AUG 12 – Navigating Choppy Waters

I wanted to share a thought on  Gold, Miners, and Oil

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WTIC  –  Oil remained bullish with the bullish follow through on Day 6.  There may be resistance at the 50sma, but so far this looks good.

Now on to GOLD and Miners. I have a cautionary note, but I dont want to cause a PANIC. For those Heavily positioned  ( And I am) and any using leverage, it is definitely time to pay attention to what I will call the possibility of more CHOPPINESS rather than the original thought of a nice thrust higher into $1400+.

CAN WE still get a push higher into $1400+? Yes, but what I am seeing in this choppiness needs to be addressed here, again, especially for any using leverage or very heavily positioned.  Let me explain by starting with a recent chart that I posted.

GDX AUG 5th – I noted choppiness and divergence. A push higher out of this was possible, but a continual struggle could signal something else and I drew a sideways choppiness – not great for leverage.  SO far I would say we are seeing that play out. It can go choppy / sideways, and then burst higher still.

GDX 1 week later –  It still shows CHOPPY

I had originally said that I thought GOLD and MINERS had put in 2 short daily cycles, and I said that Gold possibly did or didn’t, but I was sticking to the idea that Miners did, based on this chart – also last week AUG 5th. We would be in a 3rd daily cycle looking for a Peak.

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When a 3rd daily cycle tops and begins to drop into the next DCL ( Daily Cycle Low) that is usually the peak of the intermediate cycle.  Then you can get a 4th daily cycle that doesn’t go to new highs and drops into an ICL.  ARE WE THERE? I cannot say for sure, but leverage here would hurt if we do start to chop & drop. Let me draw what that can look like that for you.

GOLD 8-11   This looks like it wants to break the trend line up and drop.  Will it? I cannot say for sure, but each time Gold POPS, it gives it up lately.  We need a POP and run higher soon, or this could roll over. ( Just a cautionary note for leveraged ones).  The last 2 days Gold has Popped to $1360, and gave it up. Will we do that today?

HUI –  So far it is a bullish uptrend.  Picture this current choppiness and possible drop as being similar to the choppiness and drop that we saw at the end of April & may.  I have this numbered as though 1-2-3-4-5 is ending. You could also picture my ‘5’ as ‘3’, and we could get that thrust higher to the real ‘5’. Time will tell.

My current chart of GDX with certain indicators that I have come up with to help me see strength or weakness, are still showing weakness.  THIS CAN be done away with with a good burst higher, but the longer we go in this daily cycle without a burst higher that holds, we run out of time.  The last 2 days burst higher and sold off.  On day 14 (today) it is best to throw up a caution flag.

I will say this:  I am not selling out of all of my positions, I will likely be lightening up in heavy winning trades however, if we cant get a POP that holds into the close .  INDIVIDUAL MINERS can continue to out perform even when we see Gold dip. I held onto some positions when we went into the ICL in May.  That turned out to be a buying opportunity, but the Miners that I held did not get CRUSHED.  They dipped.

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NOTE: Please don’t Panic. I AM NOT GUARANTEEING A DROP NOW, I am cautioning on Leverage and heavy positions,  just in case this weakness persists.GOLD keeps Popping higher, and giving it up into the end of the day. That will cause me to lighten up a bit if it continues. I will cover more in the weekend report.

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Conclusion:   I expected GOLD to surge into the $1440’s, even High 1440’s and I still do in time.  I expected a higher push sooner than later, but I also have expected a dip to an ICL in SEPT/OCT  and have mentioned that.  I have to let the markets tell me when they will be timing these events. If we continue sideways and start dropping soon for 20 days stairway down, and then bounce in a final daily cycle for another 20+ days,  we will get the ICL in Sept / Oct.  If we POP & Run higher for days, then we can cash out a bit higher before the next dip into an ICL. We have a little time to see how this develops.

At the same time, we have been looking at ENERGY / OIL STOCKS and Oil bottoming. Remember, OIL might be on DAY 7  following an ICL  ( if we don’t get that undercut low).  It may soon be a good time to go shopping in a different store where the sale prices currently are.  This storehouse of Precious Metals stocks may go on sale soon too, in Sept and Oct, and we will come back for the bargains. 

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~ALEX

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NOTE:  pre-market right now GOLD just Burst higher by $15.  It looks great, but I still look at the chart.  That puts Gold at $1553. SO look on this chart of Gold yesterday and look at $1553. That is NOT higher than Wednesdays high of $1363.60.   I want to see a POP and a run, or at least a POP and hold into the close, because “Time” is of the essence.