Tuesday July 31st – The Triggerfish
In anticipation of a change in the way a market sector is moving, we sometimes start looking for a possible catalyst or a trigger that will cause that change in direction.
NASDAQ – The NASDAQ was strong and moved to new highs. Everyone was really bullish, but I was expecting a drop. The Trigger seems to have been ‘earnings’. We saw FB, NFLX, TWTR among others disappoint, and even though AMZN and GOOG blew away their forecast estimate, it was not enough to prevent the drop that we are now seeing. Friday and Monday took back 3 weeks of gains. We could get a 1/2 cycle low bounce here, but we may not.
SPX – This would be what I would expect from a 1/2 cycle bounce. Not a move to new highs, but I am expecting a L.T. Daily Cycle and a drop into a dcl. The volume is strong, the stochastics is still overbought.
WTIC – Oil regained the 50sma. I’ve been expecting oil to drop after a bounce here, and I think that the low on day 21 is too early for a dcl in Oil, however I found something interesting.
XLE – When Oil ran to new highs, the XLE dropped. Now Oil dropped and the XLE is near recent highs. The OIH rebounded sharply with volume too. They both look to be turning bullish. That is odd, so I want to keep an eye on this sector and see how this plays out over the next 2 days ( Oil inventory Wednesday often moves Oil too).
USD – Since the USD & the Markets dropped, I really thought that that would be a ‘trigger’ for a POP in Gold, but that may not be the Trigger that Gold is looking for. The USD dropped…
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I did some thinking about GOLD & what may trigger the next move higher out of an ICL, so we can discuss that briefly.
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GOLD 4 Hour Chart – If this small triangle is a ‘continuation pattern’, Gold should drop & a measured move would make a slight new low. A drop to $1200? So…
1. Will the FOMC Meeting Wednesday be the trigger to save & reverse Gold higher after a drop today, or…
2. Will the FOMC Mtg Wednesday trigger a sharp drop in GOLD to a shake out, and then a reversal higher as selling exhausts and shorts start to cover?
UPDATE TUESDAY 7 A.M. Eastern GOLD 4 Hour Chart – Gold is not breaking below that triangle this morning. It could break the lows from a week ago or on the FOMC WED, and sync up with Miners.
It’s possible that the FOMC MTG Wednesday has a discussion about ‘Inflation” & Gold pops or drops . If the FED states that inflation is moving higher faster than expected, Gold could POP and start a short covering rally. If they say the opposite, we could get a slam down sell off that exhausts the selling & reverses then too.
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Let’s look at Miners
Even here at Chartfreak, the Comments section of our reports has finally turned disgusted or maybe fed up with Miners selling off, even though GDX only closed down 5 cents on Monday. This slow day after day after day sell off is beginning to wear people down. I am exhausted covering it 🙂 We were almost daily hearing about ‘eagerly buying the dip’, or ‘getting some more Miners at a discount’ if they sell off more. Now we are seeing disappointment and it is this type of sell off that is enough to cause most people to just go away. Sentiment for Miners is pretty bearish. That is actually what we like to see as an ICL approaches.
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GDX #1 – So far the slow drip, drip, drip has taken place. GDX lost 5 cents and people are more bearish about that then when I’ve seen it lose 50 cents. This slow drip to new lows is wearing people out. Volume was light, but a FED WEDNESDAY could change that. Slight divergence on the RSI, none on the MACD…
GDX #2 – So here is where we are with GDX, and I have mentioned this set up all along. We are back at the lows of the trading range. The question here is , “Will the FOMC meeting hold GDX at these 2 support levels AGAIN ( The Red line here or below $21 blue line)? ” It has held here for almost 2 years, so that is very possible. The FOMC could rocket Miners higher tomorrow after 2 p.m. Eastern time…
OR
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GDX #3– We need to mentally be prepared for almost 2 years of stops being run, and THEN buyers step in and short covering rally follows. I can EASILY picture this support holding again, but I can also EASILY picture this letting go on Fed Wednesday And then reversing after the break down is accumulated by big buyers.
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They never make it easy. At this point, I’m just wondering what the trigger or catalyst for Golds short cover rally to start will be. It was not the dip in the General Markets, and the USD dropping on Friday & Monday did not start Gold higher. It may just be the FOMC MEETING on WEDNESDAY. We’ll see what happens on Tuesday, and maybe we’ll get a few more clues?
Enjoy your Tuesday trading.
