Wednesday November 13th
SPX – The General Markets continue their climb, and the 10 sma has been helpful as a stop in case it starts to drop. That is a reversal on day 28.
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USD – The USD has been climbing out of its low, and Gold and Silver have made new lows each day, but the selling has been rather mild…
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LET’s TALK ABOUT THE PRECIOUS METALS
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GOLD – Gold has been dropping little by little, and making new lows daily. We have a new low on day 30, and we are within the timing for a dcl. It is worth noting that Miners are not following the GOLD & SILVER Sell down, so we’ll discuss that later.
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GOLD – After we get a Swing Low / Reversal, it will be a buy with the hope that it ay also be an ICL. There is a chance that it will form as L.Translated, and roll over as a final daily cycle- so we have to keep that in the back of our minds. THAT is what the last daily cycle did.
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GOLD – Looking back at the dip into the May ICL, you can see that it was not a crash down like the ones that we see with Bear market time periods. It slowly chopped sideways & down daily cycle after daily cycle & that often just gets frustrating. Eventually THE LOW forms and a strong rally followed. See the chart, our current choppiness does look similar to that sell off into May. When that ends, we should get a rally.
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GOLD – So we saw a reversal Tuesday on day 30. That COULD be the low on day 30, but I’ve seen day 32 or 34 also, so let’s just look at one more Gold chart…
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GOLD – Sometimes the bottoms form with multiple reversals. Gold may be forming a low now or over the next couple of days. This kind of choppiness at a low serves to shake off some Bulls.
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SILVER – Silver also made a new low on Day 30, but again, it is very noteworthy that many Silver stocks are NOT at the lows, and a couple are at the highs!
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GDX – When I looked at GDX & GDXJ, I saw that triangle that I have been pointing out looking like it is actually being back tested and we got a reversal on Tuesday. A back test like this would be a buy signal to a ‘technical trader’ like myself, but it is not the safer buy of taking position after a confirmed swing low is in place.
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GDXJ – I see the same pattern on GDXJ. I would definitely have expected a tag of the 200 sma when we are so close, but that won’t happen unless we keep making lower lows and slide down this triangle for a few more days.
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GDXJ – We are also just shy of the 50 % Fib, but we DID reach that 50% mark in October. GDXJ actually has a higher low, resisting the selling into lower lows . The selling looks to be drying up.
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GOLD & SILVER ARE MAKING LOWER LOWS, BUT MANY MINERS ARE JUST BULLISHLY SETTING UP AND I HAVE ALSO POINTED OUT SOME AT THE HIGHS. WE HAVE REVIEWED MANY OVER THE PAST FEW WEEKS, BUT LET’s LOOK AT A FEW MORE CHARTS, NOW THAT WE ARE CLOSE TO OR AT THE NEXT DCL.
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AUY – I received an email from a Reader that likes AUY. When I looked it up, the first thing that I thought of was a Box consolidation so far. I read a book 20 years ago about a successful Trader / Dancer named DARVOS and he loved to trade the box method, because he was a dancer and was away from the trading desk or the ‘tape’ as it was called back then. You can google his story if you wish in your spare time. Eventually this will probably break higher & run.
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IAG – IAG is also forming a box consolidation too. These are not breaking to new lows daily with Gold & Silver, and IAG reversed at the 200sma again. ( You could buy something like this with a stop really, it seems to be holding up well).
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This was in yesterdays report: SVM released earnings and has been favorably accepted too. It made a nice 2 day move higher while Silver made new lows…
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SVM – It continued higher as Silver made new lows.
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PAAS – This also continues to climb higher despite Silver selling down.
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ALSO FROM A PRIOR REPORT = HL – Notice that Hl dropped sharply last week and then recovered. It broke to new highs Monday and is also ignoring Silvers drop. Silver is at the lows, HL is at the April highs. BUT IS IT TOO EXTENDED?? I SAY NO…
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BUT IS IT TOO EXTENDED?? I SAY NOT AT ALL, IF YOU LOOK BIG PICTURE
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HL – It looks more like it is just getting started when you compare it to the 2016 run. It is just breaking from that downtrend, and above that 200sma.
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For the Precious metals Sector, we are on day 31 or possibly day 1 of a new daily cycle. The selling has been fairly mild in Gold , Silver, and the Miners using GDX & GDXJ, but it has been VERY MILD in many individual Miners. I have many readers that do not like individual risk of Miners, so they are waiting for GDX, GDXJ, SILJ, etc. AT this point I would say that we are either very close to the lows, or we are really already there. Any big sell off from here will likely reverse and erase the drop quickly. We could see a quick shake out drop, like down 2 days sharply & then up 2 days quickly, but who knows at this point. Selling has been mild, it looks like a bull market consolidation.
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THE PROPER BUY to avoid draw down is when we wait for a close above the 10sma, but I personally trade differently in my trading account. Stocks like CDE, HL, SVM, and several others are acting like they are being accumulated. Miners shown in this report like IAG & AUY are showing signs of a contained consolidation. A starter position seems reasonable for those that do not mind the risk of dropping to day 34 or so before reversing higher. Honestly, this does not feel like a drop into an ICL, but the Miners look Bullish in many ways again. They may be under accumulation. I WOULD CHECK AND SEE WHEN EARNINGS ARE TO BE RELEASED OR IF THEY ALREADY HAVE RELEASED THEM. I have tried to mention which ones have already, and some are reacting strongly, a few have dropped as a result. When we have a confirmed swing low in place, I will be posting more individual Miners that are set up properly.
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IF THIS IS AN ICL, I just want to point out that it can still linger near the lows before taking off as seen here in MAY 2019. Once it got running though, the gains began to pile up over the next few Months. please read the chart. That choppy sideways crawl in May along the 200 sma frustrated many people. Then what happened?
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Enjoy your Wednesday trading!
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~ALEX
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EDIT : GOLD 6:30 a.m. – we see Gold rising this morning and a swing low ( Unconfirmed ) is forming. GOLD IS $1464. IF IT CLIMBS HIGHER TODAY, THAT TREND LINE IS LIKELY BROKEN. The 10 sma is at $1481 for those watching that. Starting a small starter position right now is not as safe as waiting for a confirmed swing low that closes above the 10 sma, but you can place a stop near recent lows. Waiting for that 10 sma does not cause anyone to Miss the move, it just causes one to likley miss any shake out type of action.
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THE BIGGER PICTURE FOR PERSPECTIVE: Waiting for that 10 sma does not cause anyone to ‘Miss the move’. In fact, it might even cause one to miss any shake out type action if we Pop & