. Of course, we know we could get a quick shake out, but a reversal here should be the daily cycle low.  I’m expecting that DCL, and the last 2 daily cycles are Right Translated  (R.T. is bullish) . I would say that ‘Long Oil’ is now back in play.

WTIC 6-16

XLE – The Energy sector put in a reversal at the 50sma Thursday. XLE did lose the 50sma , which possibly was a shake out. Tight stops at the 50 do not work in recent years.

XLE 6-16

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 GOLD & MINERS

 

 I wrote this in yesterdays report, and this is what we saw.

yesterday

GOLD – This is what the  “False Break Out” looks like. People buy the break out in the event that it will just run off higher, and then this will try to shake them out.  I am still bullish on Gold, despite a pause here. We could see a sideways move into Brexit, it could form an inverse H&S form with a drop to the 50sma.

GOLD 6-16

MINERS –

Since we are in a Bull market and we were in the timing for an ICL, I had been saying that I was buying Miners.  I also mentioned that I would at least buy something to have some skin in the game.  Start small a week or 2 ago. We saw MUX, VGZ, ASM, etc etc breaking out strongly.  Could GDX pull back further though?   With the FED and BREXIT and jittery hands, the steep climb that Miners have made could experience what was mentioned in the opening sentence of this report. We could see it pause, do some loosening up and shaking out just like the climber climbing that rock wall.

 

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GDX JUNE 8–  I drew this possibility on June 8th. We already see the pause and the shaking out occurring. I thought that we might see a false break out in GDX, but it remains bullish in an uphill climb.

6-8 gdx

JUNE 13– Would we drop & fill those 2 gaps on Fed week?  I actually mentioned that with this possibility, I did NOT think that the lower gap would fill. These reversals were holding up early in the daily cycle.

GDX 6-13

GDX JUNE 16 –  Reversals. This is nothing new. I still expect higher prices in time, since I believe that an ICL is in place. 

GDX 6-16

So that was a day 15 Peak on this first daily cycle so far. That is good and that climb may or may not be ‘done’ yet, it may be a 1/2 cycle low. Time will tell.  Could miners drop to the 50sma? Yes, they could drop into a DCL, but it still seems a little early to me.  I still like the set ups in various individual Miners that I mentioned in Thursdays report.

 

Look at TRQ, SAND, BTG, PVG, GORO for example.

 

BTG – My chart from yesterdays report  BTG, SAND, etc.  I was expecting a break out.  They did break out, but then the reversals came in. So it was temporarily a false break out with reversal. That doesn’t make it bearish to me.

BTG 6-15d

BTG Thursday with the break and reversal. Sand is the same.

BTG 6-16

I am still looking at the big picture.

BTG WKLY 6-15

I saw many people on Twitter and in public forums get discouraged and nervous when the reversals took place, some even got outright bearish , calling The Top for Gold & Miners.  I do not see it that way. This is also why I mentioned  to start with small positions and build them as miners climb.  As shown in this report, these are really the same old moves that we have always seen, and often buying the dips works. We repeatedly saw these miners shake out buyers all along the run from Jan – April too. Looking back, the climb was well worth the reward. 

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Enjoy your Friday trading and we’ll see you in the weekend report Late Sunday night or Monday morning.

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ALEX

GOLD CURRENTLY  (but that can change at 8:30 Eastern Time )

current gold

69 replies
  1. Ron
    Ron says:

    thoughts on CWEI as now at 50 near 21 with PB from 33 on possible reversal IF oil rallies, thanks?

  2. Cason
    Cason says:

    Guys, really like crude here. USO up big pre-market. Alex has talked potential to $60 during this run. USO pre-market at 11.43. If WTI goes to $56.75 that puts USO at $13.75. Jul USO monthly calls, $12 strike going for less than a quarter at the close yesterday. You can do the math….
    Bullish!!

    • Crystal
      Crystal says:

      Agree. I picked up more CWEI at the end of yesterday and added to my PACD. I am looking at ORIG as it escaped me last run-up – ORIG also has some premarket activity going on — so watch it out of the gate.

      Another name that I think is solid that has been steady and has great fundamentals is ANT

        • Bill
          Bill says:

          UWTI is a good play for sure. GUSH is oil services, ERX is enegy sector. Very similar action

          • Peter Castillo
            Peter Castillo says:

            I used to look at both ERX & GUSH, but the liquidity in ERX is better, and they moved in almost lock step, so decided to just track ERX/ERY. But UWTI does move different than ERX of course. Thats basically the etf’s I play with: ERX/ERY & UWTI. Hopefully we can get a good bounce in these.

