Sept 10 – Is It A Melt Up?

SPX–  I will repeat,  I never called the recent dip an ICL. It lacks the characteristics of one, but what I did say is that we have been overdue for one for a while. So we have a dcl, and similar to the last couple of dcls, the move higher has been a bit choppy, but we have higher lows and higher highs, so an uptrend continues.

SPX – In August I reminded readers that we were due for an ICL, but visually, I still do not clearly see one.

SPX – Then on Sept 1st, I posted this as a cautionary note of a possible rising wedge and mentioned that OCTOBER can be tough for the markets, historically speaking. We have seen some pretty big crashes in October. Will we get the ICL then?  We’ll have to be alert going forward to any signs of weakness as this unfolds. So some are long from the recent dcl, I am just helping my readers to see a reason to stay alert, and I will monitor it along the way.

NASDAQ–  I Do also see weakness internally in my Nasdaq Wkly Charts, as the Nasdaq attempted to push to new highs again. This looks a bit similar to Oct 2016, when the markets pulled back ( into U.S. elections) but then it took off higher.

USD – In August, I noted that the USD was at a support area, but in danger of breaking down. Watch this area & blue line, because in the last 3 years, there is not a lot of support below this area.

USD–  And the USD broke down this week.  If this drops further, Gold could get to that $1375 area that I have been thinking it should reach.

WTIC-  Oil looked very good, but it is stalling here and needs to push higher above that Magenta line. I would have a stop under the dcl green line if i was long Oil.

NATGAS- Natgas has been choppy and too hard to trade long & short recently. There is a lower trend line ( not drawn) and an upper one. A break of either line may start a more sustainable directional move.

GOLD, SILVER, MINERS

COT– This reading is as of last Tuesday, and as you can see, smart money shorts continue to grow.  That said,  being scared out of long positions 4 weeks ago when someone wrote a bearish Gold article based on the COT Smart shorts growing, would have been a losing emotion.

GOLD– August 23rd, we still had further to run, and I felt that we should break above 1300.

GOLD– August 28 & now above 1300- Gold could move quickly to the area of the former highs. I had roughly 1360-1375 in mind, where congestion at the highs formed in 2016.

GOLD– Today, Gold has been moving right along. I do think that it could go a bit higher, but we may be nearing our temporary peak. I sold my Leverage Friday and still own my Miners in case of any upside surprise.

GOLD DAILY – I have been saying all along that this could top in the early 20’s of the daily cycle count, so this was a good enough place for me to let go of my leverage, even if we do have a run away move or melt up from here.

SILVER- A weekly chart where Silver is above important Moving Averages.

GDX-  If GDX runs to former highs (and I believe that it will over time) the potential is great.

GDX- A back test and stair-step higher is possible, as shown here, but…

Example from COPPER-  When Triangles break, they often are fueled by short covering, smart buyers, and then the chasers taking positions that missed the move out of the lows.  Copper is an example of a ‘melt up’ or ‘runaway move’ out of a triangle break out. Notice that there was NO BACK TEST. Wow.

I was asked about re-entering my LEVERAGE- I do not always enter leverage again & again.  I dont like to jump into Leverage in the middle of a move unless I am just scalping trades using 15,  30 minute, and 60 minute charts.  So below is a method that I have used that has helped me to catch some great gains, and then keep them.  It is a safer way to use 3X ETFS.  Click to enlarge.

In Feb of 2017,  I got stopped out a few times, because Miners peaked early. I usually get a nice run to new highs in a 3rd daily cycle, but Miners peaked in Feb.  I couldn’t understand it , with Gold running to new highs.  Eventually, it became clear that Miners were forming a long triangle. So no method is fool proof, but the above method has helped me in the past to make and hold on to gains.

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This year Golds ICL came about in July 2017, so it has been moving off of the lows for 2 months. In the strong run out of the Jan 2016 lows, Miners paused after 2 months as seen in GDXJ below.  There was NOT a huge pull back, but price stalled and went sideways for a month.   Due to fear & human nature, I find that People in a 3x ETF like JNUG & NUGT  tend to question everything on each 1 down day of these sideways moves.  That is why many should not be over leveraged in  3x etfs after many days of rising prices.

GDXJ 2016 –  We could be due for a pullback, but even if we just get a sideways move, this choppy action was difficult for leverage.  People lose sleep on 1 or 2 down days, even holding leverage in a sideways move like this.

So currently we are at the point of this run where it could pull back like a normal run in this sector, or it could continue to melt higher.

I cannot guarantee that GDX & GDXJ are about to pull back, that is why I am holding some Miners.

If it does pull back however, I do not want to hold leverage.

So pretty much all of the market sectors, The SPX, NASDAQ, OIL, NATGAS, Miners, etc  are in the middle of a move, not the end of a daily cycle and not the start of one.  This is when it gets tricky for shorter term holders, since the price could continue higher or begin to drop into the next low.  Oil needs to break out higher soon or it is in danger of breaking below the recent dcl.  Miners look bullish and longer term positions can be held through the wiggles. Some of my recent positions I’ve been holding for quite a while , like IPI, TGB, JNUG, Miners, etc, but it just felt like it was time to start to lighten up and see which way these markets want to move.  If we start to get a pull back on the precious Metals, we can look for an entry for the next move higher.  The set up still looks bullish in the precious Metals sector.

I want to give my usual sign off –  that I hope everyone had a restful weekend, but I know that I have several readers located in Florida, and I also have readers in Houston Texas, both enduring the results of natural disasters. Mexico had an earthquake this weekend, Asia is being threatened by Typhoons too, and honestly,  many are dealing with anxieties, enduring unforeseen hardships, etc,  globally, not just locally.  My thoughts and well wishes are with the many going through hard times and enduring trials at this time.

~ALEX

HOS #1 – Hos popped and dropped on Friday, after I mentioned that I liked this set up.  I actually still like the set up. The whole time that HOS was climbing during August,  the XLE & OIH was dropping rapidly.

HOS #2 – This channel upward developed as the XLE & OIH were selling off sharply in August. fridays reversal could just be price holding to this channel.

COPPER too a sharp drop Friday too, after a nice long multi week ( month) run higher out of it’s base.

I drew this on Friday as a possible 1-2-3-4-5 complete, showing that copper could be starting a short pullback. TGB sold off and actually partially recovered, but I sold my TGB & locked in gains for now. I did NOT sell my WRN, but it also had a sharp drop, so anyone that dumped it-  that would be understandable.  Lets discuss WRN.

WRN #1 – As a result of Coppers drop, WRN also took a sharp dive off of the highs. This raised questions about the possible path going forward.  I’m thinking that the selling in Copper slows down, and I think that WRN could  bull flag and still eventually break out, crawling along this trend line.

WRN#2 – The bull flag formation could look like this, Or price could drop & tag that 200sma or even the 50sma again.

WRN #3 –  I thought about that deeper drop to ‘back test’  the 200sma as also being possible, when I noticed how similar the price action was inside the green circles. If my position was very heavy, I would have sold some on Friday.

WRN #4 –  I bought my position in WRN as it crawled along the 50sma down near $1.10-$1.15- so I am holding on for now.  I still like the big picture set up, and want to see how this plays out. It should remain bullish  unless something bad happens to Copper itself.