WEEKEND REPORT – Subconscious

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Have you ever heard someone say, “In the back of my mind, I was thinking about…” ? Well, in this weekend report I’m going to discuss my analysis ( technical / Cycles / etc)  and the conclusions that are drawn from that, and also what has been subconsciously ‘ in the back of my mind ‘ in a few areas.

 

SPX – Friday I pointed out that we could bounce here, but I still expect a drop from my analysis.

We did get the bounce at multiple support areas after filling a gap & ‘buy the dip’ has been working.

 

These patterns do look similar, and some may think that it would lead to further rally upside…

But ‘ in the back of my mind ‘…

 

I expect a deeper dip for now due to cycle timing, eventually into an ICL. Friday stalled out and sold back down at the 10sma, so we’ll see what happens next week. The bounce may end there.

I would be expecting maybe something a little like this.

XLF –  The fact that the financials still haven’t recovered the 50sma is always ‘in the back of my mind’ too

But by now you definitely know that also ‘ in the back of my mind ‘ , I believe that these markets could have the potential to turn parabolic .

 

USD – The USD continues to down trend – putting in lower highs and lower lows. The daily cycle counts have extended to almost 40 days so was that really a day 29 dcl, or is it still ahead here at day 38 ( See the chart).  I expect an ICL in the USD soon. The inverse relationship between GOLD & THE USD has not been present lately, but a solid move higher soon could still drop Gold into the ICL move.

As mentioned, the relationship between GOLD & USD has disconnected from their normal inverse relationship. That adds a trickiness to the analysis too, because you used to be able to gauge one with the other. ‘In the back of my mind’, I feel that this constant drop in the USD should have pushed Gold a lot higher, and it makes me wonder about the bigger picture.  More on that later.

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My WTIC march 17th chart – I thought that Oil could drop as far as $42 – $44 area.  Most of my charts back then showed a $42-$44 target last spring, as shown here.

WTIC – Oil did hit $43.76.  Looking at the weekly chart, it really looks like OIL did a shake out & recovery here. That would be an ICL, but I had my doubts because many of the Energy & Oil stocks are still lingering at the lows.  On MAY 25th there is a meeting that will discuss the possibility of more Oil cuts & that meeting could affect Oil.

 

Look how much the OIL COT has improved as OIL dropped down seeking out an ICL!  One more drop is possible and it could get it to the red line. Open interest shot through the roof.

 

 

SO lets look at Energy / Oil stocks now.

XLE – There was a false break out in April, and we can see that the blue trend line has now been broken again. The 50sma has not been broken yet, but it is close.  ( I accidentally used the 30 on this chart, but the 50sma is also still holding price down).

XLE WEEKLY –  This upper trend line is drawn from the top of the spring break out now.

 

So you recall this comment Thursday about some ENERGY OIL stocks improving while others did not.  I said that RES, BTE, ERF actually look like BUY candidates, so do we have some leaders?

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Let’s look at RES, BTE, & ERF and see if they had further follow through on Friday.

 .

YES, follow through

YES

 Yes – so some areas may be shaping up quicker than others.  I am now going to watch this sector closely for more signs of improvement.

 

NATGAS WEEKLY – I did not re-enter my Long NATGAS position, and now I will not unless I see a drastic change.  Why not? As mentioned on this chart last week,  the break out on the daily chart was invalidated and…

 

NATGAS WEEKLY -This still could be a H&S, but more importantly …

Look at the NATGAS COT NOW.   SMART MONEY REALLY ADDED TO THEIR SHORT POSITIONS.

Commercials ( Smart money) Are short below the center line.  Take a look at Dec 27  2016  they were highly short ( See the chart above to see what happened to price after Dec 27, 2016 ).  In early March 2017  they were pretty ‘Long’ above the center line. See the above chart to see what happened in March when they were long.   The final brown bar on this chart is Last week and they went VERY SHORT .  I have to heed this warning for now.

 

 

PRECIOUS METALS

 

Honestly, I have many things going on in the back of my mind with the Precious Metals.  I have even silently debated for Months in my mind whether or not this last intermediate cycle confirmed that the 2016 launch brought Gold back into a Bull Market or was that just a temporary run? That said,  I have mentioned before that even in a bear market rally, a move out of an ICL has 2 very strong daily cycles that we can make great money on, so I am looking forward to the next ICL & the gains to be made there. Other things weigh on my mind about the BULL MARKET of 2000 – 2012, the bear market that was 2012-2016, and now did the Bull return?  I expect the next intermediate cycle will answer that, and I am already prepared to discuss that debate in future reports if the need comes up.  I am open minded and unbiased, and I have already collected a special folder of charts along the way as that debate is in the back of my mind. For now…

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GOLD, SILVER, and MINERS

From Thursday, Gold & SILVER were on day 7 and reversed lower.  I did not go short and mentioned that we can still bounce and even peak on day 10, 11, 12 or around there and still put in a left translated daily.  I drew a possible bounce similar to Aprils bounce for Silver, and I might short after watching things play out.

