Gathering The Goods

Another week of choppy trading, but there is a lot to talk about this weekend.  It may be time to start gathering the goods, so lets get right to the charts.

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SPX – More of the same, Capped at the 50sma and L.T. ( left Translated) so far, it still needs to break one way or the other. Markets do not like indecision, and maybe this is what we get until after the elections. Please read the chart.

 

NASDAQ –  The NASDAQ broke out and was holding up pretty good, but the MACD divergence is showing a lack of strength and it is overbought a bit. This actually looks more like it wants to drop.

 

USD – The USD broke out and reversed lower Friday, so it could be a false break out to draw in long positions. It is actually due to drop into a dcl ( Daily Cycle Low), and a drop by the dollar would help Gold.

 

USD WKLY – Read the chart please.

WTIC – Oil has been doing very well since we started buying those lows. In a report last week I mentioned that Oil could find a struggle at the $50 area , and here we saw a break and Friday had a possible reversal candle. It could pull back for a bit or build a handle. I still expect higher prices over time.

 

WTIC WKLY–  This is a bullish looking chart, yet I still hear quite a bot of bearish talk.

NATGAS – This bullishness continues as NATGAS has acted correctly all along. It has been a buy the dips candidate.

 

PRECIOUS METALS

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THE COT is dropping much closer to Mays ICL levels  🙂

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GOLD – Gold did not put in a swing on Friday. It shot higher with the jobs report and sold off as the day went on. It is oversold, and in the cycle timing for a Low. It can occur now or in the next few days, we will look for a swing to develop & confirm.

GOLD WKLY – Gold dropped to $1243 this week, but a tag of the 50 week MA is possible and a drop & reversal would actually be great. It would lower the parameters of a weekly swing.

SILVER – Oversold and in a support area and a measure move on the sell off.

GDX –  2 charts from last weeks reports, and then a few new ones.

 

GDX –  This was a reminder that GDX could drop to around $21.55 and be fine.

NEW CHARTS

GDX – Please read the chart (Another week or done?).

 

GDX –  Please notice: We do not have a Confirmed Swing Low in place.  I got emails asking am I buying leverage now that we had ‘the confirmed swing low’ in place for GDX.   Notice on this chart that just because there is a Swing in price,  that doesn’t mean it is a confirmed final low and that it will not roll over. Buying every swing with a tight stop will frustrate traders, since one could get stopped out if a stop is too tight.   I will discuss at the end of this report that we should be very close to our lows and if I am adding to Miners here, I do NOT use tight stops on day 25  ( I will use mental stops and monitor positions). Even a dead cat bounce later will get price back higher than this point.

 

GDX – One more small dip this week?   Maybe. Please read the charts. THE lows may or may not be in, next well will make that clear.

GDX : GOLD – GDX : GLD will trigger a buy signal shortly after the lows in Miners comes in. Miners out pace Gold over time. Read the chart.

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One concern that has been brought up is  “What if this isn’t an ICL and we get 1 more daily cycle?” Is that possible”   I do think it is possible, but unlikely.  Even if it was, we are due for a daily cycle low and we would see a bounce higher soon and we will know as time goes on whether we have an ICL or another daily cycle ahead.  The best thing to do is take this trade and make some gains, watching it step by step.  Lets discuss this…

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Let me show you 2 examples of what this could mean using Hecla Mining

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HL– You could buy it expecting an ICL, and you would get the bounce, then watch it do something like this if the ICL is in.

HL –  If we have another daily cycle ahead of us leading into an ICL in November, this does look like it has room  to roll over 1 more time, but decent %-Gains can be made now too. One could sell partial position after 8 days or so from the lows and ride the rest until things become clear if they are still unclear then.

 

When the ICL is in place, I actually think many of these miners could move 50-100% higher again, so it is worth the risk to take a position either way. Now lets look at charts showing how some Miners are setting up to a bullish look, and I will include HL in that mix.

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HL –  This can be drawn too, by adjusting the upper trend line a bit. This would be showing that an ICL could be at hand, and a break out & back test would be next before a strong run higher.

Lets look at a couple more Miners and see if they have bullish set ups too.

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CDE – This looks like a low risk set up. It can still drop, so please read the chart.

CDE – Another view is a possible shake out from a different pattern, a break higher would be a buy.

