July 22 Weekend Report

I hope everyone is enjoying a nice relaxing weekend, lets review the markets and discuss our expectations for the coming week.

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SPX – The break out that I expected after seeing the 3 white soldiers pattern is in play. Breaking to new all time highs get price above resistance, so a small sideways consolidation may be all that is needed before price continued higher. I expected a back test of the break out based on the VIX being below 12, so that still may happen.

SPX WEEKLY – I know someone that is trading ( holding)  UPRO and TQQQ as a result of me pointing out the 3 white soldiers, and they are doing very well. Congrats!  I didn’t take that trade.  The VIX is quite low at 12, leverage at this point may be a bit too much. Use caution.

Lets look at the NASDAQ…

 

The NASDAQ has further to run before breaking out to all new highs.  It is the TQQQ etf   (leveraged)  that captures the move in the NASDAQ.  BAck test this break out?  The VIX is at 12. Caution, use stops.

SIDENOTE:    When I mention certain set ups in the markets that are bullish, and lets say for example that I mention   ” We are at an ICL so this has a lot further to go! “   I may not take a trade, because I am focusing on trading Miners stocks or Energy stocks.   Yes, by all means feel free to take that analyses and trade an ETF that you like to trade, whether I say to or not.  I usually cover the SPX, WTIC, GOLD, etc and there are ETFs that you can trade for those sectors.

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USD – The USD had a slight change of character on the day of Brexit.  That candle stocks out without me having to point it out. It then struggled under the 200sma for a bit and now popped above it. This should NOT immediately rally much further for several reasons.  One reason is cycle count.  This should dip to a DCL first, then it may go higher.

 

USD WKLY – APRIL 29 – THIS WAS MY ANALYSIS OF THE DOLLAR DOUBLE TOPPING AND ROLLING OVER. I HAVE BEEN CALLING FOR THAT FOR OVER A YR.

 

USD NOW – You can see that Brexit has added a little recovery juice,  BUT this has NOT been bearish for Gold, Silver, or Miners. I will not change my thinking on the $USD heading lower unless it breaks out higher in the coming weeks. The chart does look a bit more bullish than in recent past charts.

 

WTIC – 2 and 3 weeks ago many started to want to buy OIL.  Some Energy stocks have held up fairly well, but cycle timing was saying that OIL needed more time to consolidate and dip lower.  That was a bit confusing,  energy stocks looked OK, Oil was due to drop. It was hard for some to believe that Oil could stay weak, since Oil was so bullish from $26 to $50+.   It is ready yet?

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WTIC DAILY – We’ve seen reversal candle last week, but Oil wasn’t ready yet.  Timing-wise, it is now pretty close. I have us on day 25,  and the avg cycle timing is 30+ days. I wont jump the gun without a break above the 10sma.

WTIC WKLY – It doesn’t have to drop to $40 to make this inverse H&S.  The right shoulder can be higher as a sign of strength. IF oils cycle runs 40 days, it may drop there though. That is why I am not jumping the gun here.

 

NATGAS – Natgas really took off higher in May -June. It is setting up in another bullish consolidation right now.

 

NATGAS WKLY – This is actually a bullish back test, and the daily is a bull flag.  NATGAS looks ready to run even higher.  If you trade  UGAZ or DGAZ, you want to pay attention to the above charts.

 

CRB – This can drop below the trend line for a shake out, and Energy makes up a good part of the CRB, so if Oil dips, this will too most likely.

We were looking at Steel and Aluminum stocks, etc.   I do not just use the CRB to track them due to Energys impact on the CRB, so lets look at STEEL itself.

Bullish even if it back tests further. Thats why X, AKS, ZEUS, etc stocks are doing so well.

 

GOLD & MINERS

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ON JULY 13th,  I wanted us to expect a pull back, and showed that it could drop down and back test the break out. IT could go below $1300 and still be fine actually.

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GOLD DAILY – This is a bullish sell off, and it is back testing the break out area.  I expect that we could see further selling, but we are close to another run higher i.m.h.o.

GOLD DAILY AGAIN – We have done a 38.2% fib drop and a back test too.  That is enough, but we could also do a 50% to the 50sma to get further oversold on the stochastics. This is normal and remains bullish.

GOLD WEEKLY –  Again, Gold can drop further and remain very bullish. 