And Silver did reverse on Friday as I expected.  I wanted to see what happens Sunday night & Monday before I go short. I’ll discuss my plan to possibly short when discussing the Miners.

GOLD – GOLD is now at resistance, but it can still slide higher along that magenta line. A move higher by the USD could drop Gold  ( Though the inverse relationship is not exactly in tact, it could reemerge).

 

I am still being asked, ” That sell off April to May, could that be an ICL drop?”    Never say never, but MINERS remain weaker than Gold and do not seem to confirm that thinking.  If that was an ICL in Gold,  then Gold would be really strong and Miners would be a whole lot weaker.  I personally think that Silver & the Miners took the lead- a warning for Gold lovers.  PLUS it is unlikely to get an ICL without a failed daily cycle in Gold and that could happen on the next drop. So let’s look at Gold on a weekly…

 

 

This weekly chart does not stand out as an ICL like almost all of the other ICLs shown. Only the MAY 2016 ICL was slightly similar, but it  had 4 weeks of red candles, we just saw 2 weeks.  Gold is now at resistance on the weekly chart too.  The big volume last week does look bullish, but we’ll see if there is follow through.

GOLDs BASIC CHART

GOLDS COT  is getting bullish again, but not at Dec ICL levels yet.

SILVER – Amazing bounce right to the 38% fib number. It ‘could’ tag the 50% & 50sma at $17.35ish, but I wasn’t  expecting it to get there.

 

SILVER –  Honestly,  I have said it out loud and in the back of my mind – this long relentless sell off did look more like a drop into an ICL for Silver. Gold held up very well while Silver crashed down.

SILVER WEEKLY –  It also looks like a shake out / recovery on a weekly chart. A spike in volume makes this interesting too.  Silver looks rather bullish and silver did sell off like an ICL, so this is a tad  Confusing.  Occasionally I get mixed analyses as things play out and it leaves me patient and watching for follow through one way or the other.   Silver looks like it crashed to a low, Gold does not.

 

GDX –  Read the chart. Miners had 2 steep sell offs, one in Feb and one in April.  I played the DCL bounce and am Out of Miners long or short.  I need time to watch things unfold, but I have to expect that unless GDX bursts through the 200sma,  this is resistance and will  roll over into another sell off  like the last few tags( ICL, possibly around the next Fed Meeting).

 

GDX –  I drew in a sell off using the same length arrow as the  Feb drop and it takes us to Dec lows.  Miners are now already slightly overbought here. If Gold is up Sunday and Monday,  GDX may tag the 200sma & I may try to short that.  Note: A strong break out above that 200sma is unexpected, but we have to say that if it happened, it would be a change in observation. That is where ‘shorts’ have stops.  A small break like in February is normal.

 

GDXJ –  Same story here with the 50sma. The top could be in, or a bounce & tag and drop.

So that is the rgulr weekend review with a few extra observations and some of the things that are in the back of my mind. I will sign off here, and will be eager to see the precious metals Sunday night through Monday.  There is room to the upside, as shown, but if the ICL is ahead, it is very limited and I may go short this week. I will add a few other charts that I found interesting at the end of this report. Have a great weekend!

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~ALEX

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AND NOW FOR MORE CONFUSION?

 

PALLADIUM – This looks like a rising wedge that is breaking down. So we expect Gold to sell off, and Palladium looks like it started to also.  That’s good.

PLATINUM really caught my eye for several reasons while researching it.

 

PLATINUM CHART #1 –  Somewhat related to GOLD & SILVER.   Does it want to drop or break out here? A final drop would match what I expect for Gold.

PLATINUM CHART #2 –  I could see PLATINUM drop into an ILC with a 1-2-3-4-5 wave move. This matches a final sell off in Gold, However…

 

PLATINUM WEEKLY – The big picture weekly of Platinum looks to be at the support line lows already. I do see a possible false break down below the Magenta line, so maybe that drop to ‘5’ in that 1-2-3-4-5 above is still part of a false break down on a weekly basis below?

