Feb 3- It’s Melting, But It’s Not Necessarily Ugly

Friday gave us what looked like a Melt Down across the board.  Like the Theme picture,  melting does not necessarily mean that it is time to throw it away.  We may find some good buying opportunities when the selling dries up.  Let’s take a look at the Markets…

 

DOW JONES #1 – WEEKLY – I was just pointing out this week that we haven’t really seen a 2 day sell off in a long time, but we were due for a DCL ( Sell off).  Well, the Dow dropped 666 points on Friday ( No, I don’t ready ANYTHING into  that )  🙂

 

NOTE:  I will not proof read this , so that I can release it tonight before going out. Please excuse the typos!  Thanks.

DOW JONES #2 – almost 3 weeks of trading was erased this week alone. The best thing to do is let this play out, by waiting for a swing low. Let’s look at the daily chart too…

DOW JONES #3 – So this pull back , as seen on the daily chart, has wiped out about 3 weeks of trading.  We lost over 1000 points this week. The 50sma may be tagged, but we are late in the daily cycle, we could see  dcl soon.  I will discuss that further with SPX.

SPX #1 – Was this a blow off top? I doubt it, because this is an extremely right translated daily cycle, Markets don’t usually top extremely R.T.. We SHOULD get new highs after this R.T. Daily, but that is when we will know more.  Please read this chart.

 

SPX #2 – So if this was a “topping Area”, we should know during the next daily cycle.  We should see the next daily cycle break to new highs.  IF IF IF it rolls over as L.T. , as shown on this chart, that could lead into a series of lower highs, lower lows  ( L.T. Daily Cycles).

NASDAQ BLOW OFF TOP – I used this chart in a prior report to examine the 2000 NASDAQ top. I pointed out a choppy area in 1999 before a ramp up.  See the chart and then Let’s zoom in on that choppy area of 1999…

NASDAQ BLOW OFF TOP CLOSE UP – So that Choppy area for 1999 looks much different when you zoom in.  Also take note above that choppy area, on the way to the top, it had a steep weekly drop twice ( Red Arrow). Are we  experiencing that now? Read the chart.  I do NOT think we topped, as noted above, but are we in a bumpy stage? or that DROP on the steep climb higher?  …

SPX #3 – We do see Big Sharp Weekly drops that are part of any bull run. Again,  is the choppy stage back in early 2017 & this is that sharp weekly drop on the way higher,  and THEN we roll over L.T. later?

I will monitor as it plays out. At this time, I would expect a dcl that could be bought, because we should get to new highs after such a right translated daily cycle. Then you must use a trailing stop and see if it continues to ramp higher or rolls over L.T.

 

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OIL COT – AMAZING!  The Smart money increased shorts again. This is really calling for a stronger pull back in Oil, into an ICL.

 

WTIC – If we get that pull back, I would expect a back test to the magenta line & Green 200 week MA.

 

WTIC – And this is often a weekly topping candle, but we’ll see how this play out.

I mentioned that XLE, XOP, OIH  had high volume selling before Friday, and wondered if it was a tell that Oil will soon start selling off too.   This is how they ended the week on a weekly chart.

 

I will say that ERY, DRIP, DWT –  Leveraged short oil or energy etfs do look good. I have wanted to buy one of these for a while, but Oil just won’t sell off.  These are high risk and under Oils constant resilience, I wont recommend them, but I may take the trade & thought that I would mention it FOR EXPERIENCED READERS

 

DRIP broke above the 50sma Friday

ERY – Good volume on Friday as it approaches the 50sma.

 

 

NATGAS WEEKLY – Please read the chart. I think that it was just too difficult to trade in  2017 other than very short bursts. It too rolled over sharply this week.

 

USD

 

USD – If this is a dcl, then we are on day 6 & the USD still hasn’t broken above the 10sma. Let’s do a close up.

 

USD –   If this is just a DCL that will form as L.T., it could roll over very soon.   Gold & Miners would then likely bottom ( their DCL).  If it is an ICL, that could hinder Gold, but Gold looks fine, so I am thinking that this is going to fall further sooner than later.  I have also entertained an idea that a dcl came on day 26, and with that, this daily cycle could drop further, helping Gold & Miners too.

 

USD WEEKLY  – Are we at the same time period that we saw with a dcl of July that just rolled over?  Or an ICL like Sept? The selling from Jan 2017 Peak to Sept 2017 ICL  was 9 months long & this selling from Nov peak is only 2-3 months long. This could drop further, unless a dcl does a back test of the break down.

 

 

 

 

GOLD #1  – Gold has definitely closed clearly below the 10sma now with Fridays sell off. For Gold this looks like all 1 daily cycle.

 

GOLD Weekly-  The Aug pull back tagged the 10ma, and the 10 weekly ma is at $1305.  Use this chart for the following COT chart too.

GOLD COT AS OF TUESDAY  – I need to break this down, the way I see it. Click the chart to enlarge it.