          • Peter Castillo
            Peter Castillo says:

            Very nice observation Bill!!! I had never done the math. I had looked at liquidity, and the fact that they move in the same general direction, but that makes an argument for being long GUSH over ERX. Thanks for pointing that out!

  3. Peter Castillo
    Peter Castillo says:

    Good morning all!! Gold did hit its weekly 200 sma yesterday, which is a natural place for traders to take profits. Still, a lot of stocks held up really well for that kind of reversal. GDXJ still holding its b/out above previous close.

    • Crystal
      Crystal says:

      I am realizing that I need to clarify my understanding of the difference between miners, Jr miners and actual gold stocks.
      And with the exception of TRQ, I have not done any DD – just trading them based on Alex’s gold charts

        • Crystal
          Crystal says:

          Just the fundamentals behind the various miners and which ones make more sense as a long-term investment – risk/reward.

        • Crystal
          Crystal says:

          That was the one that Rio Tinto has a large stake in and there are rumors they might take it private.

          The debt/Capitol is astonishing – .15
          Price/book – .77
          PE TTM -17
          EPS Growth last qutr- 100%

          Sounds almost too good to be true 🙂

          • Bill
            Bill says:

            Agreed, its one of the few miners with positive net income. Along with TAHO, GOLD, CLGRF, VGZ, GORO

          • Crystal
            Crystal says:

            That’s exactly what I need to look into– I think some of these mines are in some fairly unstable countries and have had environmental problems etc

          • chartfreak1
            chartfreak1 says:

            TAHO and GORO are 2 companies that I also think should be way higher priced than they are for their fundamentals.

            I see some companies flying , double, triple, etc, but TAHO is just chugging along.

            I do love Majestic as a Silver company ‘AG’, but I sold that WAY too early and didnt hold any for a ‘Core’ like I wanted to.

          • Crystal
            Crystal says:

            I almost sold my very few shares of AG yesterday after reading your report, but I couldn’t pull the trigger -up almost 5% today. I am thinking of finding out who the MM’s are and baking them a pie and sending it to them 🙂

          • chartfreak1
            chartfreak1 says:

            I dont know if you meant that you wanted to sell after reading my report because I discussed extended Miners vs those that aren’t, but the extended ones can also just go sideways for several days and then continue higher .

            I like AG a lot. The D.D. that I did for them last yr showed that management was very smart ( In my opinion). Other companies were selling the silver they pulled from the ground, Majestic Management was storing theirs to sell when prices went higher.

            That will pay off in their earnings reports going forward .

          • nancytheartist
            nancytheartist says:

            I have a small core of AG at 3.12..I love that stock! So glad Crystal hung on! I recently bought GORO…too soon, not green yet, but hopefully soon!

          • Ray
            Ray says:

            Bill,
            CLGRF is that Claude resources? if yes they have been taking over by SSRI
            unfortunately as it was a good one for the last 3 years or so

          • chartfreak1
            chartfreak1 says:

            The funny thing with Miners, I have seen it for SO LONG, is that perception seems to be much stronger than reality.

            You take a stock like NGD that is supposed to be able to take gold out of the ground fairly cheaply, and good fundamentals and compare the performance to a jr that is “exploring” or only producing small quantity, but may have good reserves in the ground, etc. That little junior will move 10X and NGD might double.

            Example AUMN in 2009-2010 went from pennies to $28 . RGLD – a rock solid company , went from $35 to $50. Really?

            Its a speculative game.

          • Crystal
            Crystal says:

            I see what you mean– I still feel more comfortable putting my IRA money in a company that has stronger fundamentals and is in a more stable country for a long term hold– but then put a couple hundred down on a lottery ticket gamble/bet in the hopes that is the stock that gets “played”

          • chartfreak1
            chartfreak1 says:

            Yes, I should have added that AUMN crashed back down to reality later, while the fundamentally sound companies held up better.long term 🙂

          • Cason
            Cason says:

            Yep. I read people that do the fundamentals on miners all of the time and have yet to see any of it at all amount to a hill of beans. They (mostly) really all move together. When it was a bear and gold was going down, good fundamentals didn’t help anyone. And when we had bull mania in 2011-2012, being profitable didn’t matter, all went up. Honestly, I mostly disregard their earnings.

            But NOT with energy!

  4. Peter Castillo
    Peter Castillo says:

    SDRL might have had a shakeout yesterday below the 100 sma, but it looks good.

    AA also sitting right on its ling term ma’s.

