Friday October 28

Well, you know the story. I don’t usually plan on doing a Friday report. Thursdays report can usually cover what could happen on both Thursday and Friday.  We are specifically focused on Gold  & Miners , so we should discuss that area a bit before the weekend. Let’s start with the $USD.

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USD Oct 26 – Would the dollar drop into its Daily Cycle Low, or would the 10sma act as suppport? It is overdue to dip down.

USD Oct 27 – It DID use the 10sma as support so far. This Daily cycle rise is longer than normal.

EDIT :  It is now 8:23 a.m.  and I want to release this and haven’t proof read anything.  I will have mistakes and go fix them now, but please excuse the ones that you find 🙂

So I pointed out yesterday that this still could be a topping point, and we need to watch the USD.  Gold has resisted breaking through the floor (lows) with the Dollar rising.  If the Dollar dips down, I would expect Gold to at least pop and then drop into a dcl, hopefully a higher low. 

GOLD – Day 14 and Gold is staying alive above the 10sma.  As seen in the Dec 2015 ICL, If the ICL is in place Gold doesn’t always rocket out of the lows. Gold can just go sideways for a month, testing the lows and testing our patience and determination. Yes it can. It also should be noted that it can drop into a lower low as a final dip into an ICL.

LETS EXAMINE THE GOLD DEC LOWS – This was not easy either, but notice that it finally took off AFTER DAY 19.  It shot higher and then dipped again.  THAT was a buy. 

Could this crawl along the lows be happening now too, as the USD climbs higher?  I think that it could be happening, and I will focus on that in the Weekend report.  I sold 80% of my leveraged positions ( JNUG) , because timing is getting to the average mid point of a daily cycle. Sideways moves are also a bit decay prone. I can sell the rest on either a Pop or a Drop.   Lets take a look at Miners.

MINERS

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GDX CHART #1– Day 12 saw GDX drop even though Gold held above its 10sma.

GDX CHART #2 – It broke a trend line that I was watching, and on day 12 I took this as a sign to remove leverage. I wanted to keep it a winning trade, since it was bought when I announced that I thought the lows were in in Early October.

GDX CHART #3–  Please read the chart.

GDX CHART #4 – So I changed the trend line and tried to use the first 2 candles out of the lows. Is this dip really breaking a trend line, or setting the trend line at a 1/2 cycle low?

GDX CHART #5 – Zooming in for a close up, and using the first 2 candles, I see that it did break the current trend line.

GDX CHART #6 – Using a line chart and the first dip, it looks pretty clear that the trend line is violated, however…

A trend line is established using 3 touch points, and I didn’t see 3 tags in a straight line on the chart above really.  That is why I still wonder if this drop is setting a trend line from the lows to the day 12 and a 3rd point comes later, as drawn here?

GDX CHART #6 – Since this is just a ‘possibility’ , Leverage still had to be cut on that possible trend line break shown in the other charts.

So we need more time to see exactly what is happening here.  I want to make the point again that some Miners do not look ready to fail. I showed charts of  HL, IAG, NG,ABX, etc.  Others do look “iffy”, so I am a little more defensive.  This is how a trade is managed in a short term set up. 

FOR EXAMPLE:

ABX actually closed up Thursday, and held the 10sma.

NEM –  Looked fine Wednesday on the 10sma, but took an ugly turn yesterday with news of a debt tender offer.

PAAS looks weak with increasing volume on the selling.

CONCLUSION:  We caught the lows and they looked like an ICL using sentiment and Cycle timing ( 5 months since the May ICL, and we have seen them 4-6 months apart).  Did we catch a DCL or an ICL? The DCL was confirmed with a close above the 10sma and a downtrend break, the ICL has not been confirmed.  I looked back at the December 2015 ICL, and it was not confirmed for quite a while either, but the lows were never taken out in that long sideways move.

I will discuss this further in the weekend report, but it still leaves us with this conclusion – Gold still may or may not have put in an ICL, but it is not speaking to us clearly. The Miners broke below the 10sma, but I have seen that before and it then recovered it in a sideways consolidation too. As time goes forward in this daily cycle, you HAVE TO become more aware of the fact that Gold could start to look for a daily cycle low at any time.  Yes it could go sideways like we saw in Dec 2015, yes it could drop to a new low and THEN the ICL would come in on the 6th month from Mays ICL.  Gold could also POP & RUN for a few days and then drop into a higher low (Dcl) and we’ll then see that OCT was the ICL.

We have to listen to the markets when they speak, but this one, much like Dec 2015, is not speaking clearly yet. Gold is ignoring the USD rise, and is not acting normal. This will change over time and things will become clearer, but until then I have to remind people to honor your stops or maybe even lighten up if you are heavy or leveraged ( Some hedge their positions). I will discuss this further in the weekend report.  Have a good Friday and a great weekend and thanks for being here!

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~ALEX