Feb 10 – Weekend Report

In the recent bull run higher for the General Markets, I advised almost daily using a trailing stop to lock in gains just in case we saw a deeper drop.  A deeper drop to an ICL could cost you weeks of gains, a stop would lock in your gains. The goose that laid the golden eggs in the General Markets seems to have been sold on auction (for now).  Gains from November forward wiped out in just a couple of days.  Let’s take a look and see what the markets did this week. This report also takes an intense look at the Precious metals market, and I am encouraged by what I have put together!

 

NASDAQ from my last report – The markets could drop to the 200sma as they have done in the past.

 

I pointed out that prior ICLs had done just that, sometimes even breaking that level.

In a report last week, I mentioned that way too many people were diving back in, it seemed too easy for the Bulls to just quickly ‘Buy The Dip’ again,  so We should expect some volatility.

 

 

NASDAQ – 1. Importance of the stop – Notice that all gains from November to now would be taken back without a stop.   2. After such a plunge,  Many want to buy the ICL at lows and ride it back up ( I totally get that, I buy reversal candles too). 3.  If it rockets up in a V-Bottom, the gains can be very strong  quickly, but often for most I  advise waiting for a swing low for those looking for ‘safe’ & less sleepless night investing. Understandably, many tried to buy that 1st reversal despite risk. It failed.  Now we have a 2nd reversal, and many were buying that one on Friday too.  Again, I often enter on reversals too, but it is higher risk.  That said, let’s just discuss this so we understand what we are looking at…

 

 

NASDAQ LAST OCTOBER –  I’m sure that many have already forgotten how rough a bottoming process can be.  I just wanted to show you the NASDAQ from only 4 months ago, this is an old chart from then so you can ignore the writing. This can be the difference between a V-Bottom or a bottoming process, and it can be frustrating & choppy, so be prepared just in case.  I figured that if you are reminded of this volatile choppy possibility,  you can prepare according to your trading style.  We could take off higher out of the lows like July (Yay!), or Meander like August.  🙁

SPX – A weekly reversal at the 50ma with capitulation type volume. Is this the final low? We can’t tell, take a look at the slam & reversal of Jan& Feb 2016.  It is most likely that a bottoming process will take place (volatility) for a while.  This reduces excess bullishness.

 

DJIA –  The DOW reversed too, with capitulation type volume, but I cannot say with certainty if this will just take off higher or continue to try to work off excess bullish enthusiasm. A parabolic run to a blow off top could rocket higher out of lows, but we have seen these bottoms also take 5 or 6 weeks to repair. Take a look at Oct 2014, the 50 is a fairly reliable guide, but it was broken slightly at least that once & twice in a major correction period after that.

 

OIL

 

OIL COT-  The Smart Money Shorts remained very high as of last Tuesday.

 

WTIC #1 – Oil then sold off all week, with a Possible oil reversal candle off of support.  I would expect that if Oil bounces, it will put in another ‘daily cycle’ that rolls over into the real ICL.  This doesn’t fit my normal criteria for an ICL so far, except that ‘the timing’ is correct.  The COT is still smart money short, so I may be looking to short this if it bounces. I played this with DWT this week (Small position), and sold it Friday.

 

WTIC #2 – It may look like this  a- b – c typ drop, with another daily cycle into an  ICL.    I’ll use that DWT  or SCO if this drops again

 

WTIC #3 (weekly) – Oil fell below $60 , but it certainly can drop further, and the COT is amazingly still very bearish for Oil. If an ICL forms down in that circle, Energy Stocks should become a strong buy.

USD Daily – A dcl has formed in the USD.  This daily cycle looks similar to the Nov one.

USD – Since a dcl has formed in the USD,  we wonder if it could be an ICL?  That would mean a bigger bounce now like in September.  A DCL would have the  daily cycle roll over into the ICL.  I lean toward the dcl here, topping now, and dropping to an ICL with a GOLDs DCL forming now & Miners moving higher.

 

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ARE YOU READY FOR THIS?  GRAB A COFFEE OR TEA AND FASTEN YOUR SEAT BELTS, THIS IS GOING TO BE A LOT OF CHARTS, RESEARCH,  AND HISTORY. I ACTUALLY THINK THAT YOU’LL BE HAPPY WITH THE RESULTS

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GOLD – Gold did not put in a new low Friday, it pushed to a higher high than Thursday, so this is actually an unconfirmed  swing low.  LOOK HOW WELL GOLD HAS HELD UP .(See the chart).

 

SILVER COT – The Silver COT is actually closing in on the last 2  ICL levels. Very interesting as Silver seems to be a closer match to Miners than Gold.

