4-12 – 2017 Is it Really Just A Matter Of Time?

Today I want to address how, even though we can see movement within ‘cycle expectations’ get stretched or a bit extended, it is still just a matter of time before Markets seek their lows. I will discuss this in the Precious Metals Section of the report.

 

SPX – Though this reversal can be viewed as bullish and be bought with a stop under the lows, We still need to see a break out and follow through. 

Lat’s look at the NASDAQ…

 

NAZ – The set up looks bullish, but the MACD & ‘Timing’ may not accommodate a strong continuous run higher. It is a low risk entry, but use a trailing stop just in case it doesn’t keep running once it breaks & moves higher. This is in the 3rd daily cycle.

 

USD – I’d expect the USDollar to break out in due time, and this is only day 11. This could hinder Golds recent progress.

 

XLE –  Oil continued higher and XLE  actually did a back test on the trend lie & 200sma, then put in a nice reversal. It is bullish.

NATGAS –  I’ve been hoping for a pullback in NATGAS ever since I sold my position, and patience is paying off.  I didn’t want to chase it higher and that pull back looks to be here. Now I just have to monitor it and see if it remains bullish. I’ve expected a drop to the 50 & 200sma.

 

GOLD SILVER & MINERS

 

GOLD –  DAY 22 and even though we see GOLD rising bullishly, it really is just a matter of ‘Time’ before it drops into a DCL / ICL.  I was asked a good question,  “What about tensions in North Korea, could this be influencing Gold?”   My answer to that is 2 fold.

1. We had 2 R.T. daily cycles in GOLD and so we were actually expecting that the 3rd daily cycle could be strong enough to pop to new highs,  so this isn’t exactly ‘odd’ at this point.   You might even recall that at one point I was honestly expecting Gold to break the 200msa in the 3rd daily cycle and run to $1300. The  MINERS were weak in Feb and peaked in early February, so that was a bit odd.  Miners remain weaker than Gold at this point,  however…

2. Tensions in Syria/ Russia  and N.Korea can certainly add to the safe haven view of Gold.  It can cause a ‘reaction’ of additional short term strength, and possibly stretch the daily cycle a bit,  BUT in the past I have seen that it is still just a matter of ‘time’ until it seeks out the normal daily cycle low.   I WILL EXPLAIN THIS A BIT MORE LATER IN THE REPORT WITH VISUAL PROOF.

 

SILVER – Silver has looked Bullish the whole time, but many Silver Miners are acting rather subdued.  Silver almost resembles a DCL here, but Gold doesn’t.

NOTE: If you look at charts of EXK & FSM, you see that they are still closer to their lows and that they fell below their December lows, so Silver looks good, silver stocks have dragged along.  Yesterday I mentioned that CDE & AG Looked bullish, but just a quick – short term trade.

This is PAAS, and now it looks like it may want to pop  ( IT MAY NOT), so it could be taken as a ‘long trade’ for a SHORT period of time.  A SCALP TRADE if one is nimble.  PAAS adds to the MIXED picture.  Gold looks strong, some Miners look very weak, others are breaking higher.

GDX –   Yesterday GDX was stronger than GDXJ, as GDXJ is still under the 50sma. GDX has broken out & is running to the 200sma.  GDX seems to be following GOLD now and this caused DUST to drop yesterday more than JDST.

 

GDXJ –  Gold was up $20, but GDXJ was definitely a bit lackluster. GDXJ is still under the 50sma, but if GDX broke it, can’t GDXJ?  I would say that it could if Gold continues to $1300.  THAT SAID,  I want to explain something else, but first please read the chart.

So far, this has played out very much as expected  ( even when GDX broke above the 50sma, but then it started to run the course of the 2nd likely scenario).   Look at the above chart of GDXJ and note that if you were “Long”  or  “SHORT” , so far the results have been the same –  give & take,  Ebb and flow. Sideways chop for weeks.

