January 17th – Expectations

With only 1 trading day behind us since the weekend report, nothing has really changed in our expectations for the various Market sectors, but some small changes did take place.  Let’s  just take a look at what we expect going forward.

 

SPX & VIX – Using the chart below, I had mentioned on January 3rd that as the markets keep running higher, they continues to look to have that parabolic type climb to it.  Then I pointed out that with the VIX trading at 9, we should expect a POP in the VIX at some point, and a drop (temporary) in the run. Here I pointed out that LOWS come after a pop in the vix.

 

The VIX started to pop Tuesday and …

SPX – The Markets started to roll over. It is day 40, so we are due for a pull back using cycle timing.  I would look for a drop to possibly dip under the 10sma for starters. The dips have been shallow, so we’ll see how this plays out over the next few days.

 

EDIT:  As I proof read the report this morning,  the General Markets are set to Gap Open,  but that can lead to another GAP OPEN and reversal closing the gap.  THAT would indicate a temporary  exhausting market.

 

WTIC – Oil also reversed Tuesday, and we have been expecting a drop after this strong break out above $60.  The COT shows that the Smart Money is very short, I am ‘expecting’ a drop to the blue trend line, but Oil has been strong.  We’ll see what the Oil Inventory report does this week (Which may be delayed to Thursday due to the holiday).  A drop will be a buying opportunity in Oil & Energy.

 

The USD –  The USD broke down below Sept lows, as mentioned in the weekend report.  We could get a bounce & a back test before continuing lower.  Note: We are entering the ‘timing’ for a dip into the daily cycle low in Gold. I mentioned that I don’t think that the recent dip in Gold was a dcl.  So soon a weak Bounce in the USD may be enough to stall Golds upward progress and give us a dip into a dcl ( a buying opportunity).  I will discuss this in Gold & Miners.

 

GOLD FRIDAY on day 21  from the weekend report.  Golds dip did not meet the criteria for a DCL, so we viewed this as still the first daily cycle with a 1/2 cycle low.  That means that we would be expecting a dip into a daily cycle low possibly starting later this week or even next week.  They often come around 30- 33  days lately, but they can come at any time now.

 

SO WILL GOLD & MINERS JUST KEEP CLIMBING DAY AFTER DAY? OR WILL WE GET THE PAUSE AND PULL BACK TO THE DCL SOON? WE WERE ON DAY 22 YESTERDAY

 

We cannot say for sure when a dip into a dcl will come, but at this point we are riding positions entered a month ago, and we have even already added other positions.  I do not think that those positions need to be liquidated as we head into a dcl, since it may be a shallow drop  (Unless you personally like to lock in gains & want to sell to raise cash).  I think that it may be best to  just BUY or ADD ON THE DIP when it comes.  With that, let’s discuss possibilities.

 

GOLD DAY 22 Tuesday –  Gold continued higher and closed at $1338 Tuesday.  We have almost completed the ‘Cup’ that I have been saying I expect to form near $1360.  A return to September highs , and then I would have expected a ‘handle’ to become our daily cycle low dip.  Please read the chart where I point out that, after our DCL, the next run could be bigger.

 

GDX – Day 22 and this may also finish the ‘cup formation’  and then give us a dcl, but notice that in August we had a lot of sideways movement around the dcl too, so we have to expect a little volatility at times too.

 

GDXJ – I was asked about the gap from 2 days ago, so I drew this to show that it might fill at the next dcl, but it doesn’t have to. We saw one in May that didn’t fill until December. In a strong bull move,  Gaps do not always fill.

 

AS A LESSON:

I want to revisit what I pointed out about  AUY  forming a CUP in December  compared with GDX, because it STILL applies to GDX possibilities.  I had a couple of new sign ups yesterday and I want to welcome them and let them see the type of things that we have been watching & expecting with GDX.  I also recommend reading last weeks reports ( or even earlier) if you have time.

 

 

# 1 AUY – This was AUY on Dec 20th.  It was running strong from a double bottom base and I mentioned that this pattern often returns to Recent September highs when this happens.  So I expected AUY to form a CUP.

JAN 2 GDXJ  – THIS IS WHERE I COMPARED AUYs ‘CUP’ to GDX / GDXJ expectations. Look at this chart compared to AUY above. It also should return to Sept highs.

# 2 AUY DEC 20–  Here is where I pointed out that these patterns USUALLY run to former highs and form a CUP.  I drew this expecting at least a run to Sept highs, and then possibly a ‘handle’  at the next DCL.

 

# 3 AUY JAN 2 – AUY did run to the Sept highs, but then it broke out even higher.  When you look at GOLD & GDX now, they still have this pattern.  THAT IS WHY I am not recommending selling,  even though I discuss a Daily Cycle low coming due. It could be a shallow dip.   What would AUY do next?

