May 24th – Better Days Ahead
We know that volatility and choppiness can be frustrating and disappointing, and a few of my trades have tossed me around a bit too. That said, I want to also say, “Trust me, we’ve have been through this MANY times before, and I can say with full confidence- Better Days ( of trading) Are Ahead!”
Please hold on to your Eggs and Tomatoes for your lunch, while I review that bigger picture for those that need such reminders. Due to a few emailed concerns, I am writing a long pre-weekend report, this will be a rather long detailed report. Please do read it entirely when you get the chance. 🙂
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Let’s discuss this volatility:
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As you know, way back in August & September of last year I was saying that the Markets would Sell off into an ICL. We could then ride the first 2 or 3 daily cycles out of those lows, but we would really need to watch that 3rd daily cycle for signs of strength or weakness. Looking for Big Picture Clues.
As the markets broke back out to all new highs in the 2nd daily cycle, the Bulls on twitter were screaming “All in with leverage, this is going to the moon!”, but at Chartfreak we were cautious, riding tighter stops and expecting a dip into that 2nd daily cycle low. Then that 3rd daily cycle would begin. That break to new highs was a Bull Trap, and the Bulls were trapped holding leverage at the highs. Well, so far it has been quite a drop and quite a ride in the 3rd daily cycle, right? Choppy -Volatile action. Bullish sentiment has been so destroyed that I wouldn’t be surprised if we get a good bounce higher again, now that the bulls have all sold out. If so, it may not last, so we’ll discuss that again too.
I’ve also been expecting an ICL in Gold , Silver, and Miners, with a strong rally to follow by now. That has not really happened as soon as I expected. The lows may be in place for Gold, but it seems that that strong rally has been put on hold. Will it still happen? Yes, it will and I don’t question that. It always does, right after everyone gives up, throws in the towel, and hates Miners with every ounce of energy. We saw that in Dec 2015 when Gold bottomed and went sideways for a month. When will we see that ICL & Rally? That is the question. Is it time yet? We may have an ICL with Gold and another choppy bottom like 2016. We’ll discuss that a bit today & the weekend report too. Let me explain my emails…
If you are on the sidelines waiting for the Rally in Miners- you are getting tired of waiting. The trader in you has grown old & died over the past couple of weeks & months. It has been too long, and you are just too tired right now. Often Rallies start that way, think 2016.
If you have been invested here and there, hopefully you have kept your positions small, but even at that you may see some funds slowly being flushed away, chipped away, and it is also taking it’s toll mentally. “When will it end?”
I want to reassure you that an ICL always comes along, and the move out of it ( Immediate or delayed) is a good %-Gainer. Patience will pay of and losses will be recouped, If you keep positions reasonable or continue to patiently wait.
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THIS IS AN OLD CHART FROM AN OLD REPORT: Here I showed ICL’s every 5 or 6 months in a bear market. My Point?: EVEN IN A BEAR MARKET, ICLS OFFER GREAT GAINS.
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This is a chart from an older report: Our current consolidation has a choppy bottom, right? I am asked, “GDX keeps dropping toward the lows, so is that an obvious sign of weakness?” Please don’t forget- we saw that in 2015-2016 ICL in Gold & Miners. Those can lead to the greatest of gains after everyone grows tired of Miners and gives up too. November 2015 – Jan 2016 for GDX was 2 month period of choppy difficulty, BUT THEN the gains were amazing after it broke to new lows and Gold didn’t.
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Same chart and please look at it day, by day, by day, by day. Picture trading back then. If you saw my live comments section back then, it was full of complains, fear, doubt, etc. How many times did I hear, “This is so WEAK, why bother!” I had to keep convincing my readers back then not to throw in the towel. Be patient, wait on the sidelines or keep it small, because the timing was due for that ICL and…
Better days are ahead! Now Let’s take a look at our current markets…
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SPX – Also choppy, the SPX has a day 3 peak and struggles at the 50sma. Thursday day 8 dropped and reversed, so this has been choppy too.
RUT – The Russell actually broke to fresh lows, taking out the March lows.
SOX – The SOX is still dropping and broke below the 200sma. This could be a short term shake out, but we have to admit, if semiconductors lead the way, this is not pretty for a 3rd daily cycle.
SOX – Wow, After breaking to all time highs and really causing a lot of excitement, this was a deep dip, back below even that 2nd daily cycle low & 200sma. We could be looking at this with such a dip. A bounce may only form a shoulder.
TRAN – The Transports never broke to new highs and I was pointing that out all along. The question was: Would they play catch up? Or were they sending out a warning? A bounce here may present another warning if a H&S forms. Look at price along the 200sma (red arrows). This has struggled so far.
WTIC – Oil dropped Wednesday after the Inventory report, but it crashed down almost 6% Thursday. I thought that Oil was going to continue higher, but if you were long you stopped out at the 50 or 200sma. We have seen Big Drops in the past during the bull, BUT THIS is a break down as far as I can see. I would NOT go long Oil for a bounce right now, it may not last. I was going to cover this in the weekend report with the next chart, but I’ll show you now what I am seeing…
WTIC – I took a 5 year step back & found this. This will be in the weekend report.
