Jan 18th – More Picks

The VIX was Popping, the markets were dropping, and …

 

DJIA – We just can’t even get a 2 day pull back in this runaway move 🙂   A trailing stop still has you in this long position  ( TQQQ, UPRO, UDOW, ETC).  If we do get a sustained pull back, it will likely be a very good buying opportunity.Day 41 for the Dow is getting late.

 

 

USD  – The USD put in a small reversal Wednesday.  I am thinking that we saw a dcl on day 24 after closing above the 10sma for 2 days, but then it rolled over.  read the chart,  but the USD is weak after breaking down below Septembers ICL.

I already stated that with the USD breaking below a September ICL,  it is now going to drop over the longer term.  As it cascades down, I am now even more confident that we should be expecting a SOLID run in Precious Metals  (and we have already seen the industrial metals like Steel, Copper, Aluminum, running strongly).  It feels like inflation.  SO let’s just take a look at a few things from this point on…

 

GOLD is up near the September highs, and on day 21 it can continue higher before putting in a dcl,  or it can start that dip / sideways move into a dcl at any time. A First daily cycle out of an ICL usually runs for 30 days or more. Let’s take a look.

 

GOLD –  So we have a swing in place unconfirmed, and a break & close below the 10sma and trend line would indicate that we are dipping into a dcl.  We will watch for that,  and it will eventually be a BUY THE DIP event.  I’d actually like to see a drop to $1300.

GDX #1–  GDX moved to another higher high on day 23.  This just about clinches  this first daily cycle as a R.T. Daily cycle  ( right translated daily cycle).  We just might drop to fill that gap discussed yesterday and break that 10sma again.  I want to show you something that I already pointed out…

GDX #2 – I pointed out yesterday that in the Augusts dip, we ran up from the lows and then dropped again before taking off higher.  You can see 3 days up & 2 down then. My point?  We don’t always run straight up, or drop straight down into a dcl…

GDX JAN 12 chart – That is why I pointed this out with the pink boxes.  Price dropped after price left the box, and that can shake people out of position.  It then went to new highs in August, because the DCL was in place.  GDX may or may not follow GOLDS dip into a dcl, because GDX laready broke the 10sma & a trend line.

GDX-  Here I am just pointing out past runs to new highs. We had a strong push out of the lows,  and then it was a choppier ride from there at times ( pink boxes again) and then ran to new highs.  So we will expect some choppiness, ok?  I still didnt sell any positions

 

So what do we do?  We can look to buy or add on the dips or even look for Laggers. Let’s Just Look At Miners.

 

EGO – It needs to be said that obviously EGO is lagging and still in its base. Is there something wrong with it?  Maybe,  but the set up is still a low risk buy, because we have found support at the 50sma  ( Your stop)  and the increase in volume is a good sign that this might be ready to go.  EGO was up yesterday, when Miners were down. It should be part of a basket of miners,  NOT your only holding, in case it falters.

GORO  – $3.50 to $5 since the Dec lows, GORO seems to POP and consolidate, POP and consolidate.  I would put this on a watch list and see if it pulls back for you  to buy as shown when we get our dcl.

 

REMINDER OF SILVERS POTENTIAL –  I think that this is an important chart to keep in mind.  The USD broke the Sept ICL, and is going to drop.  Silver is almost guaranteed  to POP & RUN. What will Silver stocks do?  🙂

 

REMINDER OF SILVERS POTENTIAL – I mean, this run could get seriously bullish.  So let’s review a couple of Silver stocks again…

 

 

CDE #1 – Recommended here on Jan 10th. It just ran to $8.60ish and stalled. Why did it stall and is it now a sell? …

CDE #2 –  Not a sell, I think that this  may just go sideways for a bit to break out of overhead resistance.  I would add to my position here or if it pulls back, because I do think that this will break out and …

CDE #3  – Again,  the longer term potential is great.  We caught that 2016  run in CDE & AG.  I actually may have over-traded them a bit,  this was an excellent ‘Buy & Hold’, and it could happen again.

 

 

HL #1 – Ok, I drew this HL chart and it is not an exaggeration.  If it happened before after the 2008 sell off, and we have already had a similar first leg higher in 2016, the next run can be massive if Silver breaks out as shown.  But I recommended buying this days ago, is it too late?

 

HL #2 –  The HL bull Flag is waiting for you  🙂  It is possible that a dcl will bring it to the 50sma, but it is also possible that it will not join in on the selling,  it just might bull flag.   Personally,  the way I handle this is that I’d buy 1/2 now here (starter) and add more on any dip or break out.

 

KL –  Kirkland is obviously one of the stronger Miners,  like RGLD, BVN, FNV, IAG, etc.   If we get a dip,  this may be all you get.  Put this on a watch list.

 

I had a couple of reports a while go , pointing out the Bullish set ups in Industrial Metals too. Steel, Copper, and Aluminum stocks have done excellent since last Summer.  Some readers are actually still riding those stocks, and believe it or not, they still look very good.  Let’s take a look at this sector too.

