I Believe That They Are Ready

When I am preparing food on the grill, I’m checking the temperature, watching for grill marks, looking for a change in color, and several other signs to know when the food is ready.  In a similar manner, we have been watching various aspects of the precious metals markets and also looking for a variety of signs indicating when they may be ready for consumption.     🙂

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How do things look?  Lets take a look…

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USD – I’ve been waiting for the USD to start dipping down and sell off into a daily cycle low  (DCL). we are well within the timing for the dollar to drop.

WTIC –  This is playing out as I expected so far.  Please read the chart.

XLE – As expected from my Oct 10th chart, this is a bearish rising wedge.

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GOLD – From the weekend report, Day 30 or day 5th. We needed a break above $1267.69 and a close above the 10sma to make us happy…

GOLD –  We did NOT get either. These are your parameters to watch, but I think we are ready for an upside break out. Watch that $1267.60 , it can be considered a BUY or ADD more signal.  If we got a  break down, that would be on Day 32, and that is late for a daily cycle.  That means that it would most likely be a false break down and a reversal.  This is Bullish either way now.

GOLD – GOLD & SILVER are both pushed right against the 10sma. A break above it ( Preferably a close above) is Bullish confirmation.

SILVER – No confirmation on Monday, but a move higher puts silver above the 10sma  ( Not shown, that is the 10ema).

GDX : GOLD  FROM THE WEEKEND.  I mentioned that Miners are leading and that is usually bullish, so I asked,  “Will this break down or back test?”

MINERS moved this higher while Gold was slightly green, so GDX:GOLD looked like a break out & back test. Notice the MACD.

GDX –  This looks like day 4, as MINERS closed above the 10sma ( 8sma shown).  Miners often lead the move higher and they are oversold.

SO…

Miners often lead the move and that leads me to the title of this report. ‘I believe that they are ready.‘  I have been pointing out 1 feature after another in recent reports of areas of interest in the precious metals sector (  my personal ‘Buy’ trigger,  GDX:GOLD, CYCLE COUNTS, SENTIMENT, The COT, ETC. ETC.) , and at this point they are all adding up to a low being very close or already in place.

Think about this:  When you plant a garden, you lay down a number of seeds and wait. And while watering, watching, and waiting, you are looking for signs of success.  You look for some ‘sprouts’ to start popping up to prove that your garden has what it takes to grow.  Isn’t it true though, that only after you see a few sprouts begin to surface,  you really begin to feel better about your prospects of having a  productive garden down the road?

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SO are we seeing some sprouts in our garden of miners, to give us hope of good things to come? In other words, are any Miners growing above their 10sma, breaking higher, and maybe leading the way, showing that the soil may be right for others to follow? Lets review.

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HL – Nice break above the 10sma Monday, up almost 7%.

TAHO – Another POP & Close above the 10sma.  Also at this time, we see the MACD about to cross bullishly. This is still at the lows, this could be bought here with a stop reasonably below the lows.

EXK – Closed above the 10 sma, STILL AT THE LOWS,  a low risk buy.

TGD – This one broke the 10sma last Wednesday, and the MACD has already performed a bullish cross over ( below the zero line). A mini bull flag may be preparing for a break out here.

GDV – Also broke above the 10sma and has a MACD cross above the zero line. This actually moved from roughly  $2 to $2.70 in the last 7 days without many noticing. That is 30% in about a week, and nobody cares.

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So we are seeing a good sign of confirmation of a low now in GDX, GDXJ, and SILVER, and Gold will likely follow now.  Even a quick break down in Gold would reverse very quickly, so things are now Bullish the way I see things.  We also see several Miners are breaking above their 10sma while GOLD lingers at the lows.  It is now easier to recommend buying with a stop below the recent lows. The risk reward is largely in favor of upside, especially if we are forming an ICL.  Look back at May ICL. The upside for the following 2 months gave Miners gains from 50% to 250%+.  If you have been at chartfreak for a while, you remember our gains in VGZ ( 200%), MUX ( 100%+),  and TRX ( 200+%).  We did NOT lock gains in at the very top, so yes, we gave some back, but my point is that we are at the lows or very close to the lows, and even 20%, 40%, 60% gains would be excellent gains compared to the downside risk. Cycle timing says that any downside would reverse quickly.

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Look at the charts of HL, EXK, and TAHO in the report above.  DO they look toppy?  Or oversold and like they are just getting started? I see many Miners oversold, right at the lows, and they have  MACD divergence.  I think they are ready. In my opinion, to avoid individual risk, you need a basket of at least 4 or5 Miners in case one sells off,  use options, or you should trade the ETFs. Depending on what we see Tuesday, I may have some charts of set ups in the next report. If you own nothing in Miners, why not take a small position and add as we go if this analyses proves to be correct? 🙂  Happy Tuesday.

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~ALEX

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I had some charts of Miners setting up in some of last weeks reports. Why not go back and see a few of those ?