3-24-17 Sleep And The Shiny Red Apple

There are times when different markets may look ripe for the taking, but we don’t want to fall asleep to the possible warning signs in some market sectors. Lets review the weeks activities…

SPX #1 – The drop on the weekly chart isnt drastic, we’ve seen similar drop before. If it just continues up from here, we could be witnessing the beginnings of a parabolic type move.

SPX #2 – We do see a trend line break, so the drop can continue lower.

And SPX # 3 …

SPX – I am expecting a drop from here actually, as mentioned in prior reports. You may remember what I mentioned about a few other sectors like the XLF?

XLF – The Financials dropped on heavy volume and in my opinion this dosn’t look like the end of it.

USD – We do have a swing low in the $USD, but it is unconfirmed at this point.  This is how a dcl starts.  EDIT:  The lows of Friday were taken out as I’m writing on Sunday night, so we have a new low. I’m still watching   99.19 as important.

USD WEEKLY – The USD is due for a bounce.

WTIC – Many are going long Oil now, with a trend line tag. I still expect lower oil prices.

WTIC – OIL WEEKLY shows a pause at support, but will it hold?

NATTY – I have been long Natgas for a couple of weeks now. As it approaches resistance, it could pause. If you look at last March & April, Natgas paused for 4-5 weeks and went sideways. If it happens, people will automatically start discussing how bad warm weather is for Natgas, and how it cannot go higher in spring & summer months.   I was bullish last year and I got many emails telling me that I was wrong because NATGAS will fall in warm weather.   DO NOT Trade natgas strictly based on the weather, use charts.  LOOK AT NATGAS ON THIS CHART IN JAN, FEB, MARCH of 2016.  That is the cold weather and it crashed, warm weather came and it ran higher all summer long. CHARTS DON’T LIE.

NATGAS – Again, Natgas ran higher all spring and summer in 2016. I’m hoping that it can just move right through resistance.

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GOLD, SILVER, & MINERS

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To start, I just want to discuss the daily and weekly charts of Gold, Silver, and GDX and how they look.  They do look bullish in many ways, and they may be, but there are reasons to ask  ‘Are they as pretty as the Red Shiny apple was to Snow White?’  Are they good looking, but possibly dangerous at the same time?  That is what we will discuss after we take a look at how pretty the charts may look.

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COT –  The COT is rather bullish if you ask me.

GOLD – Day 10 & ‘Looks’ Bullish at this point. This should still tag or even break out above the 200sma. The 200sma is about $22 higher than current price. $1262.

GOLD WEEKLY –  Gold is at a resistance trend line, $20 under the 50 ma , etc.  It still looks bullish with higher lows and the daily had 2 r.t. daily cycles. That is why we expected GOLD to possibly break to a new high before stalling.

SILVER – Silver has been acting bullishly too.  Silver could reach $18+

SILVER WEEKLY – This looks like a break out & a back test and would be bullish too. It is at a resistance point too, however.

GDX – MINERS are not looking as bullish as the metals. At this point resistance has held it down for 7 weeks and Miners peaked in early February weeks before Gold & Silver. My question is , “If Gold shoots to a new high, will GDX break to the 300sma too?  It could, but honestly it has ignored Golds recent progress. Strength or weakness here remains to be seen.

GDX Weekly – $24.63 is the next resistance if this breaks higher with Gold.

So basically,  GOLD & SILVER  still look Bullish, Miners look mediocre.

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 Now I want to discuss the fact that I am still expecting an eventual dip down into an ICL. GOLD & Silver look quite Bullish, and as mentioned, Golds set up was bullish.  The MINERS are rather neutral, struggling at the 50sma and L.T. in their 2nd daily cycle.   What does it imply? And WHAT IF the Miners do pop over that 50sma, does that change my mind that they are weak looking? If GOLD breaks above the 200sma, does that means it is just going to keep on running?  Good questions to discuss.

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I like to look at the prior bull run for answers, and that way we do not get emotionally biased if Gold does break above the 200 sma.

