DEC 25 WEEKEND REPORT

We have one shortened week left in the trading year, and it could be a light volume week at that.  Lets review what happened last week and see where we could be heading from here.

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SPX – Though this looks like a bull flag, it also now looks ready to dip down into a dcl. The red line is the 50sma, near 2188, and would be a normal downside target. The Vix dropped very low last week, and a pull back is due.

SPX WKLY – The blue line is the 10ma on a weekly basis, at 2188. Again, a possible target for a normal healthy pull back.

USD DEC 20th –  Last Thursday I mentioned in Wednesdays chart that a day 8 peak would become a L.T. drop for the USD and could start the drop into a dcl. The USD is also within the timing to begin a drop into its ICL. This would help Gold ( And the YEN)  in my opinion.

USD CURRENTLY – That day 8 high remains the peak so far. I am still expecting a dip now in the USD.

USD WEEKLY –  In early Novmber when the Dollar broke out,  I had 3 initial targets for the USD run higher.  103.28 was the stronger of the 3 targets.

The peak hit 103.62 , closer to the stronger of the 3 targets that I gave, if this is fact the peak.

$WTIC – Last Wednesday we had a day 19 peak while we were on day 25. A new peak would help to give us a guaranteed R.T. daily cycle.

WTIC CURRENTLY – 3 days later and price still holds the 10 sma, but we do not have a new peak.  Oil looks to be weakening here and may be forming a wedge too. Oils daily cycles can be anywhere from 30 to 50 days long, which is WAY too loose to be reliably predictive using cycles alone, so I try to use other tech analyses to guide us. Since the daily Oil looks to be weakening slightly, it may pull back a bit before another move higher, or just dip into a dcl. Lets check the weekly chart.

WTIC WEEKLY – Still holding above the break out, Oil could go sideways or even dip into a dcl , so I’m using this blue channel as sort of a guide if it does dip down. I would expect oil to run to the upper level shown near $60 eventually.

NATGAS – NATGAS has been acting correctly since putting an ICL in during November. NATGAS could break above this channel and do more of a vertical climb, but it doesn’t look strong enough to do that at this point.  Maybe after the new year starts?

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GOLD, SILVER, MINERS

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GOLD – Can you believe it? No break above the 10sma yet, but I do think that this is about to change. I would say that since Gold is this oversold, a close over the 10sma would be a buy signal for Miners.

SILVER – Silver appears to be in a support area. Notice that after each sharp drop / break down from the daily cycle bounce, it has made it’s way higher again, so ‘higher’ should be the next move.

SILVER WEEKLY –  I noticed that over the past several years, Silver moved higher in January  & February. Silver is also now quite oversold on a weekly basis.

SILVER WEEKLY – This could be a huge rounding bottom, with the recent sell off included.

GDX EARLIER IN THE WEEK –  I pointed out this change in character Wednesday.  Heavy volume drops that break the trend line had follow though. Now we see heavy volume & no follow through. That is likely accumulation at the lows.

GDX – The GDX DAILY looks bullish here.  We have been looking for a possible ISLAND REVERSAL with a bullish gap open. If Gold starts trading higher while the U.S.markets are closed Monday into Tuesday, GDX could give us that gap open on Tuesday, back over the 10sma. The 50sma has held the GDX down since August. The next Daily Cycle alone may not break it out above the 50sma, but if an ICL is in place, we should be able to get back above it and start a bullish move higher.

GDX WEEKLY – Since we are expecting an ICL in Gold & Miners, we should be able to rally strongly for at least 2 daily cycles ( 2 months). This is how I envision a bullish scenario playing out after a normal bullish back test, if this was a normal bullish back test.

All last week, I have been pointing out that GPL and DRD have been showing signs of strength, possible leaders of the coming move higher.  How did they close the week?

GPL WEEKLY –  Very bullish looking, GPL closed at the weeks highs. As I have repeatedly mentioned, it has not broken the OCT lows where I bought it, and it has now even closed at 5 month highs this week.  Bullish.

