Feb 16 – Building Bridges

Sometimes building bridges by means of consolidation pave the way to higher ground.  I will discuss that later in the report, after a quick market review.

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SPX – Again, this is like a melt up phase, and if I were long I would use trailing stops and let it ride. That long bridge of consolidation has built up some energy.

This was eye opening…

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I have been discussing the VIX Timing, expecting a spike soon and other reasons why I feel that the Markets could experience a pretty good drop, possibly in the spring. Currently I have mentioned using a trailing stop as the markets continue to sprint higher.  I also pointed out a target at SPX 2400-ish  area. Now look at this…

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QQQ – The NASDAQ is red hot and could be going parabolic. If you have seen a parabolic rise in the past, they usually run red hot and everyone gets Very Bullish, then they end rather ugly. This is when people will start feeling like they are missing the boat.  Emotions take over. Buyers want to just jump in “because I read that the markets are going a lot higher!”     This is just a big picture look to keep everyone aware that the trend is the friend ( until it changes). Like NAK, a sudden news event or situation can bring this down quickly when time runs out. For now, It will likely continue to melt upward, so if you are long, stay long and use trailing stops. In a market melt up, this run can keep going.

 

USD – 2 weeks ago I re-stated what I was looking for, and this should boost Gold. A bounce to the 101.50 area was what I was thinking of.

USD FEB 15 – Exactly what I’ve been  looking for. The USD broke out & failed ( So far).

Lets see if this holds.

NATGAS – I had 3 NATGAS charts in yesterdays report.  I have been watching NATGAS for weeks and expected it to get down as low as the 200sma.  Here we are. We’ll see if it bottoms and what kind of bottom we get.  See yesterdays report if necessary .

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GOLD, SILVER, & MINERS

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GOLD – This was a nice reversal. Please read the chart. This looks bullish.

GOLD BUILDS BRIDGES AT TIMES IN SIDEWAYS CONSOLIDATIONS – Please look at how Gold CAN act before a big run.  So much talk about wiggles and bounces, but right now Gold & Miners are actually SO MUCH stronger than many are giving it credit.  Look at this chart of a bull run out of the 2008 lows.

 

Would you call this Smooth?  A steady climb higher?  Fresh gains every day? The only bad position may have been overly leveraged. This was a steady climb higher, but look at all of the dips, some I’ve pointed out, but there were  still others. This is a Bull Market.

 

GOLD 2009 ZOOMED IN–  Look at the blue box out of the July lows.  That looks confusing cycle wise. Where was the DCL?  Tough call, and although there was nothing ugly or bearish or weak in this run, it could have looked weak at that point. For inexperienced traders.  this is a sideways Bridge building period before an explosive run higher. Again, look at that tough 2 months in the blue box, and then look at the rally for the following months.   I say this because some are possibly confusing consolidation for  weakness.

 

SILVER –  Some are even wondering why Silver is so weak, and should we be selling.  Day by day it may seem weak, but please see the chart. Is this a weak chart or a strong chart?

GDXJ – Weak? I keep hearing how weak GDX, GDXJ and Miners are. If you hear that, please pull up a chart immediately and take a look.  Again, we have readers from all experience levels here, and we all may use different terms when discussing day to day action.

Someone may say to another in our comments section,  “GDX looks weak today”,  perhaps because they are looking at 10 minute charts.  They are not wrong in that context.  It might have a dip intra-day. That doesn’t mean that they think it is ‘weak’ and should be sold off.  It may not be relevant to what you may be looking at on a daily basis. Let me just say that GDXJ is not weak in this chart at this point, and no it is not giving a sell signal.

GDX– This could be a BULL FLAG and a break above the upper magenta line could have follow through buying.