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CDE ZOOM IN –  A gap higher would be an island bottom reversal buy.

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VGZ – If you have been here for a while, maybe you made huge gains on VGZ and MUX . It has corrected a lot and looks to be trying to form a round bottom base. If so, these should be the lows. This could double or triple over time just by running to former highs and breaking out.

 

GSV – GSV took off upside Friday and was up 13%.  It ran from $2 to $2.50 in 2 days now. When Gold is finishing up a sell off and some Miners start moving upside, it’s a good sign.

 

TRX OCT 4 –  I pointed out the divergence on Oct 4th and possible support at 65 cents.

TRX OCT 7 –  So far price has held that support for 4 days at 65 cents, while Gold & Miners sold off.

 

In Conclusion:  We are still waiting on a swing low in the Precious Metals sector, but using cycle timing, we know that we are there or very close.  ON day 25, these cycles usually put in lows around now or they can go to 30, 31, 32 days.  Either way, it could be this week that the final lows are in place.  There is no hurry in catching THE LOWS if you cannot stand watching your account values drop day by day.  I will explain that in detail after signing off.  The point is, if we are putting in an ICL, that is a deep meaningful low that often rallies for 2-3 months.  We could see Miners rally right into the end of the year, so adding a few small starter positions may not be such a bad idea, but as I stated in prior reports this week, each must make their own decision. For some, waiting for that confirmed swing low is a safer play and since the rally could last for weeks and months, you will have plenty of time to make good money.  ALSO – not all Miners bottom at once, and I will be showing trade set ups as they form, so that we can also rotate out of some good gains and enter into the next best thing.  🙂  I look forward to the end of this long choppy price action!  🙂

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Enjoy the rest of your weekend and we’ll see if Monday or Tuesday clarifies whether or not we have our lows in place. As always, Thanks for being here at Chartfreak!

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~ALEX

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I want to release this Sunday morning , so for the sake of time, I’m not going back to proof read this report.  Please excuse any typos  🙂

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SIDENOTE LESSON FOR REPETITION: Due to cycle timing, I do think that we are close enough to the lows that starting a position in some Miners may be fine if one can endure a little draw down. We could have the lows in place or we could get another quick dip, but I think that we really only have about a week of dipping possible since we are on day 25 and sentiment is bearish.  With that said-  If you cannot stand to buy a position with $1000 and see it at $910.00 the next day  ( Thats only down 9%),  or buying positions with $50,000 and seeing it at $45,500.00 ( -9%),  THEN DO NOT ADD YET, because Miners can easily drop 9%.  Until we have a confirmed a swing low in place, this can be tricky.  Picture this –  You go in heavy with $50,000 and then get stopped out at $45,000 2 or 3  days later. Then the lows come in on day 28 and you are too frustrated to buy anything right away because you already lost $5000.  Now you see the stock goe up 20% in 2 days. Happy?  No.  🙁   

I am a trader and that is how I make a living,  and we have others here that are experienced traders, so we all have to trade according to our own experience and confidence level.  I know that I am talking to at least 2 different groups of traders in my reports, so please know which group you fall into.   YOU WILL NOT MISS THE MOVE if an ICL gets put in place next week and you are in cash, Miners will rally for Months and you will do well.  Even if we had another daily cycle leading into an ICL in November  ( Less likely in my opinion – I am 90% certain that this will be an ICL), it is still going to be a great time to make money ahead.  This is why I have started to add to set ups that look good to me Friday.  If CDE drops further, I will add after it drops and reverses.  If it takes off and just runs higher,  I will add there too, confident that the entry was correct.  For the next few weeks, but I will NOT use tight stops, I will monitor positions.  I will discuss these ideas further as we go forward and things become confirmed.

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BY REQUEST –  Look up  CLD, SID, VALE, etc and I think that the metals commodity stocks still look fine.  I was asked to look at ‘X’

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AKS –  THIS LOOKS LIKE THE TWIN CHART OF X.  By looking at another steel company, we see that it sold off Friday and then reversed back higher.  The RSI looks like it may want to turn up, and so AKS is also dealing with the 50and 10sma as resistance, but lets see if it can break out higher.  If so, that gives us confidence that X may do the same, since the charts are similar.