DRD WEEKLY – Volume is increasing and almost closed at the weekly highs too. Recovering the 10 & 50 sma is a bullish set up.

At this point in time, you can see that I am expecting a move higher in the precious metals sector. After seeing a possible back test in Gold & Miners, why did I use a theme picture showing both good & bad?

The Good : If you have been with Chartfreak for a while, then you know that I have been saying that with an ICL in Gold, I would expect 2 strong daily cycles for the miners out of the lows. Even in a bear market, we can have 2 strong convincing bullish looking rallies higher. I have pointed that out with this chart of Golds bear market rallies. They move higher for weeks…

 We cannot be afraid to trade it, since the gains can be very big in the next several weeks, even in a bear market rally. Also, it may be the next leg up in our Bull Market.

THE POSSIBLE BAD: I have also said that when this rally takes place,  WE WILL HAVE TO MONITOR IT GOING FORWARD.

 I have wanted to show certain possible concerns that I have had found based on my research, but I also wanted to wait for the next leg up to start first. I didn’t want to scare people out of what could be a good trade in precious metals soon.   The bad news would be that there is the possible bear market side, if this rally eventually does roll over.  Did Gold & Silver re-enter a bear market with the election of Trump in the U.S. and Indias recent developments? Could this just be a bear market rally approaching? I hesitated to discuss this early on, because it may cause some to become too cautious and miss the first part of the next rally higher that I am expecting.  I will discuss this more as we move forward, but for now I will just share a couple of ideas of how this could play out, after signing off here. I will put a few extra charts at the end of this report.  Enjoy your time off and we’ll see you all again Tuesday morning.

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~ALEX

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SIDENOTE : WRN WKLY – I have also been recommending the bullish set up in WRN again when it was around $1.00 2 weeks ago.  It closed at the highs Friday, and remains bullish.  The daily chart does look as though it could pull back a little next week, I will be dding on the dips.

When the ‘Metals’ stocks took off higher, we wanted to be ready to enter on a pullback if they remained bullish.

CENX WEEKLY – I’ve been watching some of the metals stocks for their pull back and low risk entery points. On Dec 16th we viewed it this way.

CENX – Possible place to start a position and add on any further dip.

CENX WKLY – CENX popped nicely this week.  The weekly chart shows a bullish cup & handle and gives us longer term upside potential.

CLF –  CLF has now pulled back to the break out too. This is why we don’t chase them when they are running  ( unless we just want to scalp a day trade). This is now a lower risk area to start a positions, add on further controlled dips ( to the 50sma?) or even if we see a bullish run higher in the coming weeks. This may not drop further.

And finally I mentioned the possibility of the next rally rolling over. This is one example of what I would be looking for. Gold, Silver, and Miners broke down from the recent uptrend. We would want to become more alert as the expected rally approaches an area of possibly ‘back testing’ the recent break down.

This is an even more bearish idea, and it would  signal very early on that the bear market has returned.

Notice that when the 2012 Precious Metals market turned from Bullish to bearish, GDX acted bearishly around the 10ma on a weekly basis. From the May ICL and 6 months forward, it looks like a stealth ICL was put in place. It honestly barely shows up.  FROM THAT POINT ONWARD, THE GDX WEEKLY CHART did not regain the 10 ma.  Please read the daily chart below.

GDX DAILY – Notice how Bullish the rally looked from the MAY ICL into the fall of 2012 ( red box). The it gradually rolled over and the 50sma became resistance. Each daily cycle low & following rally ended near the 50sma and some could not even reach the 50sma  ( Red arrows) for 6 more months.

We have seen that start to occur now,  so we need to see this change going forward.  THIS IS MY LINE IN THE SAND. I will be monitoring this and several other areas  as the expected move higher unfolds. Success or Failure in this 50 sma area should be known fairly quickly.

There are other things that I am monitoring , and they will be in future reports, but for now I am expecting a rally and GPL and DRD look like they are leading the way. Please read this report again  ( and maybe again).  I believe that all of the questions that you may have for now are answered in this report.