SILVER – That was a strong first run, and now a big drop. Was that all 1 first daily cycle like Gold?  or is there something else here? I have an idea that this matches Miners.

 

GDX– I have to start with what I expected, and also let you know that this is what I think really should have happened under normal conditions.  I would say that 90 out of 100 times with the current set up,  you would get something close to this, matching Gold and even Miners leading in the strength department. I was obviously wrong, we got  ‘the unexpected’.   Again, THIS would have matched what Gold is doing right now, so Lets take a look at GDX and I will share with you what I have found…

GDX –  Are you kidding me?  Did we really just get a stop run already? I am NOT considering this as a failed daily cycle, and  I will explain. There are a lot of pieces to this Puzzle, and all you can do is try to fit them all together.

At this point,  I have looked back & studied possibilities , and I am going to lay a few out on the table in this report. Then all we can do is plan accordingly as this continues to play out, and maybe even expect the unexpected.

 

1. LITTLE DETAILS ARE PIECES OF THE PUZZLE

 

I WANT TO REMIND YOU THAT GOLD PUT IN ITs ICL IN EARLY DEC 2015.

GDX JANUARY 2016 – WAIT JUST A MINUTE!  GDX bottomed with a stop run over  1 month later, and took off like a rocket leaving everyone behind  (Except for Chartfreaks- we caught it then). So MINERS PUT IN THEIR ICL OVER A MONTH LATER DUE TO SMART MONEY RUNNING STOPS.  Do you see where I am going with this?  We need more facts or pieces to this puzzle please!  READ THIS CHART.

If that almost 100 million shares was ALL SELLING,  this would still be at the lows and even much lower. I think that someone just went shopping, and caused sale price to buy Miners.  Sis Miners again put in an ICL over a month after Gold?   NOTICE THE STOPS ARE BEING RUN AT just above$21…

 

GDX  15 minute chart – That stop area near $21 was triggered,  selling volume picked up, yet price stopped dropping .WHY?  Volume increased and again, Price was not crashing, it went higher into the close.  Retail buyers panic, they do not step in like that without a reversal first.  The reversal is likely smart money accumulating again, like Jan 2016.

 

NOW THE ABOVE RESEARCH RAISES QUESTIONS IN MY HEAD 

 

1. Gold DEC 2015 ICL was over a month before a ‘Miners shake out ICL’ in Jan 2016.

2. Do we have that here, with a late ICL for Miners?   And SILVERs COT is at ICL level, is it with the Miners?  There is that possibility,  but I don’t want to rush into that yet.  We will know as time goes on, but this is valid history that could be repeating itself…

3. When I kept digging, I am finding more info that could add up to some interesting observations (still very bullish in the long run for Miners).  Let’s continue.

 

GDX WEEKLY  –

I already posted these 2 charts in reports before the drop Friday.  I have been watching this sideways consolidation and when we get a break out from  a 1 year consolidation,  it can be huge! DO NOT LET THEM DISCOURAGE YOU INTO  THINKING THAT MINERS CANNOT GAIN TRACTION. On Friday we just dropped to the blue break out/ back test line.

 

GDX WEEKLY – I posted this though, again expecting Miners to act normal and have a 2nd daily cycle run (Possible break out).  So now, if they just put in an ICL 1+ Months after Gold,  this still works if you take away the final  1 + 2, and start with ICL #1 at the current lows.  We shall have to wait & see.

 

But of course, we have to think of  ‘Everything”,  the ‘what if this?‘ and the ‘what about that?…‘, and this came to mind last week.

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WHAT IF THE USD PUTS IN AN ICL SOON WITH A MULTI WEEK BOUNCE? 

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MINERS COULD EVEN DROP AGAIN.  I actually drew this on Feb 7th for this weekend report,  and it would be THE BIG STOP RUN/ THE FINAL LOAD UP for Smart Money to trip a years worth of ‘stops’ and heavily position into Miners.   You might say,  “Come on Alex,  do you really believe that that a very big  undercut & reversal could happen?” YES.

 

And I would say, ” I remember when I traded strictly Miners during the last Gold Bull Run, and I’ll never forget that those massive ‘stop runs’ CAN & DO happen”. Look at Miners in the chart below and we also see a major stop run & rally.  This also went on for Months & months.  See the chart  – Which leads me back to where we are now …

 

Which leads me back to where we are now-  Was it enough?  It actually seems that we will likely drop again to finish the job. This was NOT a major stop run.  We just dont know if it’ll be this week for a final low, or after another run higher that rolls over later into the next ICL near May/ June?

