Friday April 5th – Is It Party Time?
Today’s report will focus strictly on what most were discussing Thursday –
“What is happening in The Precious Metals Market?” Is it party time? We have a lot to look at, and I have over 30 charts to examine on this subject alone, so let’s get started…
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GOLD , SILVER, and THE MINERS reversed :
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To begin, I want to remind everyone that I discussed the difference between ‘Cycles’ & ‘Technical Analysis’ the last time GOLD broke below the 50 sma and then had a big reversal (blue arrow) in early March. See the chart below. Looking back, nothing changed in the Big Picture except the amount of time that is going by from ICL to ICL, but you may recall that I said back then that a reversal like that was ‘A buy with a stop’ in technical analysis and wait and see how it plays out. A stop must be used and even raised, because Cycles say that an ICL could still be ahead.
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As mentioned at the last reversal, using Cycles as a guide for ‘timing’, but using Technical Analysis as a trader for buy set ups, we can get variations. Why? Simply because technical analysis can give ‘short term buy signals’ too. At the last reversal, I pointed out that it was a Technical Analysis ‘Buy Signal’ and that did work for several days, but it still rolled over.
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With those reminders, Lets go forward from here…
GOLD #1 – Gold broke that accelerated blue trend line and put in a reversal. It still has NOT broken the Magenta one that normally is broken when an ICL drop happens, so can Gold bounce & still sell off? Yes it can.
GOLD #2 – In technical analysis, I would look at Gold as back testing the channel break out, a form of support. It broke out of the channel when it accelerated it’s climb and held on the last back test. Yesterday it actually fell back in the channel, but recovered. In technical analysis, that also can be a reversal ‘buy’ ( at least short term, maybe longer) with a tight stop.
GOLD #3 – CYCLES have us on day 20 and this can be 2 different things cycle-wise…
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GOLD #4 – We discussed the slight possibility that this quick sharp drop may be a stealth ICL in early March. That low hasn’t been broken as of day 20, so if that was an ICL, this could run higher. The 2nd thought is that…
GOLD #5 – The reversal may be just a short term move (bounce) in these already choppy markets, and we still drop back into that first channel and down to an ICL as shown.
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SILVER – I just want to point out again that Silver is acting different from Gold and this makes analysis for Miners difficult, I will explain why. I have pointed out that SILVER formed a base, and did NOT rally as strong as Gold. It has now dropped back to the base support zone. Silver may find support on that base, even as Gold drops further to an ICL. Notice also that its lowest low was actually in November, not August like Gold. Now think about this…
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THINK ABOUT WHAT THIS COULD MEAN FOR OUR ANALYSIS
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PLATINUM – Gold was strong, Silver chopped sideways above a base, and Platinum never really rallied with Gold or Silver. We have all been aware that Platinum lagged GOLD, when often it used to lead. These differences took place slightly in 2016 too. Currently Platinum was still forming its own base until yesterday – WHEN IT FINALLY BULLISHLY BROKE OUT. I feel that these differences could affect Miners, making this one of the more difficult times to analyze precious metals. Things are currently out of sync.
So we discussed the difficulty of :
1. Golds strong rally & support on the channel.
2. Silver choppy & sideways on a solid base of support.
3. Platinum Lagged and just now starting to break out from a base .
4. Now Miners have a reversal at a trend line too.
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GDX – So now GDX broke the down trend line and recovered. That is bullish in technical analysis and it is a bullish engulfing and it is oversold. This looks like it will try to fill that overhead gap at the least…
GDX – It can still do what the last reversal did over time, and that is a choppy rally that rolls over, but we won’t know for sure until it plays out.
HMY – I’m pointing out HMY to show what long drawn out consolidations can do, and this is what we may be seeing with GDX. Yes, this could break out & rally, but it needs to be said that Just because you get a reversal, it doesn’t always mean a strong rally, it may do something choppy like this, buying time.
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One thing that we have seen with the precious metals so far is that this choppiness and sideways consolidation has been tough for both the Longs and Shorts unless they were quick trades. The good news is that a nice long trending move should be coming in the near future.
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GDX – Back to the bigger picture, I have definitely been expecting a drop to the support area shown. There is one time that it is clear that a tag of the lower line ‘missed‘ & turned higher. Currently GDX broke below the 50sma , but has recovered it. A trend line was broken too, so we’ll just have to wait and see how this plays out over time. Do we get this dip into a deeper ICL or not? I’m still going to expect it unless we break to new highs.