PLATINUM COT LOOKS QUITE BULLISH – Smart money is barley shorting Platinum at this point, open interest has run higher. If I am seeing this correctly, Smart money is now less short Platinum than it has been for many years. Think about that,  that could be very important.   The relationship between Platinum & Gold is an interesting story in recent years.  I remember ( And most woman that buy jewelry would too) that Platinum used to be MUCH more expensive than Gold.  Platinum is now $940 and the Smart money has withdrawn there shorts.  Hmm?  Imagine if it plays catch up?

 

116 replies
  1. Hawaiifive0
    Hawaiifive0 says:

    Great report again! Let us know when you go short. I tired JDST on Friday, but got ascairt and sold at break even. Since I’ve been a subscriber, I’ve really appreciated your concern for protecting our capital, while giving us the go when you see the green light. As you know there are some, who have little regard for protecting the subs capital.

      • sandiegojack
        sandiegojack says:

        Yeah, would like it when he yelled at subs too, saying it was their fault for not getting out…

    • Cason
      Cason says:

      Yeah, when I’m unsure like that, I just take a really small position and plan to add. Like we feel extremely confident that 3 weeks from miners will be lower than right now. BUT, it could be higher Monday and Tues, etc. If we get strength then you can add to it. Mine was small enough that even if down 15-20% could still ride it, for example. Anyway, just sharing.

        • Cason
          Cason says:

          It’s all good. I started position Wed so had the Thurs drop as cushion. CF will posts if/when he sees it this week so we all have plenty of time on this trade. GL.

    • chartfreak1
      chartfreak1 says:

      Thanks H50 – having $$ for the ICL is important. I’ve chipped away at a little of mine with a few stopped out positions, and the gains I’ve made in other areas seem to keep me about break even as a result. It has been a bit tricky trading recently

  2. dsaulw
    dsaulw says:

    Regarding the prospect for going short, would you wait until the stocks put in a bottom, given how gold has largely traded inversely with the stock market lately?

  3. david
    david says:

    Great report. A couple of things, US dollar is at a low in sentiment 5% bull not seen for years. It is in its icl and due for a bounce, that will push gold and miners into their icl next month. On natural gas …. cot is very telling , I think NG is going to drop hard into its icl… might be the trade of the year ( even better than metals ICL) be patient on NG and buy it in July ,August …… just my thoughts but Alex you are bang on with your analysis… think risk management is only way to grow your trading account…. go all in on ICL’s..

  4. Cason
    Cason says:

    Those PM questions aren’t in the back of my mind. They are at the forefront. And I had the exact same thoughts/questions. Imo, this next ICL makes/breaks the PM bull/bear discussion. We get another crap ICL and don’t get higher high, etc then I’ll have to trade it like a bear until evidence to the contrary, etc. Or we take off upside… 🙂

    • chartfreak1
      chartfreak1 says:

      I’ve thought about it since last Dec ICL…I charted many many things that I wanted to look for in that ICL, and GOLD passed the test, Silver did until recently, and Miners failed in February, so the Next ICL will probably be PASS or FAIL.

      • Cason
        Cason says:

        Well, you, Sir, have my attention!!

        Yes, most of the negative bias was really from GDX/J. Actual performed pretty well until top of 3rd daily cycle. But if your trade is miners, that fact can be easy to forgot sometimes! :o}

  5. Edward Bernhart
    Edward Bernhart says:

    Great report, Alex. The addition of all the COT data certainly helps formalize a strategy especially in NGAS. I have been looking at those COT charts for a long time trying to see a pattern in the tea leaves but only now has it appeared.

    • chartfreak1
      chartfreak1 says:

      Yeah, I look at COT, but post them less often, because people try to ‘time’ a trade off of them.

      I remember seeing Smart money shorts grow for weeks and weeks as Miners climbed in 2016 out of the lows, but that happens out of deep ICL’s. I had people emailing me & commenting that it was going to crash, but historically that happened in the past too.

      I believe that some smart money are the actual Miners hedging their positions to lock in price on the way higher.

      • Maria
        Maria says:

        … i did hear that as well … recently — can’t remember where… possibly TigerTV

      • Edward Bernhart
        Edward Bernhart says:

        Your association of “smart money” with commercial COT positions in the above article was a revelation to me since I had associated he term “smart money” with hedge funds or banks, and probaly represented as large investors in the COT. I did always believe, like you, that the commercials in the Gold COT were always miners hedging their commodity price. The inference always is that you want to be on the side of “smart money” you just don’t have it labeled as such. You just know where dumb money is and that is the small investor. 😉

        • chartfreak1
          chartfreak1 says:

          Yes, I hate to trade against the smart money. They are bigger positions so they can wait patiently and continue to add, but eventually when you are on the opposite side of smart money, their position plays out.

