Sitting Near The Lows

Today is Friday,  the last  trading day of the week.  Let’s discuss just a few details of  this weeks activity…

 

I have been expecting the General Markets to pull back, and they have now been pulling back. Lets review…

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QQQ AUG 7 ,  1 month ago –  I had drawn a bearish rising wedge forming weeks ago and mentioned that these often cause a top & a drop, so I became cauious.   We also saw a channel that could bring price a bit higher outside of the wedge, so I was cautiously optimistic that it could go higher, but I was still expecting  a drop.

 

 

QQQ Aug 9 , also  1 Month ago –  This second view a month ago helped us to see that the NASDAQ  Might also run to the upper channel.  SO I said that I was cautiously optimistic, meaning that it can go higher, but I am expecting the drop sooner or later.

QQQ –  We are getting our drop now, and if you look at FB, TWTR, even  AMZN & GOOG,  you’ll see that it was good to raise stops and be cautious.  This was a false break out and…

 

QQQ –  It tagged the upper line and dropped. If we are dropping into the ICL ( and we are due), this could get choppy and eventually make its way all the way down to the lower blue line. The NASDAQ can sell of very quickly  ( see Feb & March) , so I remain cautious right now.

 

GOOG – Ever since the great earnings report,  it looks like profit taking has taken over,  not buying.

So for today,  lets just see how these markets behave. FB, TWTR, MU, CY, SOX, QQQ, etc are all dropping quickly.

 

WTIC –  Oil dropped almost $1 Thursday and as mentioned in the last several reports, it is due for an ICL.  If this is topping this early in the daily cycle,  we could see a prolonged sell off in Oil. Their daily cycles can be 30-50 days long.  The XLE looks to be breaking down, and DWT and DRIP both look bullish actually.

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I want to discuss the current situation in GOLD & MINERS

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Some people are still invested in Miners (or Gold & Silver),  others are stopped out & on the side lines, and still others are freshly dipping back into the sector.  So some people are just waiting and watching to see how the current set up in GOLD  (with a higher low) and Miners ( sitting at the lows, lower low) will play out,  others are really bothered that Miners are not leading higher here.  It is assumed that Miners at the lows with GOLD having a higher low is an automatic curse.   Is it?  It is not, and we really  just need time to pass to allow us to see how this plays out, so let’s review things that we DO know from history.

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Miners are at their new lows, and GOLD is at a higher low.  Do Miners NEED to lead the way higher?

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GDX  TOP WINDOW / GOLD LOWER WINDOW 2015- 2016 –    EVERYONE loves to talk about the Miners rally in 2016,  but they forget the day by day by day pain that got us there.  Look at this chart.

1. Gold in the lower box was making a higher low in January, after putting in an ICL in December,

2. MINERS BROKE DOWN to a New ‘Lower lows”.

3. That is somewhat similar to what we have now, Gold higher than Miners, and it throws people off

4.  THAT did NOT matter in 2016.  It freaked people out and took off higher. Read the chart.

 

ZOOM IN:  GDX  TOP WINDOW / GOLD LOWER WINDOW –

1. Nov – January- Miners put in a daily cycle that even has a bullish higher high, and THAT is usually a sign of a Bottom, an ICL.  This was a major fake out of bullishness that failed.

2. So since GDX Lows came in November,   it now looked like MINERS were leading, that they Bottomed first in an ICL, and gold followed in December, right?   See the chart.  Then GOLD made a higher low on Day 28, Miners Busted the lows.

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GDX  2016 ICL – To make matters worse, Everything was Bullish up to a  day 33 ‘peak’ for miners,  and suddenly DAY 36-40 saw the Miners crash to new lows?   THAT WAS A NEW TRICK, AND THAT WAS SCARY.  THEN IT RAMPED UP AND LEFT SO MANY BEHIND.  BYE BYE.

Doesn’t anyone remember how people felt at that time? My comments section was extremely fearful.   All I was hearing in emails were scary horror stories,  ‘So & so was predicting that Gold was going to under $1000,  even as low as $800’, because Miners broke down.  Everyone was afraid to buy and warning me and others that this set up was very bearish!

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GDXJ – GDXJ rocketed lower, and those ‘New lows’ after Gold put in an ICL was ‘ NOT NORMAL’.   What should I do now?  We all had a choice

1.  Could I get upset & emotional and cry day after day?  Sure,  but what does that accomplish? Anything good? That makes things worse.

