Jan 18 – The Road To Greater Heights

We’ll discuss the theme after a quick review

.

There was no real change in the General Markets from the weekend report, however the USD did move as expected. In the weekend report I mentioned that I see weakness in the USD chart. It broke below the 50sma Monday. We can get a bounce in time, but I expect the USD to continue to roll over, as noted in the weekend report.

WTIC –  Oil is hanging in there and can finish this daily cycle within the wedge, but I expect a drop in time.

Some Oil / Energy stocks still look to be bullishly set up, and in the weekend report I pointed out that the big picture is not bearish looking, so I am keeping that in mind too.

Big picture weekly charts of OAS, WPX, NOG, etc still look healthy.

GOLD, SILVER, & MINERS

GOLD – GOLD is strong and the good news is that Gold has a new high on day 20. As expected, this first daily cycle is strong and the second one will lead to new highs too, so we don’t want to get too cute trying to over trade our positions during this run higher out of an ICL, as mentioned in prior reports.  Please read this chart.

SILVER –

GDX – I drew a lot of charts for GDX for the weekend report and did not bother using all of them, but I can use them here to explain the idea that GDX (Miners in general) can just continue higher. This is why we don’t want to get too cute, even if a DCL is due. I wrote a report about that, but I keep getting emails where the reader says, “I sold everything, where do I get back in?”   Let’s review again:

Look at the move out of the ICL last year. Notice that GDX just took over the 10, 50 and 200sma step by step without a pause.  THIS WAS THE WARNING. You may get left behind if you sell during the first daily cycle. See the chart – notice the sideways move on the 50sma.

GDX TODAY :  VERY SIMILAR?  As of last Friday the 10 & 50 hardly paused the progress. Notice the sideways move along the 50sma. This would leave many behind again.

So I drew these next 2 charts this weekend showing possible paths for the Miners.

I drew a longer daily cycle that might just break that 200sma the way we saw the Jan 2016 ICL play out. This would be a day 25 (ish) high and then a dcl back test of the 200sma. ( Just a possibility)

A short daily cycle = A quick dip now and then a 2nd daily cycle higher.

GDX Currently – So we got a pop on Tuesday and a new high on day 17.  Even if this drops into a dcl now, it is a strong move and staying mostly invested is wise with the 2nd daily cycle slated to continue higher, likely breaking above the 200sma.

So the answer to “Where can I get back  in, I sold everything last week?” Selling everything was not in my trading plan, I actually posted charts and reports saying that ‘even in a bear market we get 2 daily cycles higher, so you want to at least have some skin in the game and you wont get left behind’. At this point, You’ll have to do the best you can to find a spot to get back in.

1. You may wait for a dip ( and it may or may not come) or

2. You may have to just buy higher in this area (and risk some possible draw down if we do get a dip).

But let’s discuss that main theme picture. When I buy a stock, I look at it on a daily chart for a good low risk entry, but I also at times think about the longer term prospects.  What about the BIG PICTURE.  You may recall if you were here last spring that with our trades back then, I showed the big picture prospect in CLF, VALE, X, FCX, AA, etc.

I want to show a few trades recently with that view.

MTL – The daily shows a possible CUP & HANDLE has formed.  I own it and this may or  may not be ready to move higher now, so what will keep me patiently in the trade?  Please read the chart.

MTL WEEKLY – This keeps me waiting patiently in the trade ( With a reasonable stop). By stepping back and looking at the mountains, I see that I am still just breaking out from a base with great potential. It can help me to stay on the road and patiently wait for the next potential upside move ( again, with stops in place).

I did a report on Medicinal Marijuana and the recent legalization of the use of MJ .  The potential in some of these companies seems staggering. The report is found here if you wish to review the warnings and prospects that went along with it. That report was written on the last day of December and many have already moved higher by 70-100+%

CLICK HERE FOR THE MJ REPORT

Lets review that BIG picture vs the short term set up / entry

EDXC – Mentioned because of their increasing sales in Phyto-bites.   This is a pain & anxiety relief  soft chew treat for Dogs.  It was a buy at 3 to 4 cents, it held above the 200sma.

EDXC was breaking higher, and was pointed out as another buy on the pull back to the 10sma at 5 cents , and it popped again forming a cup at 6 cents.

EDXC – Now over 9 cents as of yesterday , so it is up 200% from the 3 cent area 1 month ago.  What can keep someone in the trade patiently waiting for a possible continuation higher?

EDXC – This is a great long base with great potential as it climbs that mountain higher.  One may just want to continue the ride higher as the company reports big increases in their sales.

GRNH –  This was also featured in that report as one that ran up 300% last October. It was 7 cents when I started the report, now it was 9 cents here, breaking higher. Forming a cup here would still double the stock.

GRNH – After a whole month, it has only slightly moved higher, now 11 cents, but this does look good, with proper volume surges.

GRNH BIG PICTURE – Do your own Due Diligence, but if this company benefits from the new legal arrangement, the gains could be quite impressive over time based on this base. These can be very volatile stocks, so please read the report at the link above with all of the warnings too 🙂  This may not be a buy & hold for everyone.

GORO – Broke out from this wedge and would be a low risk buy at $4.00. As it moved higher to the $5.50 area,  it was riding along the 10sma  (something that I have pointed out many times in the past).  There is no real reason to sell it for the longer term buyer, especially if the 2nd daily cycle could take this back to former highs. The 50sma & 200sma are over 50 cents lower – so I did have some readers tell me that they got out.

GORO WEEKLY – SO viewing it this way, some sold it in case it drops to the 200sma, and I understand that. It may have been better to sell a partial if the position was big, and hold on just in case it does what it did in Jan – Feb 2016.  See the chart below, it did not pull back for 9 straight weeks, then it dropped for 1 week, and continued higher again. We really don’t want to lose position if we got a low risk, low price entry, and have to buy back in higher later.  I only sell partials on large positions at times.

GORO WEEKLY BIG PICTURE- So sometimes if we just take a giant step back and look at a chart knowing that we are in the first of 2 daily cycles slated to move higher, we can hold on a bit longer. GORO was a $25 stock at the peak.  If the GOLD bull is still in tact, this has great potential.

I understand that we could be due for a dip into a daily cycle low timing wise, and some of those dips have been a little scary.  Remember though, when coming out of an ICL the dips can be muted and  surprises often come to the upside.  Again look at Jan – March  2016, there was hardly a dip at all, so we want to make sure that we don’t sell ‘everything’.  If you want to trade this move and try to deploy the cash on a possible dip, I recommend that you hold on to at least some Miners through out the first 2 daily cycles.

How can this be done if one is worried about  giving the gains back at a Daily Cycle low (dcl )?  Step back and look at that big picture like we did here today. If the Bull market is still in tact, and you want to climb higher with it, it may help to step back and look at the destination off if in the distance and also the current road that we are traveling on.  In some cases, we are still at the base of the mountains  ( For example – see the GORO WEEKLY chart above again. That is a base.).

 Pulling off to the side at a time like this ( Moving up from an ICL) could really slow down your progress.  Sure, you can still take it slow if you need to sleep at night, by holding a smaller position size as a dcl approaches, but don’t sell everything.  ‘Don’t get too cute’ and you will remain on track to climb that mountain out of a bull market low. Enjoy your Wednesday trading. Depending on what happens today, tomorrows report may simply be trade set ups if they present themselves. Please see the link below too.

~ALEX

Some may want to re-read my report “Don’t Get Too Cute”.

Click here for the report DONT GET TOO CUTE