PLEASE READ THIS:  I went short at the GDXJ tag of the 50sma, so now I am almost break even after weeks of sideways, but I also see GDX break out higher.  WHAT CAN I DO?  Well, if we anticipate that GDXJ  MIGHT/ MAYBE break out too,   we can protect funds. Trades are fluid, so I do not just FREEZE, I think of ideas.   1. One could just sell.  2. One could hold a tighter stop & honor it.  3. One could buy JNUG or a few Miners long like PAAS or as mentioned yesterday  AG or CDE , etc to hedge the short.  The idea of trading is to analyze – go with the strongest expectations, but IF things start to go in a slightly different direction  ( like yesterday with GDX above the 50sma- threatening that GDXJ might do that too), we can use our experience or knowledge to protect our position for a smaller time frame.  I do still expect a DCL soon, but Gold is following through and dragged GDX with it.   Yesterday report mentioned that GG AND ABX looked bullish, so we analyze, and adjust if necessary. I stay fluid too, until the DCL comes.

THAT SAID –  I added a little JNUG to my account when GDX broke out.  I am still in JDST ( based on GDXJ) and if GDXJ breaks out too,  my JDST is now a bit hedged.  Honestly, I hate to play things this way,  it is  EXTREMELY RARE that I do, but for a limited amount of time, it somewhat neutralizes my positions, until our DCL arrives.   I will neither gain nor lose for a day or two while I assess the situation further. I also mentioned yesterday that with FCEL , UUUU, URRE, etc my account has been slightly neutralized.  THIS IS NOT A LONG TERM POSITION – IT IS SHORT TERM PROTECTION.

 

Let me show you how GOLD  has played out as expected so far.   This is GOLD FEB 28th, I expected a drop at this resistance at the end of February.

GOLD DID DROP AND MAYBE A DCL WOULD COME AT THE 50 SMA, and I mentioned a possible undercut / shake out type move too?

Mid March – We got the undercut and I found our DCL. Day 3 of our 3rd daily cycle started.  Back to the 200sma most likely.

BACK TO THE 200sma and then drop, so we were long, but Miners wee NOT following Gold at this point. I kept saying that with GOLD having 2 right translated daily cycles, It should make a higher high, so it could briefly break above the 200sma, but I did think that Miners would be weaker, since they were in February.

Right up until last Friday,  Miners remained under the 50sma, many looked weak, and Gold still struggled at that 200sma.   Our analyses was very solid and playing out as expected.    Today is 2 days later, & Gold broke above the 200sma.  Have you missed a huge move in Miners? No, but Gold now broke out and GDX  did follow to a degree.  This means that you could ( as a trader)  take a short term time frame trade if you want to go long,  BUT BE CAUTIOUS.  WE ARE LATE IN THE 3rd DAILY CYCLE TIMING .

I will still discuss the value of Cycle timing & perspectives under these circumstances later in this report. For now, as mentioned in yesterdays report, Things are stretching out a bit higher in this daily cycle and  lets just say that things could be SHORT TERM bullish for GOLD & some Miners.  Even so,  when we look back later, we will see a dcl in the near future.  The hedge that I took will likely only be held for a day or two, I’ll know better as things play out.  I expect a DCL, but I am adjusting according to short term analysis.    Please read on and learn a bit more about how & why I am looking at the precious metals this way and thanks for being here, enjoy your Wednesday trading.

 

 

~ALEX

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Let me show you my perspective when asked,  “Are we missing a huge move here in Miners? Are we getting left behind?”  I understand how some Miners may give you that feeling, but if you have ever done a ‘buy & hold’ late in a 3rd daily cycle,  then you may remember how absolutely painful that can be.  Let’s review…

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Let me show you 2 stocks that I mentioned that have a bullish look right now,  with a short term and larger term perspective.

CDE – Yes, this has been moving higher, but in MARCH it broke to new lows, well below the Dec IC-lows.  So Current price is exactly putting CDE where we were at THE LOWS in December.  I would say that this could run to  the 200sma, sure someone could take this trade for a couple of days and hope to scalp some gains,  but let me show you something else.   LETS SAY THAT CDE RUNS TO THE 200sma and you buy & hold and fall in love with CDE…

 

CDE –  Dec lows did look like a nice back test of the trend line, but a run to the 200sma is a similar bounce to the run from Dec lows to the 200sma area. Then it did still fall to new lows. So CAN CDE still drop when we are due for a DCL/ICL after tagging the 200sma?  Yes, this is a giant basing process…

 

And this type of drop  is very possible as Miners drop into an  ICL.  This would be a final double bottom, and you are NOT missing a huge run in CDE, just like Decembers run was temporary.

