SEPTEMBER 20 – FED WEDNESDAY

Today we have our FOMC meeting, so lets discuss a few things that we will be looking for…

I want to start with this.  I posted a chart of an ascending triangle in a prior report and showed how they often break out & run to the upside.

ASCENDING TRIANGLE –

NAK –  I pointed one out in NAK

NAK –  NAK started to break out higher yesterday, I would expect follow through to at least $2.25, but also…

QQQ –  We may be seeing on the the NASDAQ, right at the FOMC MEETING.  SO we may get a break out to the upside.  Note:  They are not fool proof, and they can do a false break out, but if I was long from the dcl, I would stay long for now and watch how this plays out.  Also this is often played by buying the break out with a srop below the lower triangle line.

USD – The USD is overdue for a bounce or rally or an ICL.  It has been weak and unable to gain traction, but the FED DECISION could definitely affect this in a bullish manner or a bearish one.  Let’s take a look.

USD WEEKLY – This chart was from the weekend report, I pointed out that the USD is pinned under resistance.  If it stays here too long, it could drop the same way that it ran higher in 2014.

USD WEEKLY –  Today the USD remains under that resistance.  I am watching for a close above 92.80 to give the USD short term bulls hope. Again, if it lingers here, I dont see why it wouldnt fall in the same manner that it rose in 2014.

 Nothing has really changed in Tuesdays trading with OIL & NATGAS,  so Let’s move right on to Gold & the Miners. We all know the FOMC MTG can affect this sector,  so I want to dig in a bit and prepare us for what may happen today.

 Let me start by saying that VOLATILITY often occurs, and the initial knee jerk reaction at 2 p.m. Eastern time may ( or may not)  have follow through.  I have seen the initial 2 p.m. reaction run for an hour (higher or lower) and then reverse completely into the close.  That said, itf that kind of volatility frustrates you,  you do not have to be buying right after the FOMC Decision if things start rising. You do NOT have to catch day 1 – it is often best to wait for a swing low to form. Let’s look at this sector.

GOLD From Tuesdays report –  I would like to see a back test here at 1300 or lower for the 50sma, but that almost seems too easy,right?  Everyone might be waiting for that exact back test, so maybe we do not get it.    We are in the timing to seek out a DCL too.  I do believe that we are close.

GOLD TUESDAY –   $1304 is the drop so far, that MIGHT be all we get. I grabbed this chart on Tuesday night Eastern time.  $1304 to $1313 occurred already.

 GDXJ Look at this.     It seems to have in place  a good back test of the triangle and the 10 weekly MA.   In Technical Analysis, I would buy this with a stop loosely under this support, but with the FOMC and the USD the way it is, it would probably be safer or at least less nerve wracking to wait for some solid proof of a reversal.  We may get that with the Fed.  This is a weekly chart, a weekly swing low cannot happen until at least next week.

GDX –  SO far the selling has been mild for this entire run.  A 38% pullback. We have a 50sma and a trend line at the 50% pullback,  so maybe we’ll see that after the FOMC Meeting.  Maybe.  On this chart, the low was Monday SO FAR, and this could form an unconfirmed swing today if price moves above Mondays highs.    Is the selling  in Miners just about done, considering that back test on the GDXJ chart above?  Evidence suggests that selling may be just about done, it looks like we are close to a DCL here.

3 CHARTS- THIS IS WHAT YOU SHOULD KNOW

I wanted to go back and show you on clear simple charts what has happened at prior FOMC meetings. THIS TYPE OF INFORMATION CAN BE VERY HELPFUL in showing us not only what we might see today, but in the past at FOMC decisions.

GOLD – I’ve listed whether we had a ‘No rate hike’ or ‘Yes’.  I have noticed that in 2017 a Rate hike didn’t seem to really matter from what I see below.   What mattered was where Gold was in ‘time’. That FED DAY got volatile, but direction was not likely affected much.  In other words, it was already baked into the cake.  Transparency gave us no big surprise.   I do not think we will have a big surprise by the Fed today either.   Follow along on the chart…

JAN -FEB No hike =  A dcl & a rally

March – A hike on what turned out to be day 3 and a dcl & a rally

MAY  was no hike, and 3 more days down, then a dcl. The DCL was due.

