October 20 Weekend Review
DJIA – I can’t say with certainty whether this is a long term double top or not, but it has played out as a short term double top. We were expecting this drop into an ICL for weeks . Look at the strong bearish divergence on the MACD & RSI on a weekly basis. I’ve discuss in my daily reports what to expect going forward.
SPX DAILY – I have been discussing how the markets tend to be choppy and difficult after these ICL types of drops, and so far, that is what we see. We do have a swing low, but it remains unconfirmed. Price is being rejected at the 10sma and the down trend has not been broken. A safer buy would be to wait for those break outs.
SPX – Please read the chart. We are actually late in the timing for an ICL, but this almost looks like we have more downside (Stochastics).
USD WEEKLY – The weekly shows that the USD is still pinned under the 200 ma after a brief break out. This was a green week for the USD, but that did not hurt the Precious Metals. Please excuse the Typo on the chart, it is too late to fix it. 🙂 I have to say that this looks bullish at this point, so we’ll just have to see how things play out.
WTIC DAILY – Oil is also now playing out as expected. It is day 45, and Oils daily cycles can be 50+ days, but the way to view this is that it can bottom, form a swing low , and a dcl at anytime. I had a ‘short position’ using DWT , but closed it already. Prior drops below the 50 sma DID drop lower, so it isn’t time to go long yet, and this can drop to $67 (next chart).
WTIC – This chart from OCT 17 shows the 200 sma, and I mentioned in that report that we may see OIL tag that area ( $67). It did that in August.
COT GOLD – With the burst higher in Gold, I see exactly what I expect to see. Smart Money begins to add to their short position as Gold moves out of the lows. Look at last Decembers ICL, and you’ll see the same thing there.
COT GOLD ANOTHER VIEW – I wanted to show you this way of viewing the COT with GOLDS price at lows, Deep Meaningful Lows (ICLs).
1. Simply notice how the Blue & Red lines separate when Gold is at highs or a peak.
2. Notice how the Blue & Red lines come together at ICLs ( those deep meaningful lows). Now compare the 2015 ICL and this one with the others. 2015 & 2018 are very extreme, but the current one is Rare & almost unheard. THIS IS VERY PROMISING.
GOLD BASE – The 50sma was broken a week ago Thursday with what we can call a ‘confirmation’. It was a confirmation for us that what we were expecting ( & the reasons that we were buying) has come true. The ICL should be in place. Did you notice that the 50sma is NOW CURLING UPWARD? Another Bullish sign.
GOLD WEEKLY #1 – I want to compare 2015 with 2018 again. These are 2 nice bases rather than a V-Bottom. Please study this chart and the 2 bottoms, and then I want you to look at a few things on the next chart…
GOLD WEEKLY #2 –
1. Blue arrows show where Gold Broke the weekly 10 MA then & now.
2. Notice the MACD cross at that time, currently & Then
3. Back in 2015, after a deep Bear Market Correction, the 200 weekly MA was trending lower
4. Now the 200 ma is flat and ready to rise, and that would be Bullish on a weekly chart.
5. This weeks highs for Gold tagged that 200. Price needs to push above that 200ma and when it does, that should also be considered quite Bullish.
6. The stochastics on a weekly basis in not oversold at all. When the STO in 2016 was at this point, Gold was able to run higher for 6 more months.
SILVER WEEKLY – Silver has closed above the weekly 10 ma, it has broken the downtrend line, and also look at how oversold Silver still is on a weekly basis. The MACD is close to crossing upward and the histogram is at the zero line. When it plays catch up, Silver often BURSTS higher.
I have received a few emails where people are concerned that “Silver is not doing as well as Gold. Isn’t it true that Silver needs to lead Gold for a real Bull run? “ I did address this in September, but I will address that again later in this report…
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USLV – I have been recommending owning a few Silver Miners, but some may also consider USLV ( a 3x Leveraged ETF), or even AGQ (a double). You may want to own these at the lows and use a stop, since I do believe that we have the lows in place for Silver too.
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MINERS REVIEW: We’ve been investing in Miners but due to the recent ‘base’ building, it can get a bit boring at times. Let me do a little review as to how we got to where we are and show that things are still lining up bullishly.
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GDX SEPTEMBER – Last month I had been discussing that the Lows should be in place and a possible inverse H&S was forming. It also could be 1-2 of a 1-2-3-4-5 wave move. We were still buying individual Miners, I bought GORO, SBGL, etc
GDX – On Oct 11th, Miners finally surged higher after crawling under the 50sma. I say finally because even with the inverse H&S , it was choppy under that 50sma.
GDX – I posted this idea, so that if we had a normal ‘back test’ of the 50sma, you would be ready for it and not shaken from positions. So far, we have not back tested, but we have gone sideways (Bull Flag?).
GDX WEEKLY – So the weekend report last week showed that we likely had a stop run or a ‘shake out’ and have since we recovered. We had been buying for a while now, but if you were not in yet, it was a bullish move that allows you to enter with a stop below recent lows. GDX WEEKLY remained very oversold.
GDX in last weeks reports : 2 scenarios short term, so that new buyers wont be easily shaken off . 1. A possible back test of the 50sma…
2. Or a smaller dip and a run for the 200sma.
GDX – Fridays report showed scenario #2 is playing out so far. A possible bull flag is dipping to the 10sma. That is often a good place to add to positions if you feel you are ‘light’ and have gained confidence along the way.