1. The COT started lower at Julys ICL than the Dec ICL, so wouldn’t the first dcl be lower too?

2. The August Gold DCL came in with the COT constantly rising (it often does)

3. I marked where the COT was at the AUG DCL.

4. A drop last week & maybe even next week may drop this c.o.t. and put us close to where the AUG DCL was.

 

GOLD – Evidently, what looked like a swing low Thursday was not.  We barely had a close below the 10sma, but it just looked like GOLD was stronger than Miners. Friday it clearly broke that 10sma and we have to label Gold as day 35. Gold has possible Fib targets shown, and the 50sma is at $1300

 

SILVER COT – The Silver COT is not bearish, and probably dropped after last weeks selling.

 

THIS IS WHERE IT GOT CONFUSING- I like to see Silver & Miners lead the move higher. They have dropped recently.   As GOLD held the highs, Silver dropped and went sideways, Miners pulled back deeper than gold .  Let’s just review.

 

SILVER  – Silver sold off and Smart money probably closed some shorts.

 

SILVER  – Possible Mega-phone, but the selling should dry up to hold that pattern.  If Gold dips and Silver holds this pattern,  that would be bullish.

 

AGAIN- THIS IS WHERE IT GOT CONFUSING. Miners were not holding up as well as GOLD, and they usually lead the way. I did wonder if they put in a dcl 2 weeks ago as they broke down, but they ran to new highs too.  It was a mixed picture, along with that USD chart.   For now, I AM GOING TO GO WITH GOLDS CYCLE COUNT, but will remain semi -cautious.

 

GDX #1 – If this was all part of the first daily cycle like Gold, it was actually very big.  Much bigger than the July first daily cycle. That is good news, the 2nd should be bigger.

 

GDX #2 –  The July ICL ran & pulled back 50%.  This one is at 50% at Fridays close.

 

GDX WEEKLY #3 – Please read the chart

GDX #4 same chart – EASY TO SEE IN HINDSIGHT.  Take a look at the ‘Dip’ in August 2017, or the DEC 2016 Run higher, or Jan 2016.  What dip?  Where would you have sold the ‘top’ and where would you have jumped back in?  I mentioned that this pullback could be shallow, because others ICL runs were and people sold on day 15 and could never get back in. Missed the move to the top of the 2nd or 3rd daily cycle.

 

GDS AS AN EXAMPLE OF A BULL RIDE – I used this to show that even bull runs can have a sharp pull back  ( I used this friday morning, before the sharp pull back.  I hope I didn’t cause that  🙂

 

IMGN AS AN EXAMPLE OF A BULL RIDE – Another BULL RUN with deep sell offs.  This is NOT always an easy way to make money, but after that steep October sell off, this doubled in 3 months.

 

  That is where we are  in these markets.  I expected selling down into a dcl in the General markets, but they melted down a bit quicker than expected.  I expected a sell off in Oil,  it drops and keeps bouncing back.  🙂   After some selling in GDX/GDXJ ,  I jumped into JNUG at the midday reversal FED DAY, using short term charts.  It worked short term, and THAT strategy worked for me on the DEC ICL since those lows held up.   It was a risky trade and it did not work for me this week, the lows gave in to the selling  ( I knew the risks going into the trade, so a ‘stop’ limits the draw down.  That doesn’t make it any less frustrating though).

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  So I stepped aside as just about everything & every sector sold off to on Friday.  I wanted to clear my head and re-group and try to see ‘Where are we now’ ?  What has changed and what hasn’t changed.   Is anything clearer?  Is anything broken?  What are the possibilities?  Do we have proof that the USD has an ICL?  We actually dont have a confirmed DCL in the USD yet-  so nothing has changed there.

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 Finally – I am not a perma bull in Gold – but Fridays action did not really cause damage that is abnormal or beyond repair.  Gold is not even down 38% off of the top, and even GDX is down 50% and that is acceptable.  This type of action can certainly rock ones confidence going forward, and it is prudent to play it safe, maybe waiting for a dcl and not jumping the gun. There could be further downside, as shown on this GDX chart . Each slam down week was followed by a slight undercut.  We will watch how this plays out.

 So at this point, this is how I see our markets and the possibilities and probabilities going forward. I don’t see major damage in the precious metals at all (yet), but a little caution next week as we see whether or not the General Markets drop further & drag down other sectors with them.  I would also love to see Gold drop down further & see Silver and the Miners simply slip to the 61% area of the chart above & begin to hold up as Gold sells down.  This would be a very good sign.

 Lets see what Monday brings and adds to these charts. It was a rough ending to the week almost across the board, as things started to melt down. I have had very good gains in the medical marijuana stocks since Sept & October and gave too much of that back too.  Many things got caught up in the selling last week, so let’s see if next week calms down. Thanks for being here, and we will look for the best ways to make some money going forward.

 

~ALEX