Oct 19th – It’s In The Bag

I wanted to title this report “We got it!”, that was by request actually, but you will see as we go through the charts that I cannot say that quite yet. Dont get me wrong, I believe that you will like the ingredients of this report, so let’s get right to it…

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SPX – The SPX failed when it dropped below the Sept 12th lows, and has struggled under the 50sma and even the 10sma. It needs to prove itself, but it is struggling. The NASDAQ stocks  GOOG, NFLX, AAPL, and others do look bullish, so I am just watching how this plays out over time. I am much more focused on the Gains that can be made in Miners.

WTIC –  As mentioned in last weeks reports, I expected Oil to go sideways at the $50 area, and form a handle or bull flag. This is exactly what is happening.  If I have this cycle count correct, this is early in Oils daily cycle and it should break out higher in time ( oil inventory report could do it).  That volume was curiously low Tuesday.

XLE  OCT 10th–  A channel formed and we were at the top with a rising bearish wedge. I expected some type of pull back.

XLE  OCT 17th – We dropped to the 50sma, but would it hold as support or would we drop to the bottom of the channel?

XLE OCT 18th- So far it has acted as support

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GOLD , SILVER, AND MINERS

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At 9:53 A.M. Eastern time,  I saw Gold absolutely plummet.  I posted this in the comments section, because while we are expecting a low, Gold & Silver slammed down, but Miners DID NOT. They didn’t even close their opening gaps. So I wrote the following to add confidence to our readers that what we were seeing was Bullish, not bearish.  In my opinion, it was a shake out attempt.

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GOLD – So as the day went on, Gold began to rise and recover again.  It did NOT  recover the 200sma,  or overtake the $1267.60 to put in a swing, but it gained the 10sma. I do think that the lows are in place, based on what I saw in Miners Tuesday. 

( EDIT: We are at 1270.80 at 6 a.m., as I release this in the morning. A swing is now in place for Gold!).

SILVER – Silver has a swing low in place and it has broken above the 10sma. This looks good. It is still very oversold, so the upside potential is great if we just put in an ICL, and not just another dcl. I am strongly leaning toward an ICL being put in place here after this type of selling & sentiment. Even a dcl would get this to the 50sma I would think. Same for CDE, AG, and other oversold Silver Miners.

GDX – Bullish, lots of upside potential, please read the chart, and see what it did in May. Please notice the June pullback for 2 weeks, yes it happens in Bull runs too  🙁

GDX – Earlier in the day GDX had very light volume  ( it came in heavily in the final hour or 2).  So I went back and noticed at the mid January ICL ( Intermediate cycle lows) that volume started light and began to swell with short covering and buyers coming in on the way up. I just wanted to point that out since volume seemed average Tuesday, I want to see it increase on the way up.

MINERS Bullishly playing out, without a swing low in Gold – Miners often lead the move, and they definitely are foretelling one here. Lets look at a few individual Miners.

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GSV OCT 17th –  Not waiting for Golds swing low.

TAHO from Monday Oct 17th , it is still near the lows and a good buy in this area in my opinion.

WHATS NEW –

FSM – Slowly rising out of its low, it has resisted Golds selling for over a week.  It is at resistance, I think it will break out after Gold puts a swing low in.

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CDE–  What a spectacular run in the 1st half of the year.  It looks to be breaking out with Silver. Imagine a move from the recent lows to the 50sma when Silver runs to its 50sma. That is just a start, but also a pretty good % – gain.

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SO LETS REVISIT MINERS ‘POTENTIAL’ AND THE BIGGER PICTURE

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AG – This tiny move was actually 5%. You can see the potential here, but also…

AG –  Over a week ago I mentioned that I thought that this could easily double from $8, maybe even triple  ( $24). It is a lower risk entry here, as the downside risk is far less than the upside potential with a stop in place.

TRX – Well TRX started to take off today and as it pulled back, I clipped this chart at 11 a.m. to show that this was similar to what it did in May. IF it returns to the recent highs, that is a 100+% move, but…

I used to point out the Bigger picture last spring to show the real potential in a bull market. With a solid tight base, I was saying how this should be part of a core holding and ride it up to huge %-Gains.

