Friday October 6th

Today is Friday, the last trading day of the week, and I have quite a few thoughts rolling around my head.  One of the biggest is the employment report.  Why? The Markets are on fire, The NASDAQ just broke out , following the SPX, DJIA, and RUT – which have been on fire.  What if the Jobs report disappoints?  What if the hurricane that hit Texas and then another one that hit Florida disrupts the employment numbers and caused more than expected to report that they are not working?

Well, again, it is Friday the last trading day of the week, so lets just look at what is in front of us as of Thursday nights close.

SPY – What a solid run higher after the break out. No change here.

IWM –  I used this chart in the comments /  chat section yesterday to simply show why I would use a ‘trailing stop’  rather than just selling my position when it gets to a point of ‘overbought’.  You would not be forced to sell in a runaway move,  you just ride the gains until the top is in.

QQQ –  The QQQs broke out Thursday. I am interested in the employment report for Friday, but if this runs, I would use that trailing stop idea.   We ARE due for a dcl,  and that dip on Sept 25 seems too early to be one  ( 1/2 cycle low is more likely). The last few QQQ break outs were ‘fake outs’ and never really ran far- so  the NASDAQ has been lagging lately. The recent break outs in SPX & RUT ran strongly, so we are watchinf to see if NASDAQ Now plays catch up & does the same ( or is it another false break out). We should know today, especially once the jobs report comes out.

OILs chart from yesterdays report –   I called for a bounce, because OIL / Energy stocks were not selling off with Oil. We would then monitor that move & see how it bounces from here…

WTIC –  I mentioned that OIL could bounce here, because XLE, OIH, and Energy stocks were NOT selling off with Oil, but this bounce really looks like a strong reversal. Is this a 1/2 cycle low and not just a bounce? I take things day – by – day and monitor them as we go forward, but Oil / Energy stocks still look good.

XLE – Did NOT follow Oil down at all.  This looks like a 1-2-3-4 & 5 is next.

I want to explain what I see here.  I must remain unbiased.  I am not trying to force a view point here, but I explain “WHAT I SEE” and you must decide for yourself if you can see it too.   Some readers think that everything changed yesterday, and this is dreadfully bearish, but the way I see it? Nothing has changed, so let me show you what I see.

In my personal trading,  this is so important to me:

  Understandably,  time goes on,  day after day rolls by,  and Gold is not rallying.  What happens?  Again,  UNDERSTANDABLY, People get frustrated.  Emails and comments from readers show that they are frustrated and lament that … This attempt at a DCL is ‘horrible’,  ‘awful’, ‘the worst ever’, ‘weaker than anytime I have ever seen Gold at what is supposed to be a low’,  etc.      For me,  that is just not  what I see.    When I am trading, I just try to look for the facts.  That is what helps me to remain cool, remain level headed, unemotional, and capable of making a good decision if things go against me-  or hang in there if they don’t.   You cannot tell the markets what to do, so Lets discuss what they are doing in the Precious Metals arena …

GLD –  Is this really the worst daily cycle low attempt ever?  Looking at this chart (look now),  this low looks very much like any other low, right?  It spends a few days at lows, even breaks the lows, so why is this the worst dcl ever?  Why is this “As bearish as it get”?   Simply put,  I don’t think that it is.   In fact,  let me ask you this…

XXX –  FOR THE SAKE OF PERSPECTIVE , If I just showed you this chart and you didn’t know what it was a chart of , would you say it is Bullish or Bearish?  Is it Scary? Ugly?  Or would you think, “That’s a nice move that I missed,  I should try to buy that dip”.   Perspective keeps you centered, balanced, and unemotional and unbiased.  Set stops and let the markets do what they will.

GOLD–  So, Did GOLD have a confirmed swing low in place yet?  No it did not, it didn’t close above the 10sma & trend line, so a new low in Gold is not damaging a dcl, it is extending it.  However,  miners?…

In the same way that Oil stocks  ( XLE / OIH) didn’t sell off with OIL, I watch Miners along with Gold to give me a ‘feel’ for what the markets may be doing. I am NOT a perma Bull,  I have traded JDST & DUST at times, so knowing that, let me just show you what I see at this point.

GDX –  Did GDX have a dcl in place? Yes it did  & still does at this point.  Did it break down to new lows with Gold Thursday?  No it did not.  The 50sma stopped it for now, but…

GDX LOWS – Guess what?  Every low here  moved higher for 2-4 days, and then dipped back down, just like Thursday. Please review this chart.  Is this the “Worst DCL ever”.

GDX – We are still back testing a break out = Normal

GDXJ -Rejected at the 50sma too, but it may be temporary, because…

GDXJ-  This is still just a Break out and back test so far too.

GDX : GOLD –  Miners definitely leading Gold,  so when Gold drops $10 each day,  Miners are fine.

So I wanted to answer a few emails in this report, rather than try to explain this 4 or 5 times.

Summary:  Miners are leading Gold, and I have tried to point out in the reports that several Miners are still set up bullishly,  despite Gold selling down $10 / day.  Miners did put in swing lows, and didn’t even come close to breaking those lows as Gold did.   Have we ever seen the lows act like they did yesterday?  Almost every low has actually.  In fact, a 20 cent drop in GDX when Gold is down $10 used to cause us to rejoice.

What more can I say about the set up in Gold & Miners?  I hope that this helps to just look at the facts and calmly let it play out.  Use a stop on GDX & GDXJ, and it should not be hit yet.  Please understand that buying near the lows is tough mentally,  and holding positions during a dip into a dcl may not be for everyone.  It can be emotional for some to even buy at the lows in July,  ride it up to the peak,  and hold during a dip into a dcl.     Can Precious Metals fail with te USD rising from an ICL?  Yes, because anything can fail in the markets, but at this point I see a higher low so far in GDX / GDXJ, and I have seen that at most of the lows in the past.   Miners did not following Gold down very much this week, and that is a good sign going forward.  CDE & IAG,  2 of the leaders,  did drop more than expected, but many Miners barley flinched. If Miners put in a short rally,  they will probably reverse higher quickly.

GDX was down  20 cents with Gold down $10, and I got 2 or 3 emails about this being very ugly, but honestly they were more concerned with the fact that they heard that in another blog.  Let this report show you the other side of things and remember that this review of GDX / GDXJ was an unemotional view.  Just the facts.  I thought that it was kind of encouraging to see how this low looks like all of the others before they moved higher.   Now lets see what Friday brings our way.

 We have the employment numbers due out at 8:30 a.m. Eastern, we’ll see if that affects anything going forward.  Enjoy your Friday trading and your weekend!

~ALEX

NAK –   I grabbed this chart of Nak at 9:45 a.m. as it regained the 200sma.  A break above this trend line is bullish too, so I added to NAK

HPJ –  This looks like a giant inverse H&S.  WHen these break, what can they do? …

….They can do this over time, which hit over $4.50 this week! –

Or this,  which hit $2.30 today…

JRJC –  This also had a strong run out of the August lows, and pulled back into a back test of the 50sma,  a 61.8% retrace.  I think that it wants higher price over time, it should attack that 200sma first and then try to break higher.   I dont LOVE this one until I see a bit of upside action though.

PXLW –