WKEND REPORT – brEXIT STAGE LEFT

The Fed Decision is behind us and just when we thought that maybe we could enjoy a week free from extreme volatility, we have BREXIT this week. The vote regarding the European Union is on Thursday, and that could give us another week of volatility.  That said, by using Cycle analysis and Technical analysis, we have been expecting a certain outcome and things do seem to be lining up as anticipated.  Lets do a review.

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SPX– We may have seen a 1/2 cycle low. This would lean more to the bullish side indicating that the current consolidation is building steam to attempt a break out. This looks like a ‘W’ pattern with a handle.

The W-Pattern is a bullish pattern mentioned in William O’Neil’s Books. This one ran to $800, and is currently at $1800.

 

That is not the only Bullish chart on our Brexit Week, there are more …

 

But the USD surely is not one of them 🙂  You may recal that last year I called for a double top. We have that now.

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On May 1st, I said that I basically expected the USD to bounce , drop, bounce, drop and start a down trend. ( Double top pattern). I expected a bounce from oversold then. 

Fast forward to today- we saw that bounce in May, then a dip and for the last 2 weeks another bounce, but is this starting the down-trending channel? This does not look bullish for the USD, it looks like what I expected back in the spring is playing out.

The weakening $USD has been good for our commodities. Lets look there.

WTIC – I have been expecting a Daily Cycle low – it is overdue, and I think we have one in place. Oil shot up over 5% right off of the 50sma! That just feels too perfect, but cycle timing wise, we are due. Energy stocks should become bullish.

WTIC WKLY –

WTIC WKLY  Sidenote: The first run was steeply inclined, the 2nd was a bit more gradual, but you can see that it was working through prior consolidation which becomes resistance.   I see less resistance from $50 to $60 than I saw from $40 to $50.

The 3rd run could possibly be quicker, become Left Translated, but that could be a peak at 20days or so too.  Then it could start to roll over, so I will be watching for that. You would then see a 1-2-3-4-5, and then the a-b-c correction, forming a gigantic inverse H&S. Oil has performed exactly as expected from $26. Amazing.

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XLE- Needs follow through, but looks good.

NATGAS -NATGAS has had a nice burst higher, it has basically reached the 1st target. Can it extend? Yes, to $3 , but it is also becoming due for a pull back.  It could play out as shown.

Instead of going to the CRB, I just want to review a Metal, Steel. 

The CRB contains Energy, Ag, Grains, Metals, etc. Steel will probably give me a clearer picture for the Metal Commodities, and I know that some here own or are looking at CENX, AKS, X, SID, VALE, CLF, etc.

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I had pointed out STEEL on June 2 as bullishly setting up. ‘3’ could be resistance, but I expected at least a run to ‘5’. Lets say the target is $235 to $240 minimum. 

June 8th,  that ‘3’ area did act as resistance, but I still expected a break out higher.

Steel Currently – We pulled back last week to the 50sma, and this is a very bullish set up in my opinion. The target is again $235 to $240 minimum. In the short term view.

For the Big Picture, The E.W. count could always morph into an inflation wave, and our current 1-2-3-4-5 could be 1&2.  🙂

 So I am thinking that X, AKS, VALE, CLF, SID, etc may be good candidates for another run higher.  X just ran from $14 to $18 without many noticing. 

AKS has been running a bit too.

Aluminum does not look as Good as Steel, but it is a bullish looking set up too.

Since Aluminum may play catch up, I would keep an eye on Aluminum and Aluminum stocks like CENX, AA, etc going forward.

CENX -WKLY – This looks to be ‘setting up’. AA does too

RECAP –  So The general markets could be setting up to break out higher, Oil is putting in a Daily Cycle Low , and Metals look to be leaning to the bullish side.  The Markets seem to be ignoring the Dollar when it bounces.  We have seen GOLD and Miners Rise with The USD in the past couple of weeks. Now lets look at …

 

GOLD , SILVER, and MINERS

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The C.O.T. does show a high level of smart money shorts, the highest in a year. It is concerning to a degree, but  can it just keep increasing as drawn here with Gold moving higher, or is this calling for a Large Gold drop? From 2015s ICL to the peak , you see where shorts were.  Then the ICL in Dec 2015 to the Peak in May, the shorts were MUCH higher. Could that continue? I mention this , because I think we just saw an ICL in Gold.

