April-1-2017 Weekend Report

Uh Oh! – What does “Don’t Shoot The Messenger” have to do with our weekend report? Read on and you’ll see that what I am seeing lately is not what many were hoping for in the Miners. We will discuss the implications in the Precious Metals section of this report. This is a rather huge weekend report, enjoy!

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SPX – I was pointing out a rising bearish wedge a while ago and I said that it would have to break out to negate it as it approached the apex, or it would have bearish consequences. Well it did break higher and even back tested on the recent sell off…

 

So a long position on that weekly back test was equivalent to buying the recent daily cycle low. So far, so good, but I have mentioned the importance of using stops because I am concerned with the Financials ( XLF, JPM, GS, BAC, etc etc ).  So now I’m watching the SPX this way. I was expecting a drop to an ICL at the 30 weekly MA. We could still get that even if we break to new highs – look at my orange box & arrows. That BOX dropped into an ICL after a short break to new highs, thus trailing stops are helpful.

XLF – This is still not a recovery story to me  (yet?).

USD DAILY – We had a dcl and a strong move higher for 3 days. It paused at the 50sma, so if it drops to the 10sma to build strength for that break higher (let’s say Monday) ,  GOLD might bounce again to its 200sma.

 DON’T SHOOT THE MESSENGER – When I just glance at this chart, I think to myself…

“Did the USD just make a much higher ICL and a normal ‘back test’ of the break out?” It didn’t break that trend line like an ICL usually does, but we haven’t broken that trend line in almost a year!   We are due for an ICL, and there may have been another higher one in November too. This looks bullish. I will discuss this chart again with Gold.

WTIC – I’ve been expecting a run up to this area and then 1 more drop. Some Energy stocks actually look very bullish and that does make me wonder if this double bottom was the final drop. I am long an energy play and will raise stops and play it out.

 

2 very separate thoughts here .

1. Oil didn’t even pull back 38% from the 2016 lows to the recent lows, and that is O.K., but if we get another dip I’ll be watching that area  ( $43-$44) or the 50% area ( $40) for an ICL.

2. When I look at several ENERGY stocks, they look so bullishly set up, that I have to consider that THE LOWS  could be in place.  We are doing what we should do under these circumstances – we have taken some energy trades with caution and we will continue to watch how things play out.  If THE LOWS are in, we ride it out. If it drops, we have profit and look for other entries at the next low. Read the chart.

Let’s also examine the XLE with 3 charts

XLE – The XLE has been contained in a downtrend, so this could give us our next clue. Will it Break out or remain contained?      Stay tuned, this week may give us that answer.

XLE –  This would be a bullish expectation, and it will be a good sign that some of the Energy trades pointed out here recently could continue to perform well. I’m discussing Energy trades at the end of the report.

XLE – This is the ‘still contained’  scenario.  So this is what I am watching for going forward.

 

 I mentioned that some of the ENERGY STOCKS that I looked at were very bullish looking. I thought to myself,  ” Wow, these are really bullish and these could be great short term trades or even long term buy & hold candidates”  (CHRIS, are you listening?)   🙂  So I will add one here and a few more at the end of the report.

 

LPI – We traded this in early 2016 and after a strong run from roughly $4 to $13 and eventually almost $17, we have a HUGE BASE FORMATION.  Typo on the chart where I wrote  ‘PI’ should be  ‘LPI’. This could be a nice 100% gainer over time.   More on these energy set ups at the end of the report.

NATGAS – I thought that these runs higher out of an ICL looked similar. On the left hand side, it looks like it Popped & Dropped at this point. Maybe we are due for a drop into a dcl soon, and then a STRONG run higher.  Look at the example of that 2nd run higher on the left of the chart from the GREEN ARROW.  If NATGAS back tests that 50 & 200sma now, THAT might be the next buying opportunity for NATGAS , if you missed this one.

