June 10th – No Big Deal
We are seeing Gold drop and I just wanted to discuss some thoughts on that VERY QUICKLY- A brief update.
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Nothing has changed from the Bullish big picture, the set up is bullish, but Gold has moved quickly to a resistance point. Please re-read the weekend report if necessary, but in brief- Gold may be starting the drop to its dcl.
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COT – One of our readers ( Thank You Brian) Mentioned the COT in our commenting area, so let’s discuss this briefly. This COT does show that SMART MONEY is very short, and this was as of last Tuesday, so they may be pressing their short position even more. IF YOU LOOK AT THIS COT, It pretty much matches the Feb 26 COT .
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As mentioned: Gold has moved quickly to a resistance point ( yellow shaded area) , and smart money is likely short here, because they expect a drop before a break out. I have drawn in an idea of this, an it would be a dcl, but I also want to be more specific.
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GOLDS COT IS SIMILAR TO FEB COT, BUT I do NOT expect that deep of a drop. That drop happened after a multi-month run higher. Remember this- In just 2 weeks, This short run higher actually quickly erased 4 months of losses. Let’s discuss gold here…
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Gold started to dip down Sunday Night, in fact it was down $15, but has started to bounce back a bit. You can see that the $15 dip doesn’t look all that big so far, even though it was down $15. This could fall even further…
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Gold – Dropped $15, so we wanted to discuss that as normal, not overly alarming.
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This is a Fibonacci spread of the recent run for Gold. If we have begin a drop into a dcl that will last for a few days, these are possible targets. I look for a confluence of possible support areas, or a CLUSTER of support areas to find what could be a target that most likely ( NO GUARANTEE THOUGH) that it will land exactly here.
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Here I see the 50% area or 61.8% area, is also where the 50sma will be. So we COULD drop there over a few days. We already hit the 38.2% area, and that also can offer support, but that COT may be calling for more downside. It will probably not just happen in a day or 2. It could chop around and find a swing low in that area over time ( Next week?).
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GDX – Doing the same thing here, GDX could drop to the fib level of 50%, that would do a gap fill, and back test the 50sma. It MIGHT NOT, but that is a possibility. THIS WILL OFFER US A BUYING OPPORTUNITY IN MANY MINERS if it happens.
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So we look at KL. It started dropping Friday actually, and you could see a buying opportunity develop something like this.
So I just wanted to pop in and write up a quick summary, because I already got 1 email that basically said, ” Have you seen Gold? It is down $10, what do you make of it?” I actually already covered the possibilities of a drop. Remember my 4 charts of GDXJ ? They showed downside targets, so that would obviously be a dip down into a dcl. Those with leverage Might want to lighten up on that. This could drop down, chop around, move sideways, etc – we wont know for sure until we get the DCL.
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We now just watch how this drop plays out and it ought to present a buying opportunity. Many have made some good gains over the last 2 weeks, but I still think the next move out of the dcl could be the Big One, so let’s be ready as time moves forward. Enjoy your Monday trading!
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~ALEX
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After getting back from my chiropractor appt this morning, I see that Gold is bouncing from 8:30. We’ll see how the day closes. Some may want to lighten up on the bounce, others may just want to ride out the first 2 daily cycles , with all of the choppiness and volatility.
