Feb 7th – She Caught On Fire

Look at a chart of SPX, DJIA, or even OIL and nothing has changed from the weekend report, so we are going to go right to the Precious Metals sector for a review of Mondays action.

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Notice that the USD was moving higher for most of the day on Monday, but that didn’t hinder the gradual melt up that took place all day long in Precious Metals,  right into the close.

For the USDs expectations, please see yesterdays report.  The good thing is that the Precious Metals seemed to ignore the USD when it went higher Sunday night & Monday. Also please excuse any typos. This report is a lot longer than a normal Tuesday report and I will release it without proof reading. Thanks!

GOLD –  I called this a DCL the day it tagged the 50sma, and I feel that this is day 7.  I pointed out why I called it a dcl in last Wednesdays report.  I started to point out many bullish set ups in Miners and many have been ‘re-added’ to our Dec low positions ( and many others have just held on for the ride). Doesn’t this look like it has more upside to it? I certainly believe that it does if this was only day 7.

I’m going to go right to GDX & GDXJ from here

GDX – GDX broke out above the 200sma on Monday. Bullish.

GDXJ – This is what I wrote in the weekend report: A very Bullish set up  – click to enlarge

GDXJ one day later on the weekly chart, This is Bullish.

GDXJ was up over 7% on Monday.

So from here I’ll explain where we are at and what to look for going forward. Like I said in the weekend report, we can get dips and swoons along the way, but I expect a continuation higher.  I pointed out that some Miners are already almost back to their 2016 summer highs. If you have been following my advice, you still own Miners from the Dec lows, we didn’t get “too Cute” and sell everything, because this run should have several weeks of upside from the Dec lows.

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Now I need to give a brief explanation of what happened with me Monday, and then you will understand the following charts. I was away Sunday night. Monday when I woke up and got to the computer, Gold, Silver, and the USD were all higher.  I got home after lunch time and had about an hour before I had to leave again, so I started to collect ( screen capture) some charts of Miners that I watched and that were also really acting correctly in my eyes. I wanted to put them in Tuesdays report as possible low risk entries for any with cash on hand.

A problem arose:  When I got back at the end of the day,  they had all gradually continued higher in a melt up type phase.  We will still examine those charts that I collected, and now I will discuss how they can still help us.

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NG – At lunchtime NG was breaking the 50sma and I liked this if it closed above the 50.  You can see the time stamp on the chart at 12:34. I thought that this should go into the report as a low risk buy if it closed here above the 50sma.

NG – I came back at the end of the day and look at how it melted up ( almost 10% now). It is now  a bit  extended short term. I still have higher price targets for it, but will it straight line shoot up there? Will it pause? Bull flag? Not knowing, I’ll use a different approach.  Lets continue…

PVG – Another Miners that to me looked good here. Up 6%  and breaking out. I captured this chart at 12:38 to recommend it in the report. Notice that it had no pull back. This will probably just keep running higher.

PVG –  It closed up 13%!!  How can I recommend it now, even though I do expect it to continue higher over time? It is more of a “Enter at your own risk, it could bull flag or pull back short term”, however it and NG are still useful charts. These are showing a sector is bullish and if you see a Miner breaking out Tuesday, you could enter before it just gets too stretched upward.

GORO – Captured at 12:32.  Up 4+% , I liked it because not only is it breaking out here, it had the same volume for 1/2 the day that it had all day Friday.

GORO –  Then it closed at up almost 10%.  It’s hard to recommend entering a stock up 10%, though I do expect that these could run to 2016 highs in time.  AGAIN – these are good examples of what to look for Tomorrow if you are on the hunt for another Miner.

AAU–  I wanted to show this Miner to make a separate point : The 1 day  break out often is not the end of the move in a bullish sector, especially after a consolidation near a resistance point.

SAND –  This was another one that I saw slowly moving higher at lunch time, and by the close it was up 8.22%. After a nice long consolidation like we saw in January, this can break out & run like AAU, but I still want to look for some that are possibly just getting ready to go.

