Where Are We Now?

So far things are playing out in ways that we anticipated. This should make the trades easier to enter. Lets review the Monday action in the markets.

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SPX OCT 31 – Using cycle analyses, I have been expecting the SPX to drop into a trade-able low. The circled area was the expected target, a higher low and not an outright crash. 

SPX – Nov 4th, This is a gravestone doji and quite often acts as a reversal candle after a sell off. Timing was correct and we were within that circled area.  We would look for a reversal.

SPX Nov 7th –  Monday definitely saw a strong move out of the lows by all indexes.  The SPX broke above the 10sma and in the past, day 1 was not the end of it. I expect follow through and then a possible back test of the 10sma. We saw this in Februarys ICL and Junes ICL. 

Look at the last 2 ICLs.  Price took off for 3 days and then dropped back onto the 10sma and the 50sma.  I am focusing my purchases on Miners, but if you are looking to go long the general markets  ( UPRO or another vehicle) You probably could enter a long position anywhere here in my opinion with a stop below Friday, but waiting for that pullback may offer a lower entry than you could get today.  The pullback could happen after the election results.

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USD –  Did the USD put in a dcl, or is this a bounce? Time will tell, but we have seen the USD bounce and curl back down quite a few times.  The timing is VERY LATE for a dcl, but we didnt get a trend line break as expected. We’ll have to watch it going forward.

WTIC –  We are in the early timing for a dcl, but Oils cycles can stretch onward. Be cautious, but the XLE does look pretty good. I expect a bounce, so short term trades may be favorable, but a swing low alone is not confirmation of a dcl. Further confirmation is needed since a swing can just be a bounce ( and WED inventory report will probably reveal the future path). I drew a possible bullish or bearish path.

XLE – The bullish part is that the XLE bottomed 3 days ago and Oil was still dropping.  Miners often lead Gold and Energy stocks often lead Oil. This could indicate a trade able bottom is unfolding, but I am focused personally on Miners. The bang for the Buck is usually huge there.

GOLD – Gold dropped over $25 on Monday and lost the 10sma, but I see bullish implications in the Miners already. I WANT TO SEE LOWER GOLD PRICES. We are in the timing range for a DCL at any day, but we are supposed to see a trend line break.  Looking back, I didn’t really see one in either ICL in 2016 for months though.  With that in mind,  I’m looking for a swing on a price reversal and a move above the 10sma to indicate that Gold may be ready to move higher.  The story gets better…

GOLD –  This chart from the weekend report could be playing out here. Not a post election dip, but a pre-election dip. Gold is due for a dcl at anytime, but it can drag on a bit.

SILVER – Gold dropped and closed near the lows below the 10sma, Silver dropped to the 10sma and bounced with a bit of a recovery.  When Gold dropped in May, GOLD dropped in a steep manner too, notice that Silver did not.  It may not here either.

GDX – GDX crashed down hard. It was down about 6% at one point, but it also reversed upward and closed down only about 4%. That still doesn’t sound very bullish, but several Miners actually recovered to green WITH GOLD DOWN $25!   WHEN DOES THAT HAPPEN? Let’s take a closer look at just a couple of examples…

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CLUES, SIGNS, HINTS

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AUMN –  Gold was down how much Monday? And AUMN didn’t crash?  No, it dropped to the 10sma and reversed, closing up over 4%. AUMN released earnings last week.

This was MUX on OCT 11th as a Buy, when it looked like the ICL could be in place.

MUX –  Mux sold off over 20 cents in the morning, but it moved to  green while Gold was still down $25 too.

VGZ  OCT 18th – I pointed out these lows and mentioned how this could easily move 100%+. It showed strength and divergence, but could it hold up with Gold smacked down?

VGZ Monday – VGZ closed up at a price that was near highs for the last 3 or 4 months ( With GOLD DOWN $25). Again, a move to former highs is still about 100% gains.

NSU – NSU didnt even sell off Monday, it just went higher with good volume. Yes, while Gold was down $25.

IAG was a buy here near $3 and has been pointed many times along with HL, And a few other stronger Miners. HL closed higher again on Monday  too.

IAG Last week – IAG had broken out and back tested that break out  ( Bullish). They released earnings Monday and it looked good in after hours as it shot higher  ( With Gold still down $25).

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Conclusion:  Do you see a theme here?

  Miners used to get absolutely CRUSHED with Gold down $6-$10, Monday we saw many resisting and even moving higher as Gold got taken down pretty quickly.  Miners are releasing their earnings with improved conditions and future outlook remains positive, I assume these are being accumulated. I still read of fear and negativity.  Are you accumulating Miners on the dip? Why not re-read the weekend report if you need more confidence.  When we have a swing low in place in Gold, I will be pointing out buy set ups in Miners, because that will be a low risk entry.   Doesn’t it seems that by that time, many Miners will be higher priced than today though? If what we saw on Monday continues, they will be.   When you see Miners do what has been pointed out in this report, you can ignore the fear and buy the dips.  The safest way to do this is to Keep a stop in place, hold a small basket of Miners in case 1 has a bad day, and start with smaller positions, adding on the dips. 

 IF you were with me in early October when I said that I felt the ICL was in place and showed so many of these chart set ups  ( IAG, HL, NEM, VGZ, MUX, AG, GPL, etc), you may have started that small basket of positions.  Those stocks  lows have not been taken out on this dip, in some cases  they’re not even close to the lows.  That means that you should still be positioned, and THIS is the ‘add to your positions on a dip’ type of pullback.  After the election results and possibly a strong form of volatility, I’ll be able to point out various trade set up further. That volatility MIGHT be to the upside though, because no one believes that that is possible.  I added to my current positions of GPL, AUMN,  VGZ , and MUX yesterday after they began to act correctly.

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~ALEX

P.S.  Remember the bullish set up on Copper That I pointed out last week?

What a strong move higher.  I am thinking that GOLD will look like this when it finishes it’s drop too. 

As a visual :  Do you think this would have been easy to buy in Mid October after that big 1 day drop? It dropped slowly for another week, and then took off upside.  That may be similar to what you are seeing with the sell off in Gold now. Gold may do the same after the election week follies are behind us. As stated before, I believe Golds ICL is in place.