GDXJ –  Notice please that GDXJ didn’t even break the Dec or May 2017 lows yet.   Running the stops below these areas could reap more reward for the big buyers, so will they do that this week or at the next ICL? We just need to be aware of this set up for now.

 

And that even leads me to another thought or observation –

We know that GOLD had its ICL in last JULY 2017, Right?   However GDXJ bottomed in May, and those lows were not broken.  THAT is where we would have to say the Juniors put in an ICL, again different from Gold! Do you see a pattern here?  This again shows that Miners are NOT in Sync with GOLDs cycles lately. They have bottomed when Gold held up (MAY and NOW) and they held up when GOLD dropped to an ICL  ( July 2017 & Dec 2015).

GDX also bottomed in MAY and didn’t break the may lows when GOLD bottomed in July 2017.

The above charts tell me to stop viewing GOLDS CYCLES with MINERS CYCLES.  THIS CONSOLIDATION, LIKE I MENTIONED WITH TRIANGLE PATTERNS, HAS CHANGES THEIR ‘TIMING’ IN MY OPINION. They seem to be close in many cases, but varying at other times randomly. This chart below summarizes the differences, follow it left to write.  NOTE TO SELF:  Miners & Gold do not always match up cycle wise, and we certainly saw that this week with Gold above the 50sma, Miners doing a stop run at Dec lows!.

In conclusion for the miners:  “How do I play this?”

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It is always ‘Safer’ to wait for a swing low.  It should be stated that Fridays slam down “Looks” like a stop run & reversal.  The question remains, ” Is that The Lows for now?  Or can this drop next week too,  with even a lower stop run? Especially since GDXJ  did not run it’s stops like GDX did”   It may or may not happen.    So I took position on Fridays reversal , but that is  not the safe way to go about it.    I just cant be 100% sure if this is the Final slam down & reversal for a run higher, or will it break one more time next week, and that adds Risk.  An  even lower low to run more stops in GDXJ could happen Monday, and then reverse & Run.    We need to keep that in mind. Choices become

1.   Be patient & safe, Wait for a swing low (confirmed)

2.  Riskier = Start a small position and add later ?

3.  Jump in and use a stop to protect funds.

 

 

 So that  is your weekend report, absorbing all of this may almost be as exhaustive as the fast week of trading was.   I will say that this market volatility can be frustrating and exhausting.  Even if you do have stops in place, every sector selling off at once can grab your attention in a big way, and  my accounts took a bit of a hit last Friday when Everything started heading south.  The selling was anticipated with a dip down to Daily Cycle Lows due, but the ferocity was honestly unexpected and frustrating.  However, I won’t just give up.   There is always another trade, and hard work will keep us in the game.  Eventually the dust settles too, and often really good set ups develop.  The information in this report could be very helpful going forward,  as things continue to clear up.  It’s like an unclear puzzle, with a few more pieces added to the Big Picture over time.

  Trust me, I have done SO MUCH research everyday of this week just trying to  figure this puzzle out ( some stuff that never makes the reports), that I am quite tired too.  I have given back some gains over the last week,  but I’m really very encouraged and excited about the things that I have found and related above from my research.  Shake outs and crazy moves can be minimized by trading in a safer , lower risk manner.  Honoring  stops, waiting for confirmation,  & not jumping back in too soon is one method,  but many of us do tend to be aggressive traders here, don’t we?  🙂

 Some of us will experience a few set backs trying to trade what looked like a proper set up in Gold & Miners, when really maybe only Gold was set up properly, coming out of a it’s Dec ICL.  If this is anything like the  ‘Miners ICL’ in 2016 over a month after gold did, then we still have a very strong move ahead of us, ESPECIALLY once we break above this sideways consolidation that has been going on for weeks and months .  Is there more downside to run GDXJ stops this week or was that Friday reversal enough?  If we go higher now,  do we come back down in the next ICL for the real massive stop run?  I can’t say for sure, all we can do is watch this unfold step by step in the daily reports and figure out how to take advantage of the opportunities that present themselves. Yes, I DO STILL THINK THAT THERE ARE VERY BIG OPPORTUNITIES COMING IN THIS SECTOR, the current movement has done nothing to convince me otherwise.

Enjoy the rest of your weekend,  try to read this report 2 times, and thanks for being a Chartfreak with me!

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~ALEX

 

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Side note with AUY – I just wanted to show what a good Miner AUY turned out to be. Even with the selling off and stop run this week,  AUY only did a shake out at the 50sma. .