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PERSPECTIVE :

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At times I receive emails of concern from some thinking that something must have changed.  I have a lot of readers here, and for the sake of  helping the inexperienced, as well as the experienced, I want to do a quick review.  It is Thursday and in the US we have Thursday and Friday trading and then a long weekend. Monday is a holiday .  I am getting just a few emails asking , “Should we sell everything now before the weekend? I am hearing that GDX or Miners are really weak. I don’t want to hold over the weekend if it is extra dangerous.”

 

I understand that feeling, but I let me just say that I am not seeing weakness, and this is with 2 days of Fed Testimony.  That is why I posted charts of GDX & GDXJ above as strong, and now I want to do a quick review and a short story , all at the same time.  To start with, yes, some Miners will experience bad times.  CDE got slammed recently and is going to take time to repair that chart.  PAAS had a down day after earnings, It was an out performer, we’ll see how it plays out from here.  I will discuss NAK too.  Charts of GDX & GDXJ  remain healthy and bullish so far.  Let’s take a small tour .

 

DRD– Up almost 80% in 2 months and holding near the highs. Bullish or bearish.

 

GPL–  100% higher in a couple of months, still at the highs.  Bullish or bearish.

NG – Up 60+% in 2 months, still at the highs.  Bullish or Bearish?

BTG – 80 % gains from Dec lows, still building a bridge, a bull flag.  Bullishly strong or bearish and weak?

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The NASDAQ is getting red hot as mentioned.  Now I am getting emails  ( just a very small amount, a couple, but just in case others feel the same way, I will address it in a report) asking about huge gains in Tech stocks.  They wonder if we are missing it while Miners are weak?  So after showing you above that we’ve seen some great gains in the first leg higher ,  80% gains in NG, 100% gains in GPL in 3 months, and they are holding gains and threatening to go higher, etc….let’s take a look at the situation.

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GG – Even GG ran 50% from Dec, and if you caught it after it gained the 50sma to be safe, you have 23% and a reversal Wednesday at the highs.

 

CSCO –  ON FIRE?  YES!  Look at that break out and run higher.   However this rip higher is 13%  in 2 months from Dec to now.  $29 to $32.79   ( GDXJ was $18.50 to $25.50 – GG above was $12 to $17).   You are invested in the right sector at this point.   Perspective is everything.

AAPL – Yes,  AAPL is awesome and has again hit new highs.  Yes, buying it years ago was SO rewarding.  Yes, I knew Warren Buffet bought AAPL last year.   Now look at this chart.  Could you have held through the sell off in 2015?  What about the sell off in all of October?  So AAPL is up 50% in about a year.  Very good, but some of these Miners are up 80-100% in 2 months, and others could be ready to play catch up.

 

AMD –  I actually have been watching AMD, FNSR, TWLO, NVDA, MU, CY, and a few others in my spare time. They are making great gains.  So let’s look at those bull runs.  Any dips? GDX & GDXJ aren’t dipping lower yet.  They went sideways and some feel that they are dead money.  Look at the dips that can happen in a normal bull run in AMD for example.  I think our Miners are acting VERY WELL.

WIX –  A great run, almost 100% from early last summer, but was it an easy ride? No. Could you have held on from August to January with 6 months of sideways before yesterdays POP.  GDX has only had 7 days of sideways  🙂

 

So we are seeing good gains in the TECH SECTOR, and I’m sure some stocks there are flying up 50-80% too , but whick ones?  And how long does it take to get them there?  I know that some Miners here are doing very well and I expect them to continue to do so.  The current pause or consolidation , even if it dips lower from here, can build up energy for another run higher, and I do try to stay on top of the sector that we are invested in.  Let me just say,  so far so good. It actually looks like Bull Flags could be forming.

 

TRADE REVIEWS

 

PLG –  This is a trade idea that I had in January. I wanted to point out that the normal pullback was a back test and it reversed.  This may have been a good place to add.

PLG ran from a $1.60 buy above the 50sma to about 60% higher in 3 weeks. This pullback is normal in my opinion.

