Wednesday – When Painful Cracks Appear

Don’t worry, we do have a remedy for that…

SPX –  Yesterday I pointed out on this chart that we should expect a pull back, and I also used the IWM & TRAN Charts to show that a dip was likely.  Yesterdays dip was expected.  It should be right translated daily cycle, so there were no real cracks here…

WTIC – Day 27 and still at the highs, no cracks here. This is likely to be a R.T. Daily cycle when the dip comes too.  Please read the chart…

XLE  – The First Target has been  reached (Prior highs), and it could extend if Oil continues higher. No cracks here.

USD –  The USD popped higher Tuesday.  The ‘Bounce’ out of an ICL in the USD has been bullish short term, and adding to Golds inability to break out.  It is nearing resistance areas and a ‘back test’ of the break down.  THIS BIG PICTURE helps us to see where the ICL in Gold could come in, and a top the USD run could form, but so far? No cracks here either.

BEHIND THE BEAUTY CRACKS APPEAR

I’m just going to walk us through yesterdays sharp drop chart after chart.

GOLD #1 – We had our DCL (Possible ICL) in early May.  I mentioned that we had to be alert – this could top between day 8-10 or so.  Monday was day 9 and it still looked fine above the 10sma.  It was a beautiful 6 month chart really.  Tuesday Day 10 and  the bottom simply fell right out.  It had topped on day 8.   Behind the beauty cracks appeared.

GOLD #2 – The  CHART FROM MAY 11  – Honestly, We were not really caught off guard, I mentioned that the ICL could still be ahead, but it just hurts as it drags things on a bit longer.

GOLD #3 –  I find this unlikely, but need to mention it, since Miners didn’t break down. If this were to quickly recover, we would have to view it as a ‘shake out’.   Why do I say unlikely?

GOLD #4 – The 10sma was falling sharply in April, we re-gained it and closed above it for 3 days.  THAT seems like a dcl that rolled over on day 11, NOT an extended daily cycle.  READ THE CHART…

GOLD #5–    It is true that Day 29 seemed a bit early for a dcl.  The trend line wasn’t broken to confirm a dcl, but the 10sma certainly was.   This is why I say that IF THIS RECOVERED QUICKLY AS A SHAKE OUT,  I may have to go with this type of a count.  NOTE : This really is unlikely with The stochastics mid point.  It is usually bottomed out at an ICL though.  So…

GOLD #6 – I see the stochastics bottomed out after an ICL sell off, so again, I think we have more time until we get our final low.

GOLD #7 – I’m not saying straight down for 2 weeks.  Look at the DEC ICL.  DROP, pause, DROP, pause, etc.   If we ‘pause’ on Wednesday, you should look up this chart again, before thinking that the selling has dried up. Tuesdays drop came out of nowhere, and it could do that again on Thursday.

GOLD #8 – When all is said and done,  the WEEKLY chart will probably just look normal after this drop and remain bullish with a series of higher lows as ICLs.   THAT MEANS that we shouldn’t break down below  $1238.30.  MAYBE $1250 ish.

GOLD #9  – Picture a back test or bear flag and a final drop. That would allow ‘time ‘ to pass, without breaking the DEC ICL (lows).

THE GOOD NEWS? MINERS DID NOT FOLLOW GOLDS BIG DROP-  SO FAR

GDX – GDX didn’t even break below the May DCL yet. I am out of all leverage, but I still own GPL & HL.  I can always get back in if that was a 1 day slam down ‘shake out’, but I really dont think that that is the likely path, and I do NOT want to hold leverage into an ICL.

GDX WEEKLY –  I step back to look at the big picture in times of uncertainty.  I have been pointing this out for weeks, and I think that riding JNUG or NUGT down to the lower line is unnecessary, and uncomfortable, even if I do expect a break higher later.

 CONCLUSION:  We knew that we might get that final drop into an ICL if this daily cycle didn’t get moving higher sooner than later. ICLs do have a 5, 6 or 7 month window, and that has been pointed out repeatedly.    So now that the cracks have appeared in Gold and we have to wait for this daily cycle to end in the real ICL again.  It really is best to raise cash and pile in at the next low, because at 6 months from Dec to June, it is far more likely to look and feel and actually be the ICL.  The run for Miners out of an ICL is where really good money is made quickly.

 I hate waiting for an ICL too, but as this daily cycle dips down to an ICL,  we need to expect a great opportunity in Miners.  It may be the last & best buying opportunity before this sector takes off in a major bull run rally.  We thought that the MAY F.O.M.C. time period could be an ICL, but it really didn’t seem like the sell off was enough to change sentiment.  It didn’t feel like an ICL, and doubt was always there.  I mentioned that GOLD could top L.T. by day 7-10 and apparently it did.  I think at this point, sentiment will turn negative and this drop is going to upset Gold Bugs & Bulls in the sector.  You can almost hear the screams ” Oh No! NOT AGAIN!”

 One thing that can be said is that Miners have acted quite bullishly over the past several weeks.  Did you notice that  they did NOT sell off  sharply when Gold dropped $20 yesterday? And the BPGDM was quite Bullish too, so the selling in Miners as Gold dips into an ICL may be muted. This is a VERY BULLISH BPGDM heading into a final daily cycle ( ICL).  This is usually quite weak at this point. See July ICL 2017, Dec ICL 2018.  This may only drop to 40.

 For now, we have had other trades to consider in the mean time.  I’m usually ‘all in’ at an ICL, and I was not nearly as heavy on that May DCL.   I really wasn’t feeling it, and was willing to wait until maybe day 12 to see where we were then.  I even mentioned that I sold some leverage and AXU on Monday.  With Tuesdays  sharp drop out of nowhere in Gold, now it feels like we could see an ICL at the next swing low.

 In the meantime,  We’ve discussed various set ups like  ENPH, IPI, TGB, HBM, etc and there will be other trade set ups with the market pull back. When oil finally dips down, there will be energy stocks that have had a nice run pulling back too, and those will likely be setting up to be bought.  And Miners seem to be resisting the severity of Golds drop so far. THAT could lead to buying opportunities in Miners that ran away  without us.  Stocks like KL, FSM, IAG, TRX, THM, and GORO were strong, we may get an opportunity to enter those at lower prices. See KL below.

We’ll see how things unfold and we will know better over time. Enjoy your Wednesday trading!

~ALEX

IPI – This was a break out in yesterdays report.  I said  THIS IS A BUY RIGHT HERE,

IPI – Good follow through and notice that it still isn’t near overbought, so I even added. This could break to new highs, remember the long term chart.

CBDS  – This is a copy / paste from yesterdays report…

CBDS – It DID break out and I do own it.  I’m hoping that it just runs higher from here.

TGB & HBM – I mentioned to put these on a watch list.  They dipped and held their 10sma, still looking good at this point.  It could be a buy above the 50sma, HBM stayed above its 50sma.