2.  Allow it to play out and be alert and ready for any possible opportunity that develops.    People got upset in 2016 and started giving up, feeding on fear of Gold $800.   Look what they missed.  Losses were erased  very quickly,  but only if  the Traders were alert, ready, paying attention, and thus ready to act.

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NOW LET’s REVIEW THE CURRENT SET UP AGAIN

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GOLD – GOLD seems to have an ICL in August, and also seems to have higher lows  ( similar to 2016?).   Miners are at lower lows ( similar to 2016?).  Is that possible?  It was in 2016, and just like then, it is freaking people out.

GDXJ –  Steeper than that crash in 2016, GDXJ has crashed to new lows while GOLD made a higher low.   This has caused a lot of emotional damage and confusion.     I personally do not get upset, what good would that do me?   How would I benefit?  I know that the only thing to do is to continue to examine things (COT, SENTIMENT, HISTORY, ETC)  as things play out and see what kind of opportunity may or may not develop.

GDXJ –  The current COT, Sentiment, etc could lead to a similar rally as we saw in 2016, and let’s just say that this takes place.   I want to remain unemotional, focused , ready and alert,  so that I am in a position to act ,  IF an opportunity arrives.  It’s either that or walk away.

“I want to remain unemotional, focused , ready and alert,  Just in case”.

 If you hate Miners and want to skip any possible future trade set up, that is fine.  There will be other places to trade, and I’ll keep an eye on other areas too.  Right now the General Markets and Oil are selling off, so there is a need to be patient all around, unless you like DWT & DRIP for a sell off in Oil & XLE.   The pull back in the General Markets could lead to good buy set ups too.  For me,  I am still excited about the COT for Gold & Silver,  the Sentiment being in the trash,  the scary stories circulating, etc etc.  I think that there is a big opportunity coming,  like 2016,  but I can’t know exactly the day that it will begin.  Yes, it is setting up in an unorthodox manner, but so did the 2016 Rally.   It will require me to remain focused and follow things as  this plays out.   Neither you nor I can  FORCE miners to bottom here and take off higher,  we can only try to be ready to act if & when it does.

As always, Time will tell.

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I will still be looking for other ‘set ups’ if the General Markets pull back in an orderly manner and offer low risk entries in the future too.

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Enjoy your weekend!

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~ALEX

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EXTRA CHARTS

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APHQF started down 50 cents for the morning yesterday, and then took off higher, stretching to new highs and closing up about 16%.   It is a steep rise, and may be heading to former highs.  It may top at former highs as a giant CUP that then consolidates and forms a handle.  We bought at $8 & $9, so we should be almost guaranteed some kind of good profit.   All I can say is that as hard as it is to sell such a good run,  it is best to sell some on the way up,  or raise your stops along the way.   Volume has been very nice, but I cannot tell you where this will peak.

 

IF THE MJ SECTOR REMAINS BULLISH

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 GRWG BASE –  I love this base, and you can see the upside potential.  Let’s zoom in…

 

GRWG DAILY – It is at a low risk entry,  since it seems to bounce off of the 8 ema or 10sma . This allows you to use a tight stop if it breaks below the 10sma, or you could wait for a break out higher ,   which would be a break above & out of that base on the chart above.

 

PLG – Started to pop again yesterday,  but it did sell off a bit into the close. Here it was up 14%, but it closed up 5%. I still like this base.

 

 

ZIOP –  I decided to sell my ZIOP yesterday,  simply because it started to sell below the 50sma along with XBI & IBB.  It closed under the 50sma, and  my mental stop was $2.70.  It didn’t break that area, but I just decided to step aside,  since I can always jump in later if it breaks out higher.   Basically, this is no longer acting as expected.

PLG (Side note)–   IS IT POSSIBLE AT ALL,  that GDX could ‘base out’ after that steep sell off,  similar to PLG?  I cannot rule that out,  anything is possible when set ups get extreme and deviate from the norm.  Gold would probably have to base out like this too, and  It seems less likely, with high shorts by specs and Smart money long, deep  bearish sentiment, etc,  but I just wanted to mention it.  I do so because if GDX or GDXJ rides sideways like this, riding JNUG or buying options will not work out.