TRX WKLY –  And here we are today.  We rode this much higher and many sold partial with me near $1.27 – $1.30’s.  With the partial as part of a core from  $0.30 , you can see the potential is still slowly playing out in Bullish fashion.  It could be bought here and held as a core too, if this is an ICL.

VGZ –  This was another Miner that gave long time subscribers great gains. We bought it in May and rode it to $2.00.  It looks like it hardly moved Tuesday, but again, that is almost a 6% gain. Read the chart for 100% gains.

VGZ – And hold on if you can for the real potential. This could run back up to $2, this could eventually run to $4.

NAK – NAK took off today, closing up 14% with strong volume. I like to try to envision what it could be doing, to keep me from selling out too early. This could form an Inverse H&S and do so in a 1-2-3-4-5 wave run to former highs. NAK ran from 30 cents to $1.25 in weeks this summer!

NAK –  So again, a run to the highs of the summer are 100% gains from here. The pullback was a normal 62% retrace.

NAK – And the bigger picture shows an amazing base! AT Golds 2012 peak, NAK was $20. Nak has a story and I told it in prior reports.  It sits on a HUGE amount of Gold, but it does have some local resistance as it is trying to get a mining permit. It sits in an area of Alaska where some of the best Salmon fishing originates. They could easily be bought out by a bigger company that wants that Gold. They could also be rejected for permits and be sold off temporarily, so this could be potentially a bit ‘risky’, a lot ‘rewardy’.

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I believe that what we are seeing is exactly what we have been waiting for.  All of my reports last week were pointing forward to this time and trying to prepare the readers here to be willing to start positions as we were due for daily cycle lows, and likely an ICL.  If you need to, go back and read last weekends report, or Tuesday or Wednesdays report for confidence. The timing was getting late and a swing low was due, especially by the day 25- low 30s area. Gold will almost certainly follow now, and we were seeing many Miners POPPING 10-20% Tuesday to show us what they are capable of, while other miners still linger at lows, allowing us to add an entry. 

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I think that the lows that we have been looking forward to are in. Silver & Miners certainly put in a swing low, a break of the 10sma, and many other bullish signs. Gold will likely follow imminently. I recommend taking position in these oversold Miners and collect some gains.  10% gains would be great, but you can see that some of these have the potential to double.  You could see 100% gains again.   DO NOT put all of your eggs into one basket, individual risk  (  a flooded Mine, and earthquake, etc.) can crater a Miners stock.   Tuesday is behind us and we have 3 days left in this week.  I am hoping that Gold crosses higher now and Miners continue to climb with a surge of Shorts covering and buyers jumping in.  Time will tell, but by now hopefully you at least have some position, even a small one, because ‘you gotta be in it to win it!’.

Enjoy your Wednesday trading, and thanks for being a chartfreak.

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~ALEX

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STORYTIME:   I will never forget that when I stared trading and investing in 2001 in Precious Metals, at the recommendation of my mentor.  I bought 2 stocks that I traded and also held partial positions as a core.  BEMA GOLD and HECLA MINING. I think that Bema Gold was near $0.30 or $0.50 cents and Hecla mining was definitely near $0.90 when I bought and held. I may have had 2000 shares of HL, 5000 shares of BGO. $5000 investment in my core.

Bema got bought out for $5+ / Share by Kinross Gold before the 2008 crash. HL went to $8 or $9 , but then it sold off and I panic sold it near $5 also  ( it ran to $12 after I sold it  🙁  ).  Buying and holding was NOT easy.  Such a bumpy rocky ride, but looking back, buying low and selling high in a bull market pays real money.  Those 2 trades alone turned $4000-$5000 to about $27,000 and I didnt pay taxes on it until it was sold.  It took 5-6 years, but it was a good lesson.  If we are in a Bull market, you can make money in a good Miner using the buy & hold method for your core.  “Set it and forget it”.   I know that some here tell me that they joined me and bought TRX, AUMN, MUX, VGZ, NAK, ARMS, and more for pennies/ share and sold some higher and now hold the rest as core.  The draw-down hurts, but the rallies reward.