  6. CS
    CS says:

    Alex, the charts for BTE and ERF look very interesting. Like other energy names they had a nice selloff recently but look like they want to run again. I bought a little BTE and ERX this morning. Like the odds here for energy for a short-term trade.

    • chartfreak1
      chartfreak1 says:

      I have loved that weekly chart of BTE for a while now. It looks like a break out and back test on the daily, and then it usually either starts trending higher, or it may start bouncing around and then move higher.

  8. jscottrx
    jscottrx says:

    Drifting back after a bit of a break. Baggin’ a piece of the current leg in GLD’s Long-Term-Trend UP move, the Thu close before the Fri Employment Report that nobody but nobody expected including me, via very short dated Calls, using one of my lil bag of tricks trade setups requiring a quick full positioning at the close Thu due to it being a bet ON a “gap open BIG one way or the other” Fri, paid so well, that I was content with waiting for the minimum I expected for this leg.

    Which was back up and takin’ out the previous high of GLD $123.96. Finally, yesterday, Thu, but was a “what previous high” leap to the unknown without even a “hey i would love to stop and chat, but I gotta run” lol then suddenly the chart displays required a sextuple-take “what? i am confused” when every market recv’d the same “change in plans” transmission which was to “stop and reverse”. I told myself this HAS to be a major Brexit event. It was. 7 more days of this, then hopefully, dog be willin’, at least the vote will be done with.

    But in recent days for me a major reconsideration and reunion. I kissed and made-up with natty aka natgas aka nymex NG and aka to me one of her alter egos the mucho contango’d etf UNG lol. Not sure but “something made me turn around and stay, and I can’t tell you why. No, no, baby, I can’t tell you why…”. lol.

    Natty’s next Long-Term-Trend UP move that I thought (wanted) to begin more than a month ago, well she just needed a bit more time to prepare for something that she last did 16 years ago in Year 2000, when she responded to rolling blackouts in California due to NG shortages, by leaping from less than $2.00 to a much higher avg level of approx $7.00 that was sustained for 8+ years, with a handful of pops to $15.

    But in Aug 2008 the Financial Crisis’ “take no hostages” leg down began and natty unfortunately was to be one of the worst casualties. She was taken down and held down relentlessly for almost 8 years when in Mar 2016 that evil force left her for dead, back under $2.00 spot $1.60, where she picked her self up, then laid down flat for a spell. Well in recent weeks natty has decided to reassert herself and I went all in with her UNG at 7.80 and NG at $2.60 via her UNG Oct-2016 Calls.

    { `_`} .

      • jscottrx
        jscottrx says:

        one of me fav’s who went off to UTaustin late 1980’s, as i did in aug 1977. UT offered a computer science but strangely back then it was a B.A. well FR 101 and 102 i got through. but 103 and 104. “this aint gonna happen”. i was awarded a bachelor of science in computer science UnivHouston in 1986. with honors barely pure dumb luck. temporarily retired from wage-slavin’ at 41 in year 2001 a space odyssey lol. i have yet to return to wage-slavin’.

    • Crystal
      Crystal says:

      What a difference a week makes…
      ….I’m beginning to think that the Fed and the market controls oil more than OPEC

    • Cason
      Cason says:

      Man, she was down hard yesterday but I saw the reversal in XLE so I held my nose and jumped in. Wheee! Alex, solid day for OAS as well!

  10. chartfreak1
    chartfreak1 says:

    I added to my BTG position. I still say that that looks similar to VGZ and MUX before the volcano shot.

    I could be wrong, Its a gut feel and a chart set up

    • Rob
      Rob says:

      Hi Cason, I’m not that good at interpreting COT. What about this week’s COT is positive for gold? TIA

      • Cason
        Cason says:

        Hi Rob, you want to watch two things – the green line which is ‘open interest’. The other item is the red bars which show the the total commercial shorts. The low commercial shorts in Dec 2015 show the bear market bottom. You want to see the bars get longer after that to confirm. Once you get to a market top, the commercial shorts will start to cover bringing the bars back down. The shortest bar (circled in black) is our recent ICL that Alex pointed out. The rapid gain in Gold spot/futures since then has shown up with a huge addition of shorts, as expected. At the same time, the open interest shot up with speculators chasing the move. Again as expected. At some point when this gets too high again, expect the top of the recent ICL. COT does not usually pick the exact tops – keep that in mind. It is a great secondary indicator but it is not a great timing tool. GL, bro!

  13. Peter Castillo
    Peter Castillo says:

    Maria!!! Thank you so much!!! I had taken a few days off and had not read your comment!! I started my father’s day on thursday evening, and it’s still going!!! 😉 Thank you!

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