Sept 3 – WEEKEND REPORT

Knowing that my readers are both short term traders and longer term  investors,  I want to always look at the charts and view them with a long term, medium term, and short term perceptive.  At times all 3 views are sunny or all are murky, but in times like these, I also get a mixed bag. Lets review the charts and you will see some good and some questionable things in various sectors. This can help to sort out our short term and longer term investments.

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Back before Aug 26th and on this Aug 26th chart, I mentioned that we could see price continue sideways until it tags the 50sma, or maybe even break it in shake out fashion.

SPX – Each sell off is met with buying reversals, so this reversal with the Jobs Report “might” be enough to put in the daily cycle low. If so, this should break out & continue higher, instead of more of this 2 month choppiness.

USD –  I do recommend going back and reading reports from 2 or 3 days ago at times, to refresh our minds on what we have been watching for.  On Aug 26th – The USD WKLY looked like this. I didnt expect a lot of upside, even though I saw a strong reversal.

SEPT 1st, rejected at the 200sma and lost the 50sma, so that looked bearish for the Dollar. This looked good for Gold.

NOW THE USD WKLY- After the jobs report, the USD dropped fast AND THEN RECOVERED, so the weekly chart looks like this.  The USD WKLY  is not bearish at this point and the MACD actually curled upward along with the RSI.  A weekly close above the 95.93 ( lets say 96) gets even more bullish. I’m hoping for further weakness next week, because it would help Gold & miners and weaken this chart. Gold didnt fall as the USD recovered however.

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I was asked, “Now that we have a swing in Oil, do you expect $60 or $70 oil? I’m in UWTI”.   My reply was ,  ” We do not have a swing low in Oil yet.”   Oil is one of those areas that can be viewed as both Good and Bad  ( feature Image). I am seeing very nice action in many Oil & Energy stocks, but they are ignoring the slightly ugly shorter term smudge  that I do see in Oils chart.  MAYBE the Energy stocks are telling us that Oil is going to improve?  For now, I will let the charts point out the “Cautionary’ notes of OIL right now.

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AUGUST 30th – I was seeing a more bullish Oil chart.  MACD healthy, normal pull back, RSI holding 50%. Fib targets in sight.

2 days later, please read what I wrote in green. We were at the 61.8% fib number and it was only day 21.  You do remember watching these go for 40 days, right?  So this was ‘concerning’ and even though I can see it changing, this must be noted. It became ‘cautionary’.   What about Friday? Nice reversal, right? Yes…

WTIC FRIDAY –  The chart didn’t really become any less cautionary to me.  It is a start, and this could have been just a 1/2 cycle low  ( a mid point correction) – but we need to see follow through on oil. This is still a break below the 50sma and trend line to me.

WTIC –  Please note that Oil did not put in a swing low ( yet).  Also there is the possibility that it could be rejected at the 50sma next week and continue as day 22 here. Oil could drop further after a bounce.  That would be the bad news for Oil short term.  The good news is that I DO see the ICL as Aug 3rd, and that low shouldn’t be taken out. Could Oil really drop to $41 as shown?

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WTIC WKLY – Oil could and would remain O.K. at $41.  So OIL & ENERGY STOCKS look very promising, they are either ignoring Oil and being accumulated by smart money , or they are foretelling that Oil will have follow through next week upside and recover. They may be showing us that this pull back was a 1/2 cycle low, just a deep dip to the 61.8% retrace.

WPX –  And so the good news is that this and many other Energy stocks are far more bullish that Oil looks. I have not sold my Energy stocks that I bought in early Aug. These are acting great.

So the following chart will answer all of the questions that this raises about Oil.  Questions like : If Oil is only on day 22, and can have 40 days,  wont it have to drop a LOT lower? No. What might we expect if Oil doesn’t blast higher all next week?  CHOP. What about Opec? What about Russia – they said they may cut production? Etc etc .

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OIL – Out of the 2008 lows had a strong rally similar to what we just had.  Notice in the green box that it went from $35 to $55… then it was just  chop – chop – chop.  1 solid month later, still at dcl (lows)  it took off big time and ran to $73.  Leverage during that ‘chop’ in Oil would be tough, but the Energy stocks are being bought up in the “Climbing the wall of worry ” phase if you ask me.  XLE, XOP,  (maybe GUSH for the super experienced in front of their screens all day, desiring leverage trader)  etc .

NATGAS – Still a bullish back test at this point. Going long here is a rather low risk trade as long as you use stops in case it breaks down.

GOLD, SILVER, AND OIL

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GOLD – Gold and Miners are as complex as Oil right now. Things that just look straight forward, did not always act that way in the past.  When I looked at OIL in 2009 and saw all of that choppiness, it became clear to me what I may be seeing now. Thinking back from memory, I just remembered a run in Oil from $35 to $73. I have a tendency to forget the pain  🙂  And so it goes with Precious metals at this time, so let me do a summary first.

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Summary – WHAT A YEAR,  LONG TERM BULLISH, possible tricky and hard to predict choppiness in times of correction.  Now back to the present charts. I’ve mentioned this in past reports with charts.

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GOLD – The way Gold is acting, it does need to prove itself. Why? The low was at THE END of May 31, the PEAK was only 1 month later during the 1st week of July. That’s barley 1 month later and with all of the passing weeks, this has become very Left Translated. Also our recent daily cycle undercut the last dcl.  That is failure. It is usually a sign of weakness, and would call for a drop into an Intermediate Cycle low.  They usually come 4-6 Months apart low to Low. THAT would be the end of May to the end Sept the earliest.   Enough said, we’ll see if Gold can defy cycle timing. If not, we have to expect 1 more daily cycle drop.

GOLD WKLY –  1 month ( 3 more weeks) of weakness could easily fill this ‘time & space’ after a bounce.

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Next I will just show the GDX WKLY Chart.  I want to show how Bullish this looks, but it is important to see how this could just be short term bullish.  If you bought those lows, we will be walking down this path questioning bullish or bearish daily for 8-12 days.

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GDX WKLY BULLISH REVERSAL – This is a Bullish looking reversal after a steep drop.  Many want me to call it an ICL, but it did not even tag the 38% retrace mark and it has been 3 weeks since the last ICL.  I mentioned that I bought the lows Thursday, added Friday and expect some upside.  I now have to wait and see how this plays out.  I AM CAUTIOUS and my next chart will be a bearish version.

GDX WKLY BEARISH VERSION – All of a sudden, this looks quite possible, right?

GDX WKLY BEARISH VERSION #2 – Upside target near $29?  And all of a sudden, the 50% retrace looks possible and this E.W. count could play out with an A-B-C down reaching near $22.   THAT will be a great buying opportunity if it happens. THIS COULD EASILY PLAY OUT.

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My thinking is that you have to know how to buy near the lows in a sell off, and then be ready for the good, the bad, and the ugly. We will be watching things unfold with a few different possibilities, until one is confirmed as the correct one.  The Bigger picture for OIL and Precious Metals remains quite Bullish to me. 

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Have a great weekend ( long weekend in the U.S.),  your next report will be after we see what happens on Tuesday. Thanks for being here.

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~ALEX