June – A Hike and a strong Fed Day POP, that failed.  That June strong reversal higher failed.

July – no hike – we were in the middle of a rally

GDX –  See the chart and follow along the same way we viewed it above with Gold.  GDX had a couple of VERY LARGE 1 day FOMC candles (volatility) and then the next day,  not very much more. Does knowing that help you today?  Interesting, isn’t it?  If we get a Huge move after the FOMC today,  it may do nothing big tomorrow as far as continuation, allowing  you to relax and take positions.  Or you could risk front running the big day.

GDXJ –  We see the same here with the GDXJ. Big Pops and little follow through, but remember too, we were forming a larger picture triangle, so GDXJ was ‘directionless’ for a while.

What do the above charts show? That we may get a strong reaction at 2 p.m., yet tomorrow it may not have strong follow through, unless time is up for the daily cycle selling and a DCL is ready to be put in place. We are close and due for a dcl.

So I looked at a few Miners yesterday and I did see some trying to reverse after selling off.  Could this be indicating that buyers are stepping in or some type of smart money could even be accumulating ahead of the Fed?  The timing is right for a DCL, so this could be signaling that we are close.

DRD –  I thought that DRD was dropping to fill that gap, and it acted as support instead  Buyers stepped in and we got a reversal at the gap.

SAND–  Sand has hardly sold off at all from the top, and this looks like a bullish engulfing on Tuesday. It MIGHT tag the 50sma on the FED Wednesday, but this also may just be all we will see for selling here. It is too hard to tell with the volatility that we often get on a Fed Day, but this is usually bullish.

Waiting for a swing low is safer and less frustrating, but buying the dip if we are waiting for a DCL usually sees higher price later over time. Personally I am still holding IPI, HOS, WRN, NAK, and a few miners like  DRD, GSS, EGI, etc so I may just hold on and wait and see what happens.  I personally am not even sure if I will be in front of a screen today at 2 p.m.,  so I may just have to wait and see the end results.  Note:  Use leverage at your own risk, I simply cannot coach everyones  leveraged positions day by day by day,  but I often get emails daily when readers own JNUG or NUGT asking me about the wiggles.  You MUST expect it to be a bouncy ride, leverage exaggerates the moves higher & lower.

I will post one more GDX chart below,  enjoy your FOMC Decision day trading,   and strap on your seat belts at 2 p.m.,  it often gets a bit shaky 🙂

~ALEX

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 Final GDX CHART –  I would have us on day 29, I called a dcl on Aug 8th the day this reversal occurred.   Day 29 would have us due for that dcl ( low).  Other have us on day 45+,  way overdue for a low, because they want to see that green channel broken-  so take that for what it is.  I have never seen a day 40+ daily cycle,  but it doesn’t even matter much in this bull run.  It means either day 29 or day 50 or  whatever,  we are due for a low anytime now, and GDX almost has an unconfirmed swing in place too.  A break above Mondays highs is an UNCONFIRMED swing on Fed Day.

WRN – This looks like it is refusing to sell off below that support area. The 50 wants to cross the 200sma , as price remains bullish.

I am pretty focused on Metals and Miners – but some of the Medical marijuana stocks have been setting up nicely, like GBLX, XXII, maybe EDXC is basing, and a few others like the 2 bullish charts below.   I am just monitoring these at this point, but they are bullish and I know some like to trade them.

ACBFF – A medical Marijuana stock weekly chart that looks ready to break out.

OGRMF – And this one did break out.  Again, these are weekly charts but they are showing that this sector has consolidated the huge gains in 2016 and may be ready to continue higher. The Daily charts of these and others seem to be firming up and for some reason,  these Marijuana stocks seem to run at the end of the year.