June 15 Weekend Review
Due to my work schedule this weekend, I need to make this report short & to the point so I can release it to you sooner than later. That said, I will be writing more detailed reports this coming week, because suddenly….. WE ARE AT A FED WEEK AGAIN. The last Fed Mtg & then ‘Minutes’ release did affect Gold, so I will discuss that in my next 2 reports. This report will just get to the point, and next week I will really be looking at the Precious metals sector closely, with the Fed Decision coming Wednesday.
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SPX DAILY- Looking at the SPX here, it looks to be holding up and possibly bullishly flagging. If that was an ICL, this would be very Bullish heading into the Fed. If it is just a 3rd daily cycle low, this could be sell off sharply after the FOMC MTG. THIS FED WEEK COULD PROVE TO BE IMPORTANT.
SPX WEEKLY – DOJI Week of indecision, and that makes sense since the daily went sideways. The coming Fed Week could be a market mover.
UUP DAILY- The Dollar, still in this channel, is rising, Gold reversed lower. Golds ICL was near the early May red arrow. Silver and GDXJ was the last red arrow. Fed mtg on the next Red Arrow?
USD WEEKLY – If the USD bounces to the trend line, Gold could dip into a dcl. The timing is right for that. SO FAR, THE LAST FED DECISION & MINUTES (Possible Future Cuts) HAVE NOT BEEN BULLISH FOR THE USD.
WTIC – Oil weekly is clinging to the 200 weekly MA. It has danced here in the past, we need more time to see how this plays out, but it looked pretty weak before that Tanker was attacked.
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GOLD COT – THIS IS ACTUALLY VERY BEARISH FOR GOLD UNDER NORMAL CONDITIONS. There is really nothing that I can say about this as a bullish COT Chart. In my experience, I have seen the SMART MONEY OF THE COT get it wrong 1 time. 1 time is 20 years. Smart money was very short GOLD 1 time that I can remember & Gold rallied strongly anyway. I have also heard that they got it wrong 2 times in the past 20 years, but I only remember once. So I am going to say this:
1. This COT IS VERY BEARISH FOR GOLD AS IT IS
2. GOLDs SET UP IS ACTUALLY VERY BULLISH RIGHT NOW
3. THAT MAKES THIS A BIT CONFUSING, Let’s examine this sector.
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GOLD DAILY – WE HAVE A GOLD ICL IN MAY WITH A STRONG RALLY = BULLISH. Gold reversed Friday with what is usually a reversal candle. If cycle counts are correct, that is not a problem with this on day 30. We get a dip around day 32-36 or so, and that could bottom Gold on the FED DAY or Thursday after. Very Bullish except that the COT IS PUZZLING.
GOLD – Here we see that Gold is at prior highs, and ‘wicks’ often signal a reversal at resistance areas. Again, we are due for a dcl at day 30, so a DIP is normal and may do 2 bullish things:
1. A dip at resistance could scare people, knocking them off of the Bull before it runs away
2. It may cause shorts to go short heavily. Then they’d have to short cover if it broke higher in the next daily cycle, causing a break out to new highs. So lets look at that ICL…
So lets look at that ICL…
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GOLD – An ICL should not just rally a little bit, right? Especially isnce it is a Much higher low than the Aug ICL. The 2nd daily cycle should break out from this massive base, especially if it includes short covering. That COT is the only thing that puzzles me.
It may be possible that Smart Money is painting the COT to cause a panic when it starts to pull back, and they buy it as it drops, flip long quickly into the sell off, and push it higher. I just can’t explain how we can have 2 very different set ups, one strongly Bullish and one strongly bearish.
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GDX – Miners ran sharply higher (Bullish) and are due for a dcl (normal). This could drop for 3 days into the Fed Decision, maybe even filling that 2nd Gap near the 50sma, but really this should not fail completely.
GDX WEEKLY – GDX has moved back to resistance, so it would be normal to pull back. I picture that Many may think that this is a failure to break out again, and view it as a great place to go short. Then if we just get a dcl drop to the 10 & 30 week MAs as shown & reversal, we may see short covering & Buying push this to that break out that we have been waiting for.
The set up in GOLD, SILVER, and MINERS is extremely Bullish, but the COT is extremely bearish.
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In conclusion, I have to say that if I did not see that COT, this would be an extremely Bullish set up. Why?
GOLD just came out of an ICL, so timing wise, many will not realize that Gold & GDX reaching resistance this time may not mean a drop all the way back to the lows. An ICL forming in May should give us a higher dcl next. We should break out soon, so if they all start shorting it expecting a drop to the lows, they would have to short cover at a dcl and buyers would also flood in on the break out. We also have a FED MTG Wednesday, which would be about day 33 for Gold. A dcl in 3 or 4 days would be very Bullish too.
With the COT showing ‘Smart Money’ very short, it leaves me wondering why I am seeing such a strong difference. ONE MUST BE WRONG. Can an ICL run as strong as we have just seen & then roll over after the Fed MTG 30 days later? That is very unlikely. I almost can’t believe that, but also it is hard to believe that the Smart Money is that short right now.
In my next few reports, I will simply have to discuss what happens Monday & Tuesday. Then it might help to discuss various ways to play this from here, based on your risk tolerance. Consider questions like: ” Do you want to Lock in some gains now, and keep a few positions open in case we burst higher”? or “Sell everything now for Gains & jump right back in on a dcl break higher?” Or “Cut leverage and hold a basket of Miners”. Those ideas will adjust how we trade this going forward expecting a dip to a dcl.
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It has been a very nice rally out of the lows. The set ups in Miners also look great everywhere, so we’ll just have to see how this plays out. For now, Enjoy your weekend!!
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~ALEX
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