NATGAS WEEKLY –

So we may be nearing the time for NATGAS to drift down into a dcl and then I noticed this weekly chart AFTER HRS on Friday. I sold 1/2 of my UGAZ  Friday after hours and might just exit the rest on Monday due to this weekly resistance & ‘timing’.  I do not expect a big drop in NATGAS, but UGAZ can be a ‘ Take it while you can get it’ trade’.

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GOLD, SILVER, & MINERS

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To begin,  I did a little extra research with Gold & what I found very much surprised me. It was semi bearish, but what I want to emphasis and will discuss is that in this Gold market,  is that we have seen Gold go from Bull Market runs, to Bear market, then back to a Bull Run in 2016, and now?  Well, that is what I will discuss.  The point is, if I see a bear market type pattern now, it CAN change back to Bull market after it exhausts into an ICL, but it needs to be addressed.  THAT is my job here.

 

Let me start by re-posting this Bullish chart of the USD.  If the  USD is looking bullish, obviously Gold must be looking bearish?

 

Notice that the USD was making lower ICL’s and breaking down in 2015 & 2016, and GOLD bottomed in Dec 2015 and had a strong bull run in 2016. Now the USD may have had a higher ICL in November and another one right now. Also that’s a normal ‘back test’ of the break out ( Red line). We didn’t break the Blue trendline like I expect to in a drop to an ICL, but we are overdue, so that could be it. The USD now looks bullish.

GOLD WEEKLY –  I have mentioned in the past that it is rewarding to buy an ICL in Gold, because  ‘EVEN IN A BEAR MARKET RALLY, THEY MAKE SOLID GAINS BEFORE FAILING”.  In the chart below we see that in 2013, 2014, & 2015, bear market rallies had 2 strong daily cycles and then they fail. In 2016, THAT was a strong Bull market Rally out of an ICL.

Notice that each bear market rally out of an ICL failed around the 50weekly ma. The 2016 BULL RUN pattern blew right through it. This last rally has the footprint of a bear market rally after 2 daily cycles and we are 15 days into the 3rd daily cycle, still stuck under that 50wma.    🙁     Don’t shoot the messenger.   What can I conclude if this doesn’t break out higher this week?

GOLD may be in a giant Basing Pattern.  Bullish in the long run, bearish in the next daily cycle or two for sure.  In my head I’m thinking that interest rate hikes are bad for the USD, good for Gold, and that Gold entered a new Bull Market in 2016, etc , but this set up is heading lower in my eyes.

 Even this LEAST LIKELY SCENARIO, one more pop, would lead to a solid drop this late in the 3rd daily cycle.

  Let’s continue…

 

SILVER WEEKLY  –  I have been saying that Silver continues to look bullish, and it honestly does. A break out here would be very convincing, but the drop into the coming DCL would be a back test of the break out.  My thinking is that Silver does not break out at this point though.  Let me show you something…

SILVER looks Bullish Right Now, RIGHT?

 

Look how rapidly that bullish posture can change with Silver.

In 1 day you can get slammed in Silver ( And leverage multiplies the damage).

 

LET’S LOOK AT MINERS

 

GDXJ –   I posted this chart Friday in the comments section.  Miners started to rally and that is when more people started to feel bullish & email me to change my thinking. “Is todays action changing your mind? Can I go long JNUG safely, I want to buy it now before the break out?” was the idea.   Many thought that this is a bull flag and bullish consolidation.  I want to add that it does look very bullish, and under other circumstances it could be, but with Gold on day 14 of a 3rd daily cycle, “Timing” becomes more important to me. Even a break out above the 50sma next week would roll over as a fake break out.

GDXJ   SO GDXJ tagged that 13sma on Friday and sold off into the end of the day.   Some still may say,  “They just can’t get the selling going, everyone wants to own the Miners!”  Lets examine that thought…

GDXJ – Last February GDXJ struggled at the 13 sma too …

Now I want you to look at February and see how similar that looks to right now. Twins! I was bullish at that point, because it was only a 2nd daily cycle and should have popped.  That Flash Crash Monday was only a month ago, but many have forgotten the suddenness of that swift slam already. Now we are in a 3rd daily cycle, so buyer beware.