 

WRN – This buy idea had good potential. I bought the reversal off of the 50sma and posted this in case anyone wanted to buy the break out ( a bullish break out).  $1.34

WRN –  I posted that this may be 1 last chance at $1.36- read the chart.

Just an update-

WRN – So, up 25% in days, is this now a bearish rising wedge or bullish?  I believe it is bullish and I have not sold my position.  IF this breaks down, I will sell and look to re-enter another time  ( it may just put on a handle).  I actually think that this doesn’t want to sell off, and will POP higher quickly out of this slanted flag. It looks ready to go one way or the other actually.

I had this chart of NAK as a possible path for it to recover if they can stabilize the current media situation. Will it stabilize or will it break down?   Time will tell.

NAK – Think about it,  those sell offs in  AAPL, AMD, FNSR, etc. etc. in their bull runs were scary too.  I mentioned in yesterdays report that people would come home Tuesday and see what happened, and NAK would have a 2nd phase of selling Wed morning.  I thought that then shorts may cover, buyers may step in , and it could recover.  THAT BEING SAID – I’d watch NAK to sell down Wed morning and then use the 50sma as a mental stop after that.  Now the loose selling may be done.  NAK is supposed to have a rebuttal to the article written by the Fund Shorting it.  It has recovered 2 times. Now I do not expect a lot of selling from here without further bad news.

Look at a chart of CDE vs NAK.  When CDE broke down and readers asked me, “Can I buy it?”  I said,  “I wouldnt touch it. It is a broken chart and will need time to repair itself.” I drew this for you. I did NOT expect CDE to recover, the circumstances were different.

Now look at CDE.  It has not recovered, it is struggling.  NAK has recovered from both waves of loose selling.  It may or may not hold here, but it looks better than CDE.  CDE  is a broken chart that needs time to earn buyers trust.  Buyers seem to believe in NAks potential at this point. Time will answer all of the rest of our questions and opinions.

URA – Higher highs with divergence usually lead to a dip.  How far? Is the climb done?  It is hard to tell. The last peak in January looked like a top, but it wasn’t.  Is this, or will it just keep stair stepping higher? …

URA LONGER TERM – I believe Uranium has sprung up from a double bottom base with a higher low. It looks to have begun the next Bull market, and the Uranium stocks have been on fire. In time, I think Uranium will continue higher.

So I took a trade in URRE  (Again) recently and posted it here. I’m pretty sure that his is the only Uranium that I recommended as a buy in February,  though I really wanted UUUU too. We bought in December and sold that with 100% gains. The next buy was at the 50sma, and then it popped and landed on the 10sma.

Now URRE is up over 30%, what now?  I still own it. I am NOT trading this based on URA.  UEC, URG, DNN, UUUU  charts do look a bit like URA, but this may just move on its own, and I like the base forming that it is doing here.  CAN IT dip to the 10sma?  Yes it can, but I like it and will hold it as long as it remains bullishly set up. The 10sma should hold.

So again, we had 2 days of FED testimony before Congress, and Miners held up.  Doesn’t that alone make them strong, not weak.  🙂  SO I am not thinking of selling at this point. I see what could be bull flags and I’d like to see them break out upside.  Let’s allow Thursday and Friday to play out and see if that gives us any more information before the weekend starts.  The FED spoke of inflation coming in, and that is good for Metals. I’m still holding all of my Mining positions.  We’ll probably see soon enough whether we can or cannot get a higher high in this daily cycle.  I think we can move higher, especially if that was the top for the USD.

Enjoy your Thursday and Friday trading, the Markets are closed on Monday in the US. This is the time for you to decide, based on what you see, as to whether or not you want to hold each position through a long 3 day weekend. Look at each position as an individual and decide for yourself by friday if you live in the U.S.    I still like what I am seeing, I’m still holding a chunk of NAK that was purchased lower,  but I am not adding to that position at this point.  I will try to post a small report on Friday morning.  Happy trading!

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~ALEX