MAY 21 I said that we look to have a little higher to go in the USD, but when it tops, Gold could POP. I showed ICL at prior tops.
MAY 22 – I Showed this topping candle on Wednesday, a top after the Fed Minutes??
MAY 23 – Yesterday the USD Popped and reversed lower & Gold took off higher. This DOES look like a topping process for the USD- READ THE CHART.
GOLD – Read the chart, the USD dropped…
SILVER – Read the chart, the USD dropped…
GDX – Read the chart. My emails are asking, “WHY!???? GOLD & SILVER POPPED, GDX POPPED & DROPPED! WHY???” …
The answer MIGHT be this ? Look familiar?
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Lets’s Review the sector a bit further
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GOLD – Remember how I pointed out that the Day AFTER the FOMC, Gold Popped. And now the Day AFTER the Fed Minutes we saw the same. That put in a higher low for Gold after what could have been an ICL.
GOLD – After a strong day higher, we often see a ‘pause’, so don’t expect much Friday, but next week may be a good one.
GOLD – I used this hrly chart to compare the Post Fed Meeting Pop with the current Post Fed Minutes Pop on Wednesday. It broke the choppy base. ( Thursdays follow through isn’t on here, this was as of Wednesday).
GOLD – SO we seem to have a higher low after the DCL ( possible ICL). A New High next week would be excellent sign.
GOLD – And things could unfold as a giant Cup formation over time. If so, I think you’ll see Miners do what they did in 2016, a rapid straight up move that can leave doubters and those that are fearful behind.
GDX – This is simply GDX now. We had a day 15 Post Fed Minutes Pop ( & drop) with Lows from early Mays Fed Mtg in tact. All you can do now is wait and see if those lows hold & this is just a choppy daily cycle, or does it drop to a final ICL. I ALSO KEEP REMINDING READERS HERE: 2018 = GOLD BOTTOMED IN AUG, MINERS BOTTOMED IN SEPTEMBER.
GDXJ – This break to new lows recovered so far. I drew this trend line & 8 ema in the first hr of trading for a reader in the live comments, discussing that a close above that would be bullish. It did not close above it.
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So this was a LONG report to try to thoroughly explain where we are currently. It is also a LONG WEEKEND coming up in the U.S. ( Markets are closed Monday) and I have a busy busy weekend, so this report can help to address some thoughts while waiting for the weekend report. I will try to have it out on Saturday evening like I usually do, but it may be released later in the weekend, so Please read this report again. It was written to help my readers to see and understand the way I am looking at the markets.
This report is almost like a weekend report ahead of time, but I felt it necessary to address the thoughts and concerns of a few readers emails. The emails are by no means negative or derogatory, they were of concern. ” What about this? and What about that? “ As you can see from this report, in my experience I don’t see what’s happening as unexplainable or even something entirely new. All bottoming & Topping processes can take time, churning, include choppy consolidation, and that may be what we are enduring now as the winds of change sweep through. It often takes time to turn a big ship around in choppy waters and the market sectors are like Big Ships cruising through the choppy streams of trading.
The choice is up to each one to either keep positions small and trade with a shorter term view for now, or step aside and be patient, waiting for more of a trend. Either way, you will be rewarded in time when things start to play out in the Bigger Picture. I do expect big gains when the Miners begin to rally.
I will cover the Bigger Picture in the weekend report, which could possibly be released a bit later than usual . Enjoy your Friday trading ( and your weekend!)
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~ALEX
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KL – In the weekend report, I am also going to highlight that there are a few Miners look to have bottomed already and are leading the way. I called KL a buy back when Gold was selling off into it’s recent ‘higher low’ and KL didn’t sell down at all. Since then, it pushed higher & remains bullish looking. These may be leading & safer for now, I will discuss this in the weekend report.
SGSVF – Though Miners sold off into the close, there were also a few stand outs that did not. This is where SGSVF closed, so that is encouraging too. Some may start to follow the leaders.
AKG – I thought that it was bullish that GOLD was up $10 in premarket, but AKG dropped at the open. As other Miners then slowly dropped & sold off into the close, AKG turned around with a complete bullish reversal and also closed somewhat near the highs of the day. It is oversold.
So some Miners are performing like they are possibly bottoming despite yesterdays sell down into the close.
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KPTI – Ed emailed me ( Thanks ED) and reminded me that I pointed out KPTI as possibly ready to go higher from an ISLAND Bottom. This was my chart. I expected a run to the 50sma, that would be good gains.
KPTI – It ran higher toward the 50sma , but then drifted as the markets dropped. Now it is again resisting the markets sell off and is a Bullish set up during a market sell off. It was a BUY as it broke back above the 50sma, but it might be too extended to buy right here, so far above support. Then why mention it? A watch list…
KPTI – If this drops back to the 50sma & reverses, THAT is a buy with a tight stop. $5.50 to $9 would be great 🙂
VIVE – There is nothing wrong with Vive, but after I drew this, it ran to the 50sma and dropped back a bit. It now may crawl along under the 50sma or it still could break out, but I sold mine to lock in gains. I had 20% gains at $0.60 and locked it in, in case this goes sideways for a week or so. I can always rebuy if it breaks above the 50sma.