How soon we forget that Feb drop that had us all hating what the miners can do to the downside.

 

IS THERE ANY GOOD NEWS?

 

YES!  I still see this as a giant Base in Gold, Silver, and the MINERS. There will be upside and downside, so we need to be prepared for what I feel will be the next drop into an ICL.  At that point,  we will LOAD UP LONG AND STRONG and make some great gains upside again too. The next run could be the end to this giant inverse H&S base     It could it be the ‘3’ of a giant  1-2-3-4-5?

SO the General Markets have put in a low, and so far it was higher than I was originally expecting. I have explained that if they are going to do a blow off top, it gets parabolic and the pull backs become more and more shallow. That said, I still do not like the XLF yet, and this could indicate that a deeper pull back into an ICL is still ahead.  It’s OK to be long, but be ready to take profit or raise stops. Trailing stops may help.  The USD put in a dcl, was it an ICL?  It looks short term bullish, matching Golds timing for a drop.    OIL is having a nice move higher, but I was expecting one more drop into the final lows there too. Several energy stocks actually look like they have put in some Longer term lows  ( I will show a few more at the end of this report), so this MAY be THE LOWS for some energy plays. XLE has been charted here with both a bullish ‘break out’ or more neutral ‘contained scenario’ to guide you.    NATGAS continues to act exactly as expected. I took a good size position in UGAZ at the ICL and added once too, so I sold 1/2 on Friday. See the NATGAS section for my thoughts going forward.  It seems that the best may be yet to come there in the next run higher.   GOLD , SILVER, & MINERS. Huge Bases and inside of a base you get strong moves higher and the drops are to be expected too.  We had a nice run from Dec to MArch in Gold,  now I am expecting the drop soon.   Many of our trade set ups are working out again, and we will continue to stalk the markets for good set ups , as long as the market sectors remain bullishly set up.  Enjoy the rest of your weekend and thanks for being a Chartfreak with me!

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~ALEX

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TRADES – Let’s start with the energy Stocks that I said look very bullish. They are weekly charts and show that after the very strong run higher that we enjoyed last year, consolidation has lead us to some nice weekly set ups.

 

OAS –  We made some very nice trades in OAS last spring, and now this huge base looks ready to roll. If OIL does sell off again, I do not think many of these set ups will have to break the lows, that’s how good this looks longer term.

LPI WEEKLY – This could double or triple over time , once it gets going.

WPX – Another energy stock that we traded well last spring. This went roughly from $2 to $13 & eventually $16. Even with all of the selling in Energy recently, OAS is only at $13.  It is a stronger stock.

SWN WEEKLY – So this one could drop if this wedge is not finished setting up. I wanted to point out the upside if it does just continue higher though. We just bought this in the $7’s and it could easily run to 2016 highs ( 100%).

SWN WKLY BIG PICTURE – For those longer term BUY & HOLD investors, this could be considered a ‘higher low’ and a bullish entry when it finally gets back above the 10 weekly MA.

 

CGIX –  This had a crazy day.  It dropped to $3.50 and then reversed at the 13 sma and closed up 8%.  That was a 50 cents swing on a $3 stock. Wow. In Fridays report I mentioned that I restarted a position near $3.90 and I added on Fridays dip, but I was a bit nervous too .

OVAS – This may be worth repeating too. I liked the base when Baytrader pointed out this stock.

NICE POP & to me it is also a confirming sign of strength.

OVAS –  Thinking that it could be a bull flag, I posted this follow up chart, and it could drop to a moving average.

OVAS – This was the close on Friday,  so I still own it and added a bit more.  These BIOTECH stocks get risky, so I don’t want to get Tooo heavy, but I do try to add on a dip and sell some on a pop.