1. Notice that GOLD can look bullish and break out above the 200sma ( & still drop).  And then it can Break out again ( & drop), and again ( And drop) as shown below.  A bull market can still whip saw and BUCK bull riders off.   The key is to enter at a safe point, a dcl or especially an ICL.  Read the chart of GOLD during the Bull Run during the Gold 2004 Bull run.

So if GOLD breaks out above the 200sma, and Miners break out above that 50sma,  THAT is going to look very bullish. I know that many would jump right in and get ‘buy’ signals on short term charts and even daily charts. Is that a trap?  I think it could be.  Let me show you another recent occurrence.

GOLD THOUGHTS –  Some are saying that we just saw an ICL in Gold, and honestly the timing isn’t even right according to historical precedence.  I admit that Gold looks bullish, but I still look at everything and want to warn…. Please remain cautious.  If I were long Gold / Miners, I’d ride it for all it is worth, but I’d use a trailing stop.  Why?  There was a good chance that OCTOBER 2016 put in an ICL, and the timing was even right.  I bought this low as an ICL and rode it successfully for weeks.  Look what happened at that time.

Look at that bullish looking October 2016 ramp up in Gold. Weeks of running higher, maybe even better looking than the current run.  As it broke out above the blue line, it stalled & failed. In my opinion, GOLD is due for an ICL in April or MAY, and a drop into an ICL is not one that you want to ride out long.

GDX – The same run up in OCTOBER in the miners was not quite as spectacular as Gold, similar to Miners now.  A warning?  Most are very bullish on Gold & Miners, because they are about to break out. NOTICE THAT October had GDX  ‘pause’ and drop & then surge higher in 1 final POP.  That sounds like Miners right now too.  Look what happened after that 1 final POP.

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HUI 2004 –  I have shared this chart in prior reports, but now it really does look like where we might be in ‘time’.   LOOK AT THIS CHART, I have now added some commentary.  Do you see where I would place us now?  If we get a drop like that,  unfortunately you will hear everyone saying why the bull has died.  Misinformation.  We will be dropping into an ICL, ‘timing’ is approaching for one. Remain calm, stop reading every reason why the bull died, and get ready to buy.

In conclusion,  Gold did have a bullish set up, with 2 right translated daily cycles.  That USUALLY leads to a higher high and a ‘peak’ during the 3rd daily cycle. We could still see that, and Gold COULD break above the 200sma and run for a bit, but it also can drop back below it when it dips into a DCL. Also I do expect a dip into an  ICL sooner than later. The Miners have been weak and struggling under the 50sma, but they CAN break out higher too in the short term.  I think that the BIG opportunity is still ahead when they drop into an ICL.  We want to be ready mentally to buy that, even though most will turn bearish at that time.

I’m still bullish on Natgas, I still think that Oil will be trading in the lower 40’s again, and the General markets are right in the middle of either a parabolic type run higher or a deeper drop. The XLF and banking stocks do look bearish, but unfortunately the charts for the SPX, RUT, DJIA, and NASDAQ are not clear cut,  NASDAQ actually still looks more bullish than the rest.  This means that if you are long, you always need to protect yourself and always use stops.

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EDIT:  As I proof read tonight, Gold popped up $10. That is still within the expectations that we had, but did you notice that when you see GOLD up $10, it seems VERY BULLISH.  On the charts of this report it still hasn’t reached the 200sma, and Gold is on day 11 of a 3rd daily cycle. The POP in Gold does not change anything in this report, in fact, it was all baked in with a possible run or break of the overhead 200sma. It could be the delicious red apple that sucks in more bulls and lulls them to sleep before dropping into a dcl.  Again, if you are long, ride it and use a stop, maybe a trailing stop.  We’ll see what the Miners can do on Monday. Have a good Sunday night!

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~ALEX

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CGIX WEEKLY –  This trade is acting like the NAK break from the long base.  I pointed this out in fridays report and it closed up higher Friday.

OVAS –  I still like this set up too. I bought it last week and am still holding it.

NAK – Yes I still own it. Read this updated chart.