February 1st – Post Fed Swing Sets

SPX – We are actually pretty late in the timing for a dcl, so even though this drop can meander like the one in November did, it may just be a brief dip.

 

WTIC  – Oil is also in the timing for a dcl, but it could drop further. These markets have been so strong, but I do expect a bit more of a drop here.

XLE  – The XLE dropped fairly quickly and then put in a form of a reversal candle on Fed Wed. It dropped so fast that it would take some buying to get back over the 10sma and confirm a swing low.  In fact, it may just bounce and drop again  (like an a-b-c), so I am just watching this for now.

 

THE USD

 

No doubt about the fact that the USD is frustrating in several ways.  It looks set to bottom in an ICL or DCL, but that bounce could short term adversely affect Miners.  Miners look Bullish. That said, there is No clear answer.  My only advise is to stay alert and use a stops if you’re buying Miners.  The only other thing one could do is stay on the side lines and miss a possible run higher.   Let’s examine the charts…

 

USD as UUP -From yesterday,  The USD MIGHT just be putting in a dcl similar to August, and not an ICL.  Only time will tell,  but this alone is keeping some from being comfortable buying Miners.

 

USD DAY 4 – Notice that on day 4 the USD has not even pushed above the 10sma yet.  The 10sma is around 89.50. If it does break above it, we’ll have to see how Miners react and possibly play defense.

 

USD FROM YESTERDAYS REPORT  -And in this chart I pointed out that it is possible that it wont get above the 10sma, it could drop into next week to make a low. If this is just another daily cycle ‘pause’, there would be more downside & allow miners to run higher.

GOLD, SILVER, MINERS

 

GOLD -I just wanted to point out that Gold did drop to about $1332.90, because Stockcharts does not show that.  This would mean that GOLD made a NEW low on day 33.

 

GOLD – Gold on FED WEDNESDAY did drop to a new low and recovered. This would be a day 33 low and a push above Wed highs would put a swing low in place.  A DCL is due, so that USD is puzzling.

 

GOLD – Oddly,  using this charting service, it gives me a day 34 low yesterday.  I am pointing out here that after the last FED POP in Dec 13th,  Gold just paused for 2 days. If GOLD pauses now, and the USD breaks higher for day 5 & 6, the USD could peak left translated and then drop, allowing Gold to move higher.

GOLD – From a prior report. If the USD bounced in a simple DCL and peaked on day 5-8,  then GOLD still could drop as shown, but so far the FED reversal is the low.

 

GUT FEEL:  This is a very difficult read with Gold vs USD.  GOLD looks ready to run higher and out in a dcl on day 34.  I Bought Miners yesterday and mentioned it in the comments section.    The USD has pause at the recent lows on day 4 and also looks like it may want to go higher. Can they run higher together?  Yes, but it is rare. So we have a mixed picture,  but the precious metals do look bullish.   let’s look further…

 

 

SILVER – Silver actually bottomed last week.  It also looks like a bullish set up.

GDX –  Yesterday I was comparing GDX now to GDX August.  GDX August did not get completely oversold, and put in a reversal at the lower timing band.

GDX – Yesterdays Fed sell off did almost the exact same thing.

 

GDX – Here I wanted to point out that on that ICL FED WED Pop on Dec 13th, similar to Gold, GDX ‘paused’ & dropped for 2 days.  If we ‘pause’ or drop a bit Thursday , it does not necessarily mean that it is weak.

GDX – Zooming in, we have a reversal on the 34 sma, and if price moves above yesterdays highs of 23.83,  we have a swing low. It is also at the down trend line, so a push above that is bullish too. It would be a buy signal if you didn’t buy the reversal.

So that looks like a DCL is going to form in Gold & Miners if they move above Wednesdays highs.  That would be a BUY.  The USD is the tricky part,  giving us mixed signals.

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I was asked what I watch during the FOMC DECISION,  or intraday, so I shared some charts in the comments section as time went by.  I will share some charts and thoughts here, because I found something rather amazing when I went back and looked at the first one below.

