FRIDAY MAY 25th
The General Markets – No Real Change
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WTIC from Yesterdays report– Day 32 & we’ve been expecting a dip from the wedge and into a dcl.
WTIC – It looks like the drop has started and it could drop to the 50sma as a possible target. This drop may take the form of an a-b-c style dip.
I don’t have time to review all the things happening in the precious metals sector, so I highly recommend that you read yesterdays Precious Metals Section, and this is the follow up.
GOLD – These 2 charts below were from yesterdays report and basically say that a recovery of the 200sma by Gold should be considered a ‘shake out’ and a recovery would be Bullish. Also a break of the blue trend line is bullish.
I said that at this point I expected a Bounce to back test the 200sma, and then a final drop as a most likely scenario. I thought that this bounce would draw in Buyers, and then quickly slam down & shake them out, however…
We got the bounce and it looks quite convincing. It could draw me in. I actually took a small trade yesterday in Miners, but it is one that won’t hurt me if it drops again. Let’s look at GOLD.
GOLD #1 – Gold has recovered the 10sma, and looks ready to break above the downtrend line & 200sma. Volume was strong and another day like Thursday would push this above resistance.
1. This is exactly what I said I expected , and then a drop from here, but…
2. This actually looks ready to recover & break higher with that strong volume.
GOLD #2 – We also discussed a possible LONG daily cycle bottoming on day 42. I viewed this as less likely, but if GOLD breaks out here, this would look like an ICL drop & a shake out when it plunged below the 200sma.
So I think that Gold regaining the 200sma would have to be viewed as a buy, and then you would place a stop below it for protection. As we have discussed over and over, some MINERS are just ignoring any Gold selling, and some are well off of their lows. Certain Miners should already be viewed as Bullish and are not affected by Golds movement to a large degree.
AT THE END OF THIS REPORT, I AM GOING TO SHOW YOU A FEW MINERS THAT WERE NOT AFFECTED VERY MUCH DURING GOLDS $20 PLUNGE LAST WEEK. THIS IS THE REASON THAT I TOOK A SMALL TRADE YESTERDAY.
XJY – The YEN broke below the 200sma and recovered. The way that the YEN moves often leads Gold, so this bodes rather well for Gold. It looks like $XJY did a shake out.
GDX – In the first 15 minutes of trade, I noticed a strong surge in volume, and the Miners ( GDX & GDXJ) Started to look like they were going to become bullish. I DECIDED TO TAKE A SMALL TRADE HERE, EVEN THOUGH I EXPECTED THAT THIS BOUNCE COULD ROLL OVER. I ALSO OWN SILVER STOCKS.
GDX – Volume by the end of the day did increase. GDX broke to new lows on Wednesday and then moved above the 10sma Thursday. It also recovered the 50sma. At this point, I want to be clear that this doesn’t look that much different from the rise starting on May 1st. That rise didn’t burst higher, and this one may not either, but I took a trade and can use a stop. We’ll see if it can break above the 200sma for starters.
GDXJ #1 – Honestly, GDXJ just looks bullish, like it is marching along and ignoring Gold. GOLDS $20 drop below the 200sma last week DID NOT Cause GDXJ to break down. It gapped down, but not to new lows. GDXJ remained Bullish. We had to be cautious with a Gold ICL approaching at that time, but look at GDXJ making higher lows as GOLD dropped below the 200sma. Also…
GDXJ #2– You may recall that I suggested a possible ICL in Miners took place in February. Look at GDXJ since February. It hasn’t exactly ripped higher, but it has higher lows in this sideways consolidation since February. GDXJ is now ignoring Golds drop below the 200sma about a week ago. GDXJ is above the 10, 50, & 200sma as of Thursday. THAT IS WHY I TOOK A SMALL TRADE TOO.
GDX – So we go back to our chart of GDX. Is this going to break out or is this another fake out in a continuing consolidation fake out? It looks good after making a new low 2 days ago. You could buy this with a stop under WEDNESDAY just in case it takes off running, but also…
When considering GDX, I usually look at GG, ABX, and NEM to see how they are setting up (or not), since they are big components of GDX. So now, does it look like GDX could break out based on those?
