A Fed Fake Or A Head Fake?

F.O.M.C. Volatility,  you just can’t trust the initial moves out of that 2 p.m. decision , but what is next?

SPX – The SPX dropped and recovered. This still has time to go higher before peaking and then dropping into a dcl, but it may not because I have us on day 21.  This is where the SPX started going sideways in July -August, as seen on the chart.

QQQ –  In yesterdays report I pointed out this possible ascending wedge, and would expect a break out.

QQQ – Fed volatility had it break down and recover.

USD – In yesterdays report, I was pointing out the BIGGER PICTURE for theUSD.  I wanted to atch for a recovery  ( or not) above 92.80, as mentioned here.

USD – Even with that big reversal higher,  my 92.80 has not been breached (yet). This is the area that makes things difficult with Precious Metals.  We are expecting a low soon, but the USD is threatening to break higher out of an ICL,  and that kind of a move higher would last for weeks.  This area just needs to be monitored in conjunction with the Precious Metals expectations for now.

WTIC & NATGAS – They pretty much remained the same

GOLD – This chart was from Sept 18.

The 50 sma is at $1285- so Gold can still drop down to that level

GOLD THIS MORNING hit 1291.50 so far, again,  that 50sma is at $1285ish, and a shake out could always occur too. This is the back test of a break out that everyone hates, but it should always be expected.

GLD –  I noticed a drop in the GLD in May that broke the 34 sma. You can see 4 more days of selling put the low in and a reversal / rally followed. A chart like this offers perspective and shows possibilities.  The July to Sept rally was a good one. This is a normal pull back/ back test, so far.

GDX –  Yesterdays chart showed that we were at 38%, but 50% is normal and the green trend line is there also.  The 50sma is down there too, so we should not be blindsided if GDX drops to the $23.20 area  ( 50 sma).  Yesterdays lows were $23.18.  61.8% would be $22.74  (That is the 200sma). We are looking at levels of possible support for a reversal in the future.

Look at this candle on GDX yesterday.  It was the crazy Fed Volatile candle ‘rise & drop’ mentioned as a possibility, and then GDX landed on the 50sma and a trend line.   Also…

Notice that Yesterdays candle in the ABOVE chart looks like the candle on Fed Day that I am pointing out here last May with a Red Line. That Fed Drop candle had a gap down the next day and the lows were in.  I’m not saying that is going to happen, but what I am pointing out is how bad that can look, and suddenly lows are in.

GDX – So we could get more downside for a ‘stop run’, or that could be a lst engulfing candle.  Those usually exhaust the selling, but since this sell off has not been relentless,  I have more of a ‘gut feel’ that it is not as likely to be an exhaustion in selling.It will probably follow wherever Gold goes from here.

So Did Miners get crushed , or are some still holding up?

 Honestly, I didn’t have time to run through all of the Miners on my list today.  My internet is loading slow due to my location, and I needed to gather the other charts in this report, but I did find this…

THM – This was a nice surprise yesterday ( I do not own this).

CDE – This could drop further, but it held on to the 200sma so far.  Yes, it may drop to the 50sma if selling in this sector persists, but this was Not bad for a Fed Volatile Induced Day in precious metals.

DRD – Yesterday I boasted that my DRD may not have to fill that gap.

DRD–  Maybe I spoke too soon? I will probably add to my current position when this finishes it’s correction and reverses.

IAG 2 charts – Landed right on the 34sma, so that is not abnormal.  Looking at past IAG moves, it could shake out the 34sma and recover or even drop to the 50sma and tag that too.  If I see that, I will probably buy it…

IAG – This has been a very strong Miner.  A back test of the 50sma and the break out would probably be a gift and enough to scare away bullishness.  $5.80ish.

When it comes to FED DAY VOLATILITY, we got that as expected, but I was thinking that we might see the lows in Precious Metals and start a run higher out of a dcl.  We did NOT get that yet, but I do think that we should be close, so we continue to wait for that reversal. If you look at that chart of past FOMC Meetings, often another day or so of selling was enough to finish the sell off, and then a dcl was in place.  I guess we need a little more patience in this sector and allow the correction to finish up.

Enjoy your Post Fed trading this Thursday!

~ALEX

Note: Yesterday at lunch time I saw this taking place and decided to front run the Fed and take a small starter position (  I took it in JNUG).  I was not going to be able to be in front of my screen for the FOMC Decision, and I figured I could just start a small position.  Sometimes that has worked for me in the past, and GDX &GDXJ extend upward and you end up catching a JNUG 20% move.

Maybe you can learn from me:  Don’t front run the Fed 🙂  Front-running the Fed didn’t work out so well, as GDX did tag that 50sma. GDX only closed down about 50 cents from where it was when I bought, but Further selling would take it to the 200sma.  : )  At least it was a small position and I based this decision on recent gains from other trades like IPI, TGB, HOS, ENPH, etc.  I figured that using a small portion of those gains wouldnt be so bad, and it really wasn’t bad.  It is all a part of trading.