 

CLD –  This was $3 in September, and I recommended buying a break of this wedge.

 

CLD DEC 21 – After a solid run to $4.75ish, it formed a long cup and I pointed it out again as it broke out on this chart.  It was a buy again at @$4.50.  I was asked where to sell it now that the gains on the 2nd run look good ( it’s $5.50 now).

 

CLD – So here we see the gains on that run from the cup.  I honestly think that these are in recovery mode, trending higher.  We are seeing inflation or something, and the Metals are running.  I expect that this will run all the way to 2016 highs over time.  That is a $4 to $8 run if you can just ride it out  (Even add on the dips). It may not be straight up, but it remains bullish if you are patient.

 

CLF – One of our readers asked where to sell this one after this smooth run.    CLF  was a BUY as it broke above the 50sma in December.   Notice how it is just steadily climbing along the 10sma. Is it a sell now?

 

CLF –  Stepping back, you can see that CLF reached September highs and it still looks like it wants to recover further.  It might put in a handle, but I almost think that this is just going to keep running higher.   CLF could actually be a $12.50 stock again later this spring or summer.

HBM –  HBM was a copper stock that looked ready to break out.  A buy because it already broke the 50sma, I recommended it after FCX already started to run swiftly. I was looking at the ‘cup’ forming at Sept highs, as shown.

HBM – It did exactly as expected  ( Since this is what I expect our Miners to do, this is good to see here with this copper company). Notice that the ‘pause’ was minimal and it looks ready to continue.

HBM –  What if this is ‘dip’ is all that GDX / GDXJ does?  This is a bullish environment. Notice how it ran on the first run higher this summer. We see Miners doing that now.

 

 

MTL #1 – MTL also popped above the 50sma and ran higher.  It has now been consolidating those gains in a sideways dip. It is not oversold, so it may continue to do this to the 20sma (or even the 50sma, but I don’t think so).

MTL #2 – This is why I don’t think it’ll get to the 50sma on the daily.  The weekly chart is a bullish  3 weeks tight pattern and really could be bought anywhere here with the expectation of another run higher sooner or later. Look at that 2016 move, it was very strong.

 

SID #2 – I recommended SID, a Steel stock, at the 50sma in December. It ran strongly last summer and we caught that run.

 

SID #2 – As it broke out I pointed to it again as a buy in January.

SID #3 – A reader asked me if they should sell now? I would say that the expected initial move has finished, you could sell to lock in profit, but the way these metals stocks are moving, it could have more upside after a brief pause. It might not pause as long as I have drawn – I am picturing an inverse H&S forming ( or cup & handle), but it may just keep going after this tag of the 10sma.  Some longer term investors may just want to continue to hold, with a reasonable stop in place.

Whether you , as a reader,  are a longer term  BUY & HOLD and haven’t been stopped out of Metals and Miners,  or whether you are a short term trader and you have taken profit,  I think that we still have plenty of upside for you to take advantage of. I will stay focused on Miners daily until Gold puts in a dcl.

 

CONCLUSION:  Miners are the main focus right now. We rode the first leg up since December lows, we have expected to get back up to September highs.  Some Miners have and are even breaking higher, some will continue, others may pause.  GDX & GDXJ  are more than 1/2 way to September highs.  In this first daily cycle, I have not sold my Miners or JNUG position.  I expect a dip into a dcl, but it may just turn out to be a sideways bull flag type of consolidation too.  Our  second daily cycle should run to new 2018 highs , and the run may be a very strong one.    I will cover this day by day as things play out.

Bigger Picture: With the recent break down in the USD, we can expect a longer sell off in the USD over 2018, and I have been expecting a really good rally in the Precious Metals, similar to some of the ‘Metals’ rallies.

 

This is an example of ‘X’ , a steel stock running higher since last May.  It looks like an easy ‘buy & hold’ , but for many, these are not easy to hold in real time. There are dips and consolidations, like you see in September for example.

So we are expecting a dip in the Miners soon,  a dip into a DCL.  We will buy that dip, and if you follow along in the comments section, you can see that some readers are already adding some individual Miners on the recent dips.  Some Miners have been quite strong and may not pull back all that much.  I will try to find some buy targets this week and next week as the pull back plays out.

AUY as an example-  This is an example of a Miner that just took off and didn’t look back from our  ‘buy’ at the Dec lows. . I used this simply to show that GDX may put in a bull flag type dip before running higher again.

 

Based on some of the strength in Miners like AUY above recently,  a GOLD pull back may be brief.  It is pausing now under Sept highs, so we have a trend line to watch daily. A break below and recovery may be all we get, instead of a deep draw down.

 

 

So we are watching how this pull back unfolds, and we are ready to buy the dip,  most of us adding to positions already accumulated in the first run out of the lows.   I have heard some say that they locked in all of their gains,  and they want to buy the next dip,  that is fine too.  I do expect much higher prices after the DCL is in place.

Enjoy your Thursday trading,  and thanks for being here at Chartfreak!

~ALEX