GDX – The current weekly chart has the MACD about to cross higher, the histogram at the zero line, but a bit of resistance overhead. We’ll deal with that when it comes our way.
As you can see, things have really begun to play out as expected, though it did take longer than expected . I know that many have hated the amount of time that it has taken to form the recent bases and inverse H&S patterns, it gets boring or even frustrating, but these Bases can launch a nice rally and as time moves forward, and it did in 2016. We are already seeing success and progress with some leaders.
Look at KL, SSRM, SBGL, ABX, AEM, GORO, RGLD, etc. for example, they have been featured in past reports.
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Way back in early September (4th) , SBGL was pointed out as acting bullishly. I bought it and I know that others did too, after posting these 2 charts as it broke the 50sma. This one was posted in our live chat area midday…
SBGL Sept 5th – This was posted in the next days report, the MACD & RSI were Bullish, and this was breaking from a nice base.
SBGL OCT 18th – It bounced along that 50sma , but has still moved from $2.40 to over $3.40 and is now pulling back again for another entry.
We have discussed quite a few Miners now that are acting correctly, and slowly the sector looks to be lining up for what could be a nice trending run higher, similar to the multi-month run that we saw in 2016. I will say that I see plenty of similarities between the ICL ( Intermediate Cycle Low) of 2015-2016, and the current one. As time goes on, I expect many more ‘set ups’ or entries to form and we can continue to take advantage of what will hopefully be an excellent run in the precious metals sector! ** I recommend a small basket to avoid individual risk that may come in the form of negative earnings or public offerings.
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Enjoy the rest of your weekend, and as always, Thank You for being here at Chartfreak!
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~ALEX
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Let me now address the ‘Silver is lagging Gold’ concern.
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Take a look at GOLD in 2015-2016. I use this , because EVERYONE remembers the Massive gains in 2016 for this sector. 🙂 Here I am showing with a blue line that Gold broke out from its base and above the 50sma in the 3rd day of January. So if “Silver needs to lead Gold before a real bull run can take place”, Silver should have already broken out by the 2nd week of January too, right?
SILVER 2015-2016 – Silver was still forming a base all through January when Gold took the lead. Silver broke out on Jan 26th – a whole month later. And that is not all. Just because Silver broke above the 50sma, does that mean that it Then began leading Gold? No- remember, GOLD broke the 50sma 3 days into January, so …
As you can see, it actually wasn’t until MARCH 2016 that the SILVER : GOLD ratio bottomed and turned up, so I am not going to worry if Silver lags Gold here. Some have told me that they aren’t going to do much buying in this sector yet, because Silver isn’t really flying off of the bottom yet. They feel that it is best to wait until Silver really leads gold. I hope this can help everyone to see that Silver does NOT need to lead Gold for Miners to rally. In 2016- waiting until March would have been costly. Miners were Much higher.
SILVER : GOLD NOW – And plus I already pointed out in a prior report- even with Silver near the lows, it was leading gold at the end of September and still shows a higher low.
Please think about all of the charts that I have pointed out in our reports over the past few weeks. Look at KL, SSRM, SBGL, ABX, AEM, GORO, RGLD, etc. for example, they have been featured in past reports. My advise remains the same : It is time to be invested and at least start a small basket of Miners or grab an ETF near these lows.
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Other Updates
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CZZ – This is a direct ‘copy’ FROM FRIDAYS REPORT– it could dip, but just ride it out.
CZZ – It did NOT dip, it continued higher, so now CZZ may actually ride up along the upper channel. It could form a cup here and then a handle.
THIS IS A ‘COPY’ FROM THURSDAYS REPORT ABOUT GORO – It could become a ‘buy’ again.
GORO – It dropped to the 10sma Friday and did put in a reversed. It is a good place to add if you started a position and wanted more. Note: it CAN still drop some more, but this is a good entry point.
AG – This was my Oct 18th chart, breaking from a base and drifting to the 10sma. It actually is continuing this Bull Flag.
CLF OCT 18th – I mentioned how CLF fumbles around the 50sma in the past. I was viewing it as a possible buy in this area, but also I noted ‘beware of the choppiness around this area’. Notice the choppiness in the blue boxes. The advise in Magenta writing was also ” or wait for a push above the 10sma to buy‘. Well…
Well, earnings came out Friday and they really sold it off, but then bought it back. Shake out at the 50sma? Very possible. IF IT BREAKS OUT HIGHER above the 10sma or the down trend line, that could be considered a shake out and a buy, with a stop then under the 50sma area.
You MUST read this quote from the CEO of CLF at the earnings call. He was calling out Goldman’s Matthew Korn analyst for what he considered an inaccurate rating. Wow!
https://www.marketwatch.com/story/you-are-a-disaster-cleveland-cliffs-ceo-berates-analyst-on-earnings-call-2018-10-19?siteid=bigcharts&dist=bigcharts
TGB WEEKLY – We discussed TGB as possibly bottoming or basing out, since we are seeing that in other metals stocks. It is back at the lows, so I took a look at the weekly chart. This could actually be a bullish descending wedge break out & back test. Keep your eye on this one , if it starts moving higher, the lows could be in place.
