Are They Peaking or Peeking?

Is what Peeking or peaking?  Let’s start with the USD-

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The USD was rejected at the 10 & 50 sma last week, but it is in the timing area for a bounce.

Monday the USD continued to fall a bit lower. A break below 99.25 would be a failed daily cycle, and indicate that we are starting the decline into an ICL for the dollar ( Likely great for Gold).  So I’d say that I’ve been correct in saying that the USD is peaking, and it will be dropping into an ICL in the future.

Along with that, we see some miners are PEEKING out from their recent consolidations.  XRA popped 18% higher today.

This is great news longer term, and is quite bullish in many ways, so lets discuss that next.

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GOLD – Gold made a higher high on day 24, that is bullish for a right translated daily cycle. Is that the peak for this daily cycle? It could be, however Gold does look like it wants to continue higher and many miners look set up to pop too.   If the USD bounces soon ( out of a DCL) that may stall things in the very short term, but it should be a buy the dip moment, as explained in the weekend report. Tuesday is day 25 so a dip would likely be relatively short lived. ( See the weekend report)

I also discussed a pattern in  GDX in the weekend report.  It does look to be breaking out higher too. We will look for follow through, and many traders but this with a stop a bit below the pattern.  A dip to the 50sma could happen if we slip into a dcl.  This looks like it wants to go higher though.

GDXJ –  I have been watching the  GDXJ coiling along the underside of  the 200sma for a while. I would imagine that more ‘buyers’ would jump in if it breaks through to the upside. This could happen Tuesday, and should lead to another move higher.

MANY MINERS are set up similar to GDX & GDXJ.  The set up formed this way :

1.We had a run higher and then we saw

2. A consolidation in January. This sideways consolidation is often a continuation pattern that leads to another leg higher. Let’s take a look…

EGO, GORO, IAG, AUY, SAND, etc are all set up that way.

GORO – Sideways all through January, and it’s usually a continuation pattern.

But again,  as some look ready to break out and run, others are already breaking out higher or peeking out above this consolidation phase…

ASM – Breaking out, this could jump the gap and form an island bottom or just continue higher. I mentioned this in the comments section Monday when it was only up 6%, then I bought it when I saw that it was moving up on heavy volume. It closed up at the highs.

SA– Breaking out Monday

GSV – This was only up 6% when I noticed the strong volume , so I mentioned it in the comments Monday morning too. It is another strong break out, closing up 12.5%.

MXLGF– Breaking out, this has doubled since December.

XRA –  Huge push higher on excellent volume. Did you notice that XRA has not really  done very much since December? If you own a lagger, there is the hope that it may just break out when Gold moves higher too.

In conclusion:  So we see a repetitive pattern forming in the Miners, and now several are breaking out.  I view this as Bullish and would expect others to follow. Many miners had a nice run higher from Dec into January and a consolidation sideways ( including GDX & GDXJ), and we are starting to see some Miners breaking out. This gives us the hope that many others will follow, since these are often continuation patterns.

If you have been patiently holding on to some Miners and they have simply gone sideways or slightly pulling back recently, the next move higher may be here soon for you. GDX started to move higher today and I am watching for GDXJ to break above the 200sma.  While the USD may have Peaked, some Miners are playing peek- a- boo from their consolidations. We are hoping for follow through with the next move higher. I would expect Tuesday to give us a little follow through to the upside, and hopefully others will also begin to follow. If the sector starts moving, we will all benefit from a run higher and can deploy any cash back into Miners. A pull back from here is a buying opportunity too, in my opinion.  Let’s see what Tuesday has in store 🙂

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~ALEX

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Another good point in all of this was that the SPX, DOW, and NASDAQ were down a little, but that didn’t hurt the Miners. It may be stalling some of the metals that we have been watching, buying, or just trading though.  Let’s briefly discuss some of those trades.

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I wanted to start by pointing out that VALE dipped below the 50sma before taking off higher. This is known as a shake out, and I have often discussed that action here.  You’ll here me say that I use a mental stop or a  ‘reasonable’ stop.  That means that I have to allow for some wiggle room to avoid getting shook out.  What if I get shook out and the stock reverses higher again, like Vale did? The Selling volume was very light, the recovery was strong green.  I might still re-enter the trade and try to make my money back.

I am mentioning this because with the recent market selling, some of the buy set ups in X, CLF, ( Especially AKS) and so on are dipping below the 50sma.   Since the market was down today, these are not recovering the 50sma, so they need watching. As of Friday, I captured these charts for this part of the report.

CLF – This dropped below the 50sma.

CLF –  Tried to recover Monday, but a reader ( Thx G.B.) brought up that the 50 EMA is being tagged at times too.  I looked at several charts and you can see that the price often reacts at the 50sma in some areas, and the 50 sma & 50 ema at other areas. Good to take note of.

I looked at AKS this weekend using both the 50 sma & ema, and found that price did find support and resistance at both, as shown below. I will zoom in on this chart too.

ZOOMING IN–  We see how price did react around both lines.

AKS – surprisingly , AKS broke down even further on Monday and then recovered.  So could it be that Metals will struggle a little if the general markets sell off?  Possibly, but they are still bullishly set up.  At this point I just monitor the stocks.  They are oversold, but are they still o.k.?

AKS – They may just dip more than we expected and still remain bullish.  I can picture them forming an inverse H&S after a shake out, for example.

AKS –  So we have to look at it this way too.  AKS is breaking down from out lower risk entry at the 50sma / ema, but it hasn’t even dropped 38% yet. Unfortunately someone might get stopped out of a nice set up when it breaks down like this, but I am just trying to point out that it doesn’t mean ‘it is junk now’.  It may be reacting to the general markets as they pulled back, and the set up can remain a normal price action in a bull move. It could recover the 50sma and continue higher after this consolidation period.

3 more set ups looking bullish

CX – This looks ready to break out. Construction, Cement, Ready MIx, etc. A Trump Infrastructure play 🙂

WRN – Many of us caught this trade near $1 and it jumped to $1.80.  After selling near $1.60 and allowing WRN to pull back, it has put in a reversal.  Will it go straight up from here? I feel that it will consolidate a bit more, but you never know. This is still a good entry point, because it pulled back  into the close.

INFI – One of our readers informed me of this a while ago, he had been adding to position inside of this base. He wrote this weekend to say that it had popped on Friday. I drew up this chart, but my weekend report was already out.   Well on Monday it actually hit the 200sma with follow through, so it may be too late now. If it coils along the 200sma, then you may get an entry. On the watch list 🙂

NAK –  I wanted to discuss what can happen here, since I have seen this in the past.

I had pointed out the repeating pattern of 2 weeks up, 1 week down, looking at roughly $3.00 as the next possible top.

NAKs Pattern looks to be breaking this week.  This would be the 3rd week higher in a row if it continues, and the rise is getting a bit steep.

When these patterns break to the upside, it can be a sign of euphoria, and the move can get ridiculous ( Known as parabolic). They are unpredictable, so there is no sense in asking me where to sell, but this looks like it could run to $5. After a parabolic run, they usually are unsustainable and fall apart, consolidate for a bit, and then recover again later.

This could get very interesting very quickly.