GG – This actually looks like a very bullish chart. If this was a TECH stock or a BIOTECH stock, would I recommend it? YES. With a stop under the red 200sma. So this looks good for GDX & some possible follow through.
ABX – If this was a tech stock, would I recommend this? Why not? This looks very good. It reversed on the 50sma and is moving out of oversold. So this could break out & that bodes well for GDX.
EXK – I looked at quite a few Miners today, and this was EXK 1 hr into trading. Quite a few do seem to be setting up for bullish break outs. This pulled back at the close, but remains above the 10sma so far.
EXK – I would buy this here, but with the understanding that it could drop to the 50sma one more time if GOLD did a shake out type move into an ICL. Maybe waiting for a break out over the down trend line is safer. You need a stop just in case the base metals sell off, but this looks ready to break out. I would Start small & add on a break out?
FSM – This is a similar set up to EXK. If it was a tech stock I would say to buy it with a stop under the 50sma, and add on a break out above the trend line.
So we are looking for signs of bullishness, and GOLD and the Miners do look to be set up bullishly. Gold moved above the 10sma and so did GDX & GDXJ, so they actually look to have swing lows in place. I TOOK A SMALL POSITION AND WILL ADD IF GOLD BREAKS ABOVE THAT DOWN TREND LINE. Some may wish to wait for that break out first.
Many charts for individual Miners look as good as the Tech stocks that were running nicely recently, so even though we don’t have a very clear cut looking ICL type low in Gold, I think that some buying of miners can take place, with a stop just in case.
We’ll see what Friday throws our way, and I will cover things further in the weekend report. I also will run through some charts of Miners below, just to highlight some bullishness that has been taking place, and briefly touched on in past reports. Enjoy your Friday trading!
~ALEX
IN THIS EXERCISE, I JUST WANTED TO SHOW HOW SOME OF THE MINERS HAVE BEEN IGNORING GOLDS DROP AND RUNNING ON THEIR OWN MERIT.
GORO – A BUY since March, GORO has been running very nicely since April. When GOLD dropped $20 a week ago, GORO dropped & recovered intra-day, so if we were to get another $20 slam in Gold to an ICL right now, you get the idea of how GORO might handle it.
IAG – IAG also became a buy in March and never dropped below the zero line on the lower indicator. IAG then broke out & held the 50sma on a back test. It ignored GOLDs recent $20 plunge last week.
NSRPF– I actually think that this mild pull back in NSRPF can be bought.
NSRPF – This became a buy when it bottomed in January, and never triggered a sell in the lower indicator since then. It was Not an easy ride, but a 100+% Move higher has taken place.
AG – That possible ICL in Feb for Miners shows up on the chart for AG too. It became a buy on the drop in March with strong divergence in the lower & Middle indicator. It has never dropped back below that zero line either. It has not dropped below the 50sma, and now it is above the 200sma. I did recommend AG a few times, but DID YOU MISS THE BIG MOVE IN AG? Not really…
AG – It is probably just getting started, you still did not miss THE BIG MOVE. If we see GOLD & SILVER take off higher in a sustained manner this summer, these will accelerate too.
AUY – This one triggered buy in March, but when it lost the 200sma, it also lost the zero line ( A sell trigger for safety sake). So this is a lagger and may be setting up to move higher soon.
So some Miners are lagging, and they will probably start moving higher and play catch up too. Miners like AUY, SA, SAND, AU & SBGL, etc are closer to their lows. They will likely move higher once Gold & Silver and GDX & GDXJ break out higher.
2 STOCKS AS A TRADE
CPST – This looks bullish off of that 50sma and looks ready to continue higher. It may stall, it may do a bull flag, or it may just keep going, but the high volume pop looks quite bullish.
CY – MU & CREE are at the recent highs, CY Looks like it will break the down trend and move higher too. If it breaks above the 50sma, it could be bought there and use a reasonable stop.