          I have seen one case where it didnt, if memory serves me correctly it was in 2010? And in 2016 the shorts were gaining, but price kept running.

  6. Maria
    Maria says:

    Great report CF.. thanks a bunch… 😉
    … I’ve been thinking some things in the back of my mind as well …………..
    #MEOW

    • chartfreak1
      chartfreak1 says:

      Thanks Maria

      I know you’re going to tell me about our old runner CMCM later when you see it,
      so I’ll beat you too it. Up fairly big in premarket. 🙂

    • Cason
      Cason says:

      Yeah, I can’t believe gold hasn’t rallied more over the last couple of weeks. I mean the USD got absolutely destroyed, that was a huge move for FOREX. Anyway, yes, understand the recent decoupling of USD/Gold but doesn’t mean I’m not puzzled by the “why”? 😛

        • chartfreak1
          chartfreak1 says:

          Did anyone see 60 minutes last night? It featured he Government corruption / Bribes, etc in their business practices.

          One could likely find it and watch it if one wanted too.

          • chartfreak1
            chartfreak1 says:

            I wasn’t saying that. Often a news event comes out at a short term ‘bottom’. They are always late to the party. That news program can flush out the last of the sellers

            Like when TIME MAGAZINEs front cover says to BUY GOLD AT $1900- it’s going to $3000, you better sell.

          • chartfreak1
            chartfreak1 says:

            I’m actually not taking the trade, I just saw that capitulation slam and found it interesting.
            I’m kind of looking at set ups in commodities again though.

            TGB, HBM, WRN, CLF I like the bottoming action.

          • SonOfGud
            SonOfGud says:

            hey soz CF!.. i was confusing you with Cason there.. only noticed it was you who replied when Cas replied much later.
            thats why i was asking you bout the 25 entry (Cas mentioned that on Friday)

        • Cason
          Cason says:

          Yeah, it is. The reaction back up Fri was kinda obvious. But I’m not gonna pretend that I’m a a
          Brazil expert all the sudden and know where this is going intermediate or long term?! :O

          • SonOfGud
            SonOfGud says:

            just trading for a mean reversion at the mo.
            I know nothing about Brazil, except there seems an awful lot of shooting & mutilation, up on LiveLeak

  8. Ralph Wiederzane
    Ralph Wiederzane says:

    So now we question whether the PM bull coming out of the 2016 lows was actually “the” bull returning? Interesting. It could play out a lot like bitcoin has, a spike peak years ago like gold did in 2011, then get clobbered and lose for a couple years, then mostly sideways to gently higher for a couple more years, then 5 years after the last spike or so, it really takes off? If so, that would mean in gold we are currently already done with the smashing, and well into the sideways to slightly higher movement, with the next spike taking gold to double the old highs still in front of us. Or, maybe it doesn’t do that at all. Haha!

    I haven’t done much buying yet, and the above is only for those interested in possible long term outcomes, the short term could easily see a pullback or relative “smashing” of a few percentage points. I will welcome the pullback and buy if it happens, not quite as sure how I will play it if we go up from here. Either way, for long term I like that we had a screaming rally out of 2016 lows and now people even question if it was a bull, I like the odds of being long so just have to determine when to buy.

      • chartfreak1
        chartfreak1 says:

        In addition to that, I have dome extensive research, that is what I do when I wonder….

        My research proves that even a screaming rally out of the 2016 lows can fail, and I can prove that historically. I know there are some other letter writers that say ” We made higher highs, so the bull is back”.

        Yes, thats a good start, and I look for that too, but is it an absolute, as some claim? I can prove that wrong 🙂

    • Cason
      Cason says:

      It has been a long time since I have heard someone utter the phrase “I like CLF”. The chart really does look constructive. But with the unwinding of the Trump Trade, I wonder if the long-term infrastructure development plans that helped fundamentally fuel steel and iron last fall are still valid. I probably just need to pay more attention to the chart!

      Nancy, did you see what CF said?!!

      • nancytheartist
        nancytheartist says:

        LOL…Go ahead Cason, embarrass me! I have been doggedly hanging on to my glowing red shares! Hope CF is on to something and it finally moves up!

        • Cason
          Cason says:

          Hey, I’m in that doghouse with you. Not trying to embarrass, wanted you to get excited if it has potential!!