 

GDXJ – Here I posted a bullish break out in GDX intraday on the 15 minute chart. The funny thing is, in the comments I mentioned that this could possibly still drop and ‘back test’ the break out of the wedge with a FED WHIP SAW at the 2 p.m. release. It doesn’t really look likely though, right?

 

 

GDXJ –  And then it did get back tested!  Crazy!  So I ended up Buying when it dropped and did a reversal.  I will show why on a separate chart.

 

 

 So I bought.  Why?   We got a back test on that break out, and also in the comments I wrote that I was looking around during the sell off,  I saw THM up 15%, TRX, HMY, NSRPF, CDE, SA, AKG, SAND, and several other miners acting perfectly fine and in the green.   This did not look like a broad-based sell off, so as GDX & GDXJ reversed , I added.

 

JNUG  – I  was watching this shake out take place and saw very heavy volume, but price stopped dropping, and actually reversed. To me, that volume is stops being run, and buyers stepping in and accumulating large positions. I jumped in , and a stop can be placed below the lows of that sell off.   This is not as ‘SAFE’ of a buy as a confirmed swing low, it can whip saw & come back down, but like I said-  it all added up with many miners green, and a stop close below.

 

JNUG – This is how the day ended. I bought around the reversal candle.

So I saw reversals on many of the Miners.  Let’s take a look at just a couple.  If we get the swing low in place,  these may be good opportunities.

 

CDE – Doesn’t this look like a low risk entry? It is right above the 50sma so a stop could be placed there.

 

HMY – HMY is still at the lows, but this is strong volume over the last 2 days and it didnt drop during the Fed Sell off.  It looks stronger this timeand closed up 6%.

SA – I posted this after the Fed sell of started.  SA was one of the ones holding up through the selling, and this looks low risk if you use a stop.

SAND – This could be viewed as a cup with an odd handle. If I bought it I would use a tight stop at the 34 sma, and risk is minimal.

 

 So above I wanted to show you why I bought before a swing low was in place.  As a full time trader, I often jump the gun if I see the right conditions in real time.  Sometimes it works, other times I get stopped out.  1. We had a sharp sell off and reversal in Miners.  2. Many Miners stayed Green and others also have reversal candles.  3. We are on day 34 for Gold. These are a few of the reasons that I added intraday.   It was risky, but things were looking more bullish than bearish. The USD is the only question mark.  If Gold drops to yesterdays lows, and Miners resist the selling, that would be bullish. If they both drop, I may get stopped out.

 

 Basically, the information that the FOMC MEETING presented was not a surprise.  I think that the initial reaction in GDX & GDXJ could simply be bigger players running the stops to accumulate large positions at the dcl.  I hope that they are done  🙂  We got a nice reversal and any follow through higher puts a swing low in place and regains the 10sma.

 

 I know that the USD looks to be bottoming too, but should that stop us from buying if Gold & Miners put in a swing low?  The USD would be on day 5 today after going sideways, and if it is just a DCL, it could peek on day 5-8.   If it is an ICL and due for a small rally?  Well – that is tricky.  All I can suggest is to use stops and stay alert until the uncertainty that comes with the mixed signals clears up.  I added to my position yesterday, and will use a stop under yesterdays lows for new positions.  Stay frosty and enjoy your Thursday trading!

 

~ALEX

 

I will be away for an hour or two in the morning – I should be back by the time the market opens.

 This is Gold as I proof read the report this morning. Gold is dropping toward yesterdays lows  ( $1332.90).  You can watch that number. It may just be a ‘test’ of the lows, but what if the lows break?   If it breaks, we may see Gold push below $1324.30 to run some possible stops there. If Miners drop too, I will probably be stopped out of my positions and will have to reassess .  I would actually love to see Gold break down and recover before the open with that often seen 8:30 a.m. directional change.  That way Gold could break down, but Miners would ignore the move.   Only time will tell how this is going to play out!

Stay frosty my friends! 🙂