 

THE COT –  Everyone was talking about the dangerously high COT over a month ago,  saying Gold would plunge.  I was saying to BUY, we had an ICL at the end of May.  So you may recall that I pointed out that I just expected the COT to get higher and higher levels of smart money short positions  ( Shown by growing brown bars at the bottom.  I drew in what I expected.  Longer Brown bars, higher shorts, no big deal) . I saw this in 2009 and pointed that out to build confidence here in Long positions. 

COT TODAY –  The brown bars ( Shorts) Did keep growing, and with recent selling, they have now backed off. I was hoping to see this. 

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GDX–  GDX has fought like a real champion through all kinds of resistance seen to the left.  Last week Miners reversed right on support, but they could do it again to tag that 26.84 area.  DO YOU SEE WHERE THIS COULD GO ONCE RESISTANCE CLEARS OUT?  It could double again over time.

 

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SO with that in Mind, let me show you this.

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GDX 2008 onward out of the bear market sell off. Were there any huge drops in the first year? Not really. We had normal DCL’s and even a Mild ICL  ( like we just saw in May 2016),  but The first big drop came 1 year and 3 months later. 

Since Miners bottomed in mid January of 2016, if they repeated this type of bullish action, we wouldnt see a real deep dip until 2017.  Can I guarantee that that will happen? No, but history shows that it is possible that Miners just continue bullishly being accumulated by Funds, while nervous traders mentally damaged by the multi year sell off are afraid to buy  the dips.   WE here at Chartfreak have been buying Miners since Mid January, and have been richly rewarded, despite the occasional dreaded ‘Public Offering ‘  🙂   I want to remain focused here for as long as it remains bullish.

To sum up the above comment on Miners, I would say that it is prudent to remain cautious in some ways, because pull backs and ICLs are normal part of the Ebb and Flow of the markets.  At the same time, recognize that when a BULL is held back for years and suddenly starts running, breaking over barriers and charging through resistance,  it is a BULL MARKET and surprises are to the upside.  

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HAVE YOU HEARD?

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I have seen where some writers are saying that  “The Summer months are seasonably weak for Gold.”  Did you hear that too?  I got 2 emails telling me that this is what they heard, and I thank them for letting me know what others may be reading too.  If this is a concern of yours , because you read that seasonality is bearish for Gold during the summer, I will tell you this.

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I have been trading the precious metals since the year 2000. I distinctly remember bottoms in May , in June, and in July.  I was a new trader back then and I clearly remember the good times and the bad, and summer was often a good time to invest in precious metals, when the bull was running.

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A chart is worth 100 words, so …”IS the summer always bearish seasonably for GOLD?”

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2005 – Huge rally May through April of the next year!

2007- Huge rally  August to March

2009 – June to November

2011 – June through Sept

2012 – Summer through Fall

 

 

 

Not enough info?  How about …

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2001 – July through September

2002 – July through Sept

2003 – April and it ran through the summer straight up & continued through the year

2004 –  MAY though OCT

That is 4 summers IN A ROW.   Enough said, a chart is worth a thousand words. Don’t fear summer seasonality for Gold.

GDX – I also had this chart in a recent report, but it is worth repeating now that we dont have to fear “summer seasonality:.  Inside of our cycle parameter,  we see that the first intermediate cycle had day 38 as a low , and price has never gone under that low again.  Selling on Day 38 would have been a bummer.   We are now on day 39 ( I think) of this 2nd intermediate Cycle.  I think we have time to move higher into August, then maybe we peak and did into an ICL in late Sept or Oct? Time will tell.  For now,  We have our dips and pops, our ebb and flow,  but this is a chart of an uptrend. Enjoy it by buying the dips early near the ICL and riding itfor the 1st, 2nd, maybe 3rd DCycle to a peak. 

 

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And again,  in 2008 onward, MINERS ran basically higher for over 2 years as shown without a huge deadly drop, just bull dips in a bull market.    We are only month 7 of this Bull starting in Mid January 🙂

 

Enjoy the rest of your weekend!

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~ALEX

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P.S,  I can release this Monday morning and proof read it Sunday night when I get back home.  I have a busy afternoon and will be going to a going away BBQ for friends and family.   OR I can just release it now and ask that you forgive any typos that I didn’t have time to go back and correct.

I will release it Sunday morning.  Please excuse any typos  🙂