GDXJ – GDXJ has a new low on day 20 & reversal. I have seen dcls on day 20, but they have been rare lately. This reversal is a buy similar to the one in early March, but it ended up being short term gains.
GDXJ – We all know that Miners can break out and run or continue the cycle count down into the 30’s. Some will want to continue to be patient and see if we get the ICL lower prices, others may take a trade here. That is up to you.
JNUG – For example, JNUG could bounce from $9 to $11 and still roll over. Time will tell.
I’m going to discuss some Miners at the bottom of the report, but for now I just have to repeat that things are a bit Mixed in this sector. Platinum, Gold, Silver, and Miners are acting differently from each other, and when analyzing this sector, I feel that that needs to at least be understood. It sends mixed messages when Platinum & Silver were lagging, and suddenly Platinum is breaking out of its base during a pull back. Lets review those 4 charts again…
1. GOLD – After a strong rally, sits on the top of a channels support, but could drop to the bottom of the first channel.
2. SILVERs rally died and it went sideways. Now it dropped to support on the Base
3. PLATINUM – Base Building. Ran to the 200 sma in November, was rejected, formed a base at the lows, and now Bullishly broke out on Thursday.
4. MINERS – A very choppy base was built from September to December, followed by a nice rally. Recently we see sideways chop in this area for over 2 months. Has that ended? Or do we get our drop to the 200 sma as expected?
We have seen this ‘disconnect’ before, even in 2016 when Gold & Silver bottomed in December 2015 and Platinum & the Miners dropped to new deeper lows in Jan 2016, but it makes timing everything difficult.
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Interesting side point: Our Platinum Stock was Red yesterday.
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So the choice is the same as it was at the last reversal. In technical analysis, one would ‘Buy’ the reversal with a stop and either take short term gains or see if it can continue higher over time. Cycle-wise it would seem more likely that the ICL is still ahead and this will just be a bounce. That means that some may just continue to wait and see, ready to just get in if Miners collectively break out and run higher. I have also mentioned in many reports that owning at least a few miners may be helpful. I will discuss a few things below.
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At this point, the reversal is short term bullish, but if the ICL is still ahead, I have to expect that drop in the coming weeks. Look at that chart of GDX right ABOVE again….That has been one choppy run! The choppy sideways move for the past 2 months has made this difficult for both Longs & Shorts. This chart, however, reminds us that all Bull Markets buck around and try to keep the riders off, it can make some people just give up, and off it runs.
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Just remember that the potential is great when this breaks out higher, whether it is from here or after a final dip to support.
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~ALEX
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Some Miners landed right back at their support and they seem to continue to be acting correctly (Bullishly).
AG – I have pointed out AG several times this way. This is in the buy area again.
CDE – I noticed reversals within the first hr of trading, so I pointed out CDE & FSM as soon as they double bottomed and reversed in the first hour of trading. I posted this yesterday in the live trading area.
CDE – Look at CDE by the last hr of trading. And if you buy this reversal, You have NOT missed any rally in CDE. That was a new low.
FSM – I captured this double bottom reversal in the first hour of trading too, and FSM went from Red to up 3.4%.
FSM– Closing up 7%, FSM is another Silver stock that dropped all the way back to the lows on this sell off & reversed. It can be bought with a stop at the lows.
MAG – MAG reversed at support so far. It also can be bought with a stop.
NG – Nova Gold actually ignored Golds drop this week and was reversing on support of the 50 & 200sma Monday, Tuesday, Wednesday, and Thursday. That seems pretty bullish, though volume did dry up a bit on Thursday.
NG #2 – Since it held support as Gold dropped, there is a possibility that a stock like this would hold up if Gold sells off to an ICL. You may see something like this ( Similar to AG now above its support).
USAS – Winner. Up 20% after being rejected at the 50sma earlier this week.
So basically we have a Mixed Precious Metals Market, and we even have a big variation in the Miners themselves. Some like CDE , FSM, and even USAS are right at or still near the lows. Others like NG or AG broke above support and have held up even with Gold selling down. And finally we’ve seen real nice runs in KL, MAG, SAND, etc – they dropped to support. SAND, KL, AU and a few others are currently under the 50sma, so they’ll be worth watching for a recovery.
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Final Note: The 10sma held the USD and it reversed higher, so the swing high that was unconfirmed is negated. That said, A higher dollar did not stop the reversals in the Precious Metals.