AUY –  It simply put in a Bull Flag for a ‘handle’ and then continued higher again!  If  GOLD or GDX does this type of a FLAG at the time of the DCL, anyone that sells now or even  last week or the week before will have to buy back in higher to catch the 2nd run.

 

AUY Tuesday  (Now)-  This is how a BULL can run out of the lows of a solid long base.  1. It reached the SEPT highs target as a cup,  2. bull flagged a handle, and 3. moved on to the next target at last Februarys highs!   So,  GDX could do something similar.  I am recommending trying to ride out the wiggles in the Miners and simply BUY THE DIP or ADD to a dcl if we get a good chance.

 

More Chart evidence of the type of Strength we could see in GDX / GDXJ at a DCL.

 

GG last Friday  –  This was in the weekend report and it also finished its cup as I had expected, reaching September highs.  Will it form a handle? …

GG – Tuesday it decided that it also wanted to just keep going. Again, this is a Bullish move out of the long base that formed recently in all of that sideways action. Like AUY, this is also taking off higher  to 2017 highs.  Selling GG last week or the week before would have left someone behind.

 

NEM FRIDAY –  NEM also formed its cup reaching the September highs,  so again, I am expecting that GOLD, GDX,  & GDXJ can reach their former highs before giving us a DCL.   It is a very valid possibility.  NOTE: They may not reach it BEFORE the dcl, they may finish the cup on the 2nd daily cycle, but so far things look pretty good here as the USD rolls over and Miners are being accumulated.

ABX –  And along with GG & NEM, ABX is a good part of GDX.  It now looks ready to join the race.  If it gets running here, that may allow GDX to reach up a bit higher to September highs.  ABX actually looks like a BUY right here, with a stop below the 50sma.

 

CONCLUSION:

1. The General markets look due for a dip down to a dcl.  SPX is on day 40 and the VIX was down at 9.  We will watch this unfold, but so far semi loose trailing stops have kept people in the long positions.  We have discussed a parabolic run as a very likely occurrence here.

2. The USD broke down last week.  Weak bounces MIGHT cause a reaction in other sectors, but the USD broke down in a Big Way, and will head lower sooner or later.

3. OIL – We have been waiting for a pull back in Oil, it is due.  It will be a great buying opportunity, so I will be watching it going forward.  We had a reversal Tuesday and I want to watch this play out.

4. NATGAS –  See the weekend report

5. Gold , Silver, & Miners are on fire, but they are within the cycle ‘timing’ to start seeking out a daily cycle low.  These dips into a low can bottom on day 28, day 31, day 34.  We dont know exactly when, but we can identify a top when it arrives and then we will look for the LOW to buy when it forms too.  I am probably just riding my Miners out from here,  knowing that the second daily cycle will lead to new highs.   Miners have been very bullish.

 

Enjoy your Wednesday trading.

 

~ALEX

 

MGXMF –  I recommended this strongly on Jan 5th as it held at the 10 & 30 weekly MA.  I said that this long tight base looked ready to go, and I also bought it.  I think I wrote that I expected it to run back to former highs eventually. That is what I expect  (And possibly a lot more if the set up remains bullish). Next chart…

 

MGXMF –  It POPPED Friday and had strong follow through on Tuesday.  I am now being asked where to sell.  Anywhere that you want to lock in gains is fine, but Look at the above chart again.    I personally think that it can return to former highs over time.  I would only sell a partial if I was heavily invested, and let some ride.  I am thinking that this is going to go higher over time with this set up.

BTG –  I did point out the back test of the blue line as a good entry point, and it is running up to finish its next target ( $3.50).  Most of the Miners are acting very well.

 

BITCOIN #1 –  I had written a report mentioning that I was looking for an ICL ( Intermediate Cycle Low) in January,  but I wondered if it came in early in December.  Those dec lows were broken.

 

This was as of Last night when I wrote the report.

 

BITCOIN –  There is a possibility that we have entered a longer consolidation phase, and if we have,  the block chain stocks may begin to act according to thier own personality or on their own merit.

Other Crypto currencies are breaking down rapidly too, so I am on the sidelines watching how this plays out.  In my first Bitcoin report  (And I had them under the blog tab,  in the public content too. You can find them there to review if you wanted to).  I also discussed the possibility that we saw a parabolic type top in Bitcoin.  NOT a permanent top, but we had seen a few other parabolic tops, and these need time to work themselves out.

 

I used these 2 charts to prove that BITCOIN has put in a parabolic type top in the past and needed time to re-set.  Look at early 2013, and then again late 2013 on these 2 charts.

 

Parabolic tops in Bitcoin – Early in 2013, and again late in 2013.

 

RIPPLE WEEKLY- Other cryptocurrencies  are dropping rapidly too.