 

2009 C.O.T. –  Lets see if I can explain this correctly, so that the reader can follow my thinking.   After the Long Term Lows were in place on Oct 2008.  The Short positions just kept growing as prices kept rising out of each ICL. Short positions matching prior highs did not indicate a top, the shorts kept increasing. Higher C.O.T. short positions formed the next cycle tops with higher & higher or increased short positions each time.

SO I agree that the C.O.T. levels look foreboding, but I also am thinking that GOLDS ICL is in place and price will go higher.  Maybe there will be a pause or pull back along the way, but I still see Gold Moving higher with the rest of the commodities. Time will tell, but for now lets take a look at some charts.

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GOLD – Many are seeing this and calling this a topping candle.  It often is a topping candle by the way.  This false break out is the top, and that COT may have some going ‘short’.  Again, it is at times a topping candle, like in Jan 2015 and Oct 2015 (see chart), but…

Is it ALWAYS a topping candle? When it was, it was often overbought on a weekly basis, right?

 

GOLD WKLY – The prior topping candles were at overbought conditions I am thinking that we are coming out of an ICL, not overbought. Gold can pause or maybe go sideways during this Brexit voting week, or may shoot higher an back test on Bexit vote. Either way, I am still bullish.  We also just closed at 2 year highs on a weekly basis, and people are bearish. Gold has been going sideways at the same prices from early Feb 2016. That is a 4 month consolidation. I think it is an illusion to be bearish and believe that GOLD is weak here.

Again, We also just closed at 2 year highs on a weekly basis, and people are bearish after a 4 month consolidation which relaxed overbought conditions.  I just like the way that sounds.

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SILVER – This may in reality be a giant Base. You know how these bases can play out.

 

GDX – In technical analysis , this is a normal break out and back test consolidation. The next leg higher could equal the first leg higher.

 

GDX MONTHLY – People that felt they missed the first run should look at the big picture. Yes, many Miners doubled, tripled, and even quadrupled, but there is more upside to make some nice gains in my opinion.

SO in harmony with that thinking,  I have been posting in recent reports some chart set ups for miners, as shown below. I believe that they are bullish set ups despite the volatility that we’ve seen and a few false break outs. 

 

SAND –

BTG –

 

And with the false break outs have come some ‘upside surprises’ for sure.

 

VGZ – I was showing the excellent base on a few Miners and had mentioned buying this consolidation around 80 cents, but the ICL wasnt in place, so it did seem a tad risky. Some did buy in with me when I said I was buying Miners 3 weeks ago.

VGZ –  is now at$1.45 and the upside potential is still good.  I did sell 1/2 of my position Friday , and would buy a pull back IF WE GET ONE.  The resistance is really stronger at about $2.50 . A bull flag here would be fine too. Wow.

MUX – I bought it 3 weeks ago now, but I was pointing out here that I love break outs with strong volume.

MUX –  When they are ready, the upside surprises are big coming from such solid bases. I sold 1/2 of this too. 

 

SO I am thinking that we are going to have set ups in the ENERGY, COMMODITY , and MINERS. Please re-read the past recent reports for trade ideas.  I had mentioned CWEI, OAS, LPI, WPX, and others, I also mentioned some miners. I am going to release this report now  ( Sunday afternoon) and I will try to at least look for a couple of low risk set ups to be released Monday morning. Maybe Energy , Maybe Miners.  I know some are hesitant with the Gold COT shorts being so high and a false break out, but I look at Golds close Friday as a bullish trick. No one dares to buy it now. We shall have to wait and see.

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Friday when I saw Gold rising into the close, I was thinking,

” They are going to buy this into the close after that Thursday slam down instilled fear in traders. No one will dare to buy going into the weekend, and maybe no one will want to add before the brexit Vote.  A perfect set up for “Them” to get positioned before Gold really breaks out? ”  Time will tell, but I still really like the set ups on BTG, SAND, and a few others. 

 

Enjoy your Weekend and I will try to add a couple of set ups on Monday morning , as long as the set ups are rather ‘low risk’.

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~ALEX