So the above  examples can still be helpful.  If you see one of your favorite Miners just about to break out above the 50 or 200 sma, or maybe it is already breaking above the 50sma, you may want to take a position. The above examples do show what I am expecting in the Miners. They are breaking out from the January consolidation and making great gains!

ALSO –  I have others that started to break out and still look to possibly still be just getting going.  Maybe we call them Laggers ready to play catch up.  Let’s take a look.

DRD – I saw this at noon and I could see that it gapped down 40 cents and was in the process of recovering.  It was down 14 cents, but the weekly chart was a ‘buy’ the way I look at them. It almost landed on a double support area, and THAT was a great Buy area, falling on lightish volume. .

DRD – By the end of the day  DRD was up 16 cents.  Is this over extended?  Not at all. With the shaky news out in the open, and this being scooped up, it could move much higher out of this long consolidation.

PPP– I have been watching PPP, and this was going to go in the weekend report. It didn’t go there because  I was not happy with the dreadful way that it is acting out of the Dec lows.  I wanted to see at least some sign of strength. This pattern did have me buying it at Noon Monday though, because it was just starting to pop from a wedge.

By the end of Monday  PPP  popped from the wedge and also moved above the 50sma. This looks like it could be ready to go.

VGZ – Also from last Friday, this looks ready to break out to me. These long consolidations can be explosive, once they get going.  UNTIL THEY GET GOING, they are BORING! This is actually an excellent base.

VGZ MONDAY – VGZ may be ready to play catch up.

TRX –  This chart is from the weekend report. I have been posting about TRX  in almost every report for a week. I still have people telling me that this is not even responding to Golds move higher this time around, they say that it is dead, so let me review it again.  TRX ran up 60% off of the DEC lows. I then recommended it again at the dcl.This weekly chart is bullish.

TRX since the DCL it is actually also up 20%. It was down at MID DAY when I checked it, and it closed up 8%.  Yes, TRX was red at noon time, but this moved 10 % from Mid day Monday to the close.

I posted this last week at 47 cents.  It is up 20% from this point.  The upside potential if this gets going is great. 100%? , 200%? More?  Enough said, I’ll stop discussing TRX for now.  🙂

FSM WEEKLY –  FSM did a perfect 61.8% pullback, and has moved almost 40% higher from Dec lows.  I think that this one has plenty of upside.

FSM DAILY – Just getting moving here?  This is a low risk buy with a stop below the 50sma ( red line) and it looks ready to break above the 200sma ( green line).

So there you have it. We had a nice upside surprise Monday in Precious Metals with the USD green too. By not over trading this sector out of the Dec lows, we are maximizing our gains, since the pull backs have been shallow to minimal.  At this point, anyone that is starting to worry about losing the recent gains that have added up can use a mental stop or trailing stop.  Maybe on BIG positions, use a trailing stop on partial position would help? It is up to you as a trader, but I do think that these break outs could lead to higher price in the coming week or so.  Some are reaching out for their 2016 highs!  I am not trying to trade in and out of these, but if I have a very extended position, I might sell a partial or all of it and try one that has not followed through yet. Let’s take a look at that…

**Lets say for example I owned :

PAAS – PAAS is still running higher, but what if it is extended and is only tacking on 2 % each day now? It also may be nearing a peak? I might sell 1/2 my position…

And try it in 2 juniors  ( Like PPP and TRX for example).   I’d do this just because the chance of increased % gains is in this set up. There are no guarantees, PPP could fail to follow through, but this is a strategy that I often use as a trader once a stock runs higher for a weeks.

 So now we’ll have to see what Tuesday brings our way.  I hope that it is 1/2 as good as Monday was with a little more follow through, but if it is not, the set ups remain bullish.  I am not going to worry about it until I see signs of weakness.  Some of these POPS from yesterday could just bull flag. Thanks for being here and enjoy your Tuesday!

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~ALEX