4-3-2017 Keep It Simple

I need to keep this report  SIMPLE. Best wishes to me on that one…

ALL EYES ON GOLD & THE USD THIS MORNING- 

The 200sma is at $1262 and that has acted as resistance in the past few days (so far)

We need to look at the possibilities going forward, in harmony with the weekend reports expectations that GOLD & MINERS are in a 3rd daily cycle and time is getting late.  Cycle Timing is getting late, but can GOLD & Miners still go higher? In the weekend report I did say that they could, but it seemed less likely. Monday had the Miners looking a bit more bullish, so we need to discuss this area again.  I need to try to KEEP THIS SIMPLE, so I will try to do that by explaining each chart in basic terms.

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# 1 USD – If the USD pulls back at the 50sma, that would cause GOLD to run back up to the 200sma, and Miners could also react higher. This is still a short term move with ‘time’ limits. ( EDIT: The USD broke above the 50sma in pre-market).  Gold continued toward the 200sma.

#2 GOLD – I drew this last Friday –  The 200sma is at about $1262. A pop like this should still be short lived, but Gold did have  2 R.T. daily cycles and they can break to a 3rd daily cycle new high before rolling over. That is normal, but usually will not happen this late in a 3rd daily cycle. Gold MIGHT briefly break above the 200sma.

#3  GOLD – On day 16 I do NOT expect Gold to go a lot higher, but again it was R.T., so we could see a pop to new highs. Thankfully volume is weak at this point, and hopefully it stays that way. Please read the chart.

#4 GDX –  $23.45 is the 50sma. I drew this Monday morning and a pop to the 50 or 200sma has always been possible, but since the Miners were L.T. in the 2nd daily cycle, it seemed unlikely.  Now I have to wonder …

1. If the USD drops as shown above, would Miners pop like this?

2. As GOLD POPs to the 200sma, would Miners pop like this?

3. Will Miners exaggerate that move by Gold and jump to the 200sma?  It has always been possible, so it had to be addressed.  ( EDIT:  PREMARKET GDX IS AT THE 50 SMA) Read on…

SIDENOTE:    I have purchased  JDST when GDX / GDXJ tagged the 50sma and that causes a cautionary  ‘situation’ at this point. I have ALWAYS said here that I hate to recommend 3x ETFs to   traders, because in my opinion when you trade 3X-  you need to think 3 times as fast.  USE A STOP OR LOCK IN GAINS is one answer.   I have mentioned out loud that I am in JDST, so I know others follow me.   I am still in JDST, but I bought in the $13’s and now I may have to sell if Miners rally here. What are my thoughts here?

I do not HAVE to sell, because I still think that JDST will be in the $20’s sometime in April. If it drops to $12 and then goes to $20, the pain is brief, BUT MOST CANNOT STOMACH THAT, and I am a trader playing safety first anyway, so …

A. I might sell if I see a rally unfold in Miners, to try to buy JDST back even lower ( near $12?). 

B. Or I BUY JNUG & HEDGE UNTIL THE RALLY IS OVER.  I hate doing this, but timing should make this brief.

One really should always protect a trade that doesn’t unfold as expected.  It happens, so you run defense at that point.  Those familiar with US Football can look at it as though  “Someone intercepted the ball, now it is time to keep them from scoring against me”.  You run defense ( Hedge or sell )  until we get the ball back.      So  I may sell or I may just  buy JNUG to hedge a short rally in miners,  etc.   I may need to protect this set up, but it doesn’t mean that the final results have changed. I still expect that a 3rd daily cycle will roll over soon, we may just have unfinished upside business.

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#5  GDX –  So if GDX breaks the 50sma & tags the 200sma, it could look like this.  I did mention the 200sma is ‘possible’  in most of the reports last week, but less likely timing wise.  The JDST that I own would be dropped fairly quickly, right?  NOTICE THAT The hard part is that GDX broke above the 50sma each time, and then closed below it.  We may see that or it could run to that 200sma. The volume is weak, the MACD is bullish.  That gives MIXED SIGNALS and Gold may hold the key.

#6 – This was in the weekend report.  If Gold POPS and DROPS today,  Miners still may not break this red box above the 50sma.

#7 GDXJ at 11 a.m.  –   At 11 Monday Morning I captured this chart trying to break out of this downtrend. I was pointing out our 2 targets at the 50 & 200 sma.

# 8 GDXJ at the close – It did NOT break from the triangle shown in the chart above, but if it does, the bigger pic resistance is where the purple downtrend line and the 200sma intersects. That is $39.07 and for those holding JDST, if that happens, that will hurt. Protection is key for active traders if this breaks out higher.

The above situation is why we start with ‘Starter positions’  and then we build on them. I can protect that JDST position for a few days with a JNUG purchase or just sell JDST and re-enter.  I hate this situation- it’s certainly not the ideal outcome.  When Gold pops,  Miners often exaggerate that move, so Miners could run a bit higher.  This needs to be monitored short term.  The Long run outcome still remains the same.

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IS THIS A ‘TELL’?  HMY looks exactly like the GDX chart to me, only it broke out with conviction Monday. Is this 1 day ahead of what GDX will do?

ASM also looks like it wants to break out, with volume swelling as it presses on a down trend line.  So if we see individual Miners trying to break out,  it could be a ‘tell’ that GDX or GDXJ may follow to the 200sma.  It is a warning sign or a cautionary note for holders of Shorts of any kind.

That is where things stand at this point in the Precious Metals sector.  Mondays move by Miners seems to have shifted the possible tag of the 200sma to a bit more likely.  I have mentioned protection in this situation, but I would still expect a drop into a 3rd daily cycle and possibly even an 4th down to an ICL in May.  Those simply waiting for the ICL are probably pretty happy right now, avoiding these choppy and volatile days.  For active traders, we always need to protect our positions.  It is a part of trading.

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~ALEX

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EXTRAS THOUGHTS

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EDXC – Slow boring consolidations eventually broke out higher. EDXC is in a consolidation.

EDXC WEEKLY – Looks very good on a weekly chart. Twice it tagged the 50 wma, then consolidated, then ran higher.

LGCY –  $2.29 WEEKLY CHART. Oversold and does look good.

LGCY WEEKLY BIGGER PIC –  $2.29 and I like this set up.

LGCY UPDATE – Monday it ran a tad hogher and I’m watching to see if it has follow through or will remain range bound.