          • nancytheartist
            nancytheartist says:

            I don’t embarrass easily….but maybe I should! Could learn some lessons about not falling in love with a stock! LOL

  13. Ken
    Ken says:

    I am not stating this to start an argument but:
    With my work on Gold Weekly this weekend, imo, one needs to atleast consider the May 8 low as an ICL……it is within the timing band and price is above two TL’s and above above the 104 Weekly MA until those are broken I am positioned as such.
    You can also see that both Silver and GDX May 8 lows could easily be ICL’s.
    No crystal ball on my desk ( I gave it to Maria ) for sure but…..

      • Geurt.
        Geurt. says:

        Do you own this stock Alex.
        Sold this morning UGAZ @ 21.33 bought it @ 18.85
        Thanks for your great help !!!!!

        • chartfreak1
          chartfreak1 says:

          I have owned this stock since November average around 3 cents. I have said in prior reports that I am just holding it long term. They reported earnings last week, and each quarter they are seeing record sales in their products, but I always recommend longer term traders to do their own due diligence ( research).

          • Ken
            Ken says:

            If the Vet says this product will help for whatever health issue the pet may have the Owner of said pet WILL buy it so…….. if EDXC can convince the Vets this stock should fly. imho 😉
            Disclaimer: I own it.

          • nancytheartist
            nancytheartist says:

            My son has 2 beautiful aging yellow labs. I noticed when visiting, they have trouble getting up and down and sometimes even grunt….if he could ease their discomfort, I think he would. And there are SO MANY dog owners like that!

          • chartfreak1
            chartfreak1 says:

            I’m not sure if you’ve done research on it, but it seems to be quite a legit product for Hip displacement pain relief, anti-anxiety, etc . Pet owners usually do what it takes to help mans best friend enjoy their days.

            I personally like the taste – lol

  17. Brian
    Brian says:

    Cloudiness in all markets. I know the Dollar is coming to the end of its move probably and should put in its ICL which makes me want to just not touch my JDST position right here as my original plan is to ride out JDST to GDXs ICL and not get cute. But with S&P touching the underneath of the breakdown I want to get back into my UVXY position for a ride to $18.. But if UVXY does that, will GDX hit the upper triangle its forming and drop JDST to its lower support in the low $60s or high $50s ( 10-20 % lower than my $68 entry ) ? or does GOLD just react to an S&P move down and miners have been weaker so the move down isn’t as extreme in JDST ? Or does none of that happen ? lol.

  18. BayTrader
    BayTrader says:

    CF – what you think about XGTI. Just took a starter, liking this chart post earnings…

    • Bill
      Bill says:

      I tried to play it last week and got burnt. I was using energy sector stocks, they didn’t react positively.

      • Ken
        Ken says:

        Hey SOG,
        Yea believe me when I tell you I did not think the March lows would be taken out, I got stopped out, THEN to make matters worse I Missed the May ICL….just no excuse….I knew it was due. Grrrr !!
        To your point: If USO touches the Red MA “highway” soon the May ICL would negated correct ? If so then THE ICL is still ahead ? iyo 😉

        • SonOfGud
          SonOfGud says:

          not necessary for previous ‘ICL low’ to be taken out,… if the red chn is rising enough, like it did back in 2010… that red touchdown then was the wave 2 pullback (?)

          • Ken
            Ken says:

            Ahh I see what you are saying. Thanks SOG.
            Interesting….certainly on my daily watch list. Let me know if you pul any triggers. 🙂

          • SonOfGud
            SonOfGud says:

            will do… i at least expect a reaction back down when it touches the (purple) 34 week ema

    • Cason
      Cason says:

      Ken, you may have seen some of my comments last week. But I am now with CF in that ICL for oil lies ahead. Actual crude has been HOT!! I wish I had taken that trade. I went into energy stocks and it has been absolute crap. ICL or not, USO/UCO etc would have been a great trade out if that low. Find the next pullback and then we get another chance!

    • Ken
      Ken says:

      My old friend who stabbed me in the back by negating my count a few months ago…..I shall not forget. 😉

      • chartfreak1
        chartfreak1 says:

        You are an avid drinker of the Jo- Maybe you can take revenge and make this ( possible) Double bottom pay for your next few yrs of Java.

        The reason I caught this is that ticker ‘JVA’ is on my list and earnings came out last Friday. It gapped down good today and then did a bullish engulfing. I thought – they hated earnings, but maybe the JO is ready?

        Looked at JO & see a double bottom.

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