 

AG –  Another bullish break out Tuesday.  One could buy that break out expecting a possible run to the 200sma.  Risky late in a 3rd daily cycle, but it could make it there in days.  Are we missing the final run out of the lows in AG?  Look at  February.   That was a Great run, but it did give it all up in a drop to the dcl.   AG fell from $11 to $7 after a strong run higher in February.

 

 

AG –  Now look at this huge base. Ever since AG sold off, it has NOT kept up with Silver or GOLD. At $9, you can see that it has danced around $8-$10 for months and this recent strength is not that great in this chart.  I did just show how AG  MIGHT run to the 200sma, so that being said…

 

Cant AG run to the 200sma ( Again)  and then drop into a dcl or ICL and give us a another good price in the future?  Yes it could. You are looking at a base carved out from cycle timing here.  Each run out of these lows probably looked like a great run possibly leading us back to new highs, but here we are still at the lows, right?  WHEN the Precious Metals markets start to run,  this can break the highs of $20, so at this point, we are not missing the most of this move.

 

NEXT – The answer to that question,  What about Syria, Russia, and N.Korea?  Can’t they cause GOLD to just break out & run higher and higher  and higher? Do cycles still work with geopolitical unrest?  GREAT QUESTION FOR ME TO ANSWER.

In my experience ,  they do,  even under very significant situations, still drop into a DCL / ICL.  Let me explain here.   Think about what the situation must have been like during 911 when the Twin Towers in N.Y. were attacked.   GOLD IS A SAFE HAVEN PLAY.  This attack was within the Financial district of the U.S.   Huge skyscraper Buildings crashed down, panic was everywhere, the Financial district was hit hard in the U.S.,  where stability is often viewed as necessary for a bit of normalcy in the markets.    Gold had returned to its Bull Market status by 2001 .  UNDER THOSE CIRCUMSTANCES,  2 terrorist planes crashed into Skyscrapers, bringing them down in the heart of N.Y.C., one hit the Pentagon, and another also crashed in a field.  Confusion and Concerns were global, so wouldn’t Gold just take off and run and run and run?  One would think so, but lets take a look at GOLD under those extreme conditions.

 

GOLD ‘TIMING’ –  This is a chart of GOLD during the 911 crisis.

1.  We see One HUGE blip of Buying and the move out of that dcl was pretty much exhausted.

2.  Gold went sideways for weeks, and then…

3.  Gold rolled over and Dropped into a normal DEEP DCL weeks after that attack.

4. Was the crisis over already?  No, but Gold had a 1 day POP & exhausted the move higher, now timing was due for a change in sentiment and a pullback.  A DCL & ICL.

 

GOLD –  And then when you look at a chart of GOLD  during 2001 & 2002,  could you even show me where the CRISIS was?   I erased the dates, and I think that You wouldn’t even know when that Crisis took place  if it wasn’t pointed out for you, right?  So will SYRIA or N. KOREA chatter cause a DCL or ICL to be avoided?  See the chart.

This was GOLD WEEKLY during 911. Despite the geopolitical terrorists actions,  the ICL still came in time.

 

Conclusion:   N.Korea or the events in Syria can add short term bullish reactions,  but we will still get an ICL in the coming months.  For now, expectations are still playing out as mentioned back in February, but adjustments should be made for the short term bullishness in some Miners.  GOLD broke above the 200sma and could run to the $1300 area, but he time is getting laste, we usually see a dcl by day 28-33ish.  Now GDX seemed to have a bit of added strength too, with GG, ABX, and a few other miners breaking higher.  I’m watching to see if GDXJ breaks that 50sma, and I will make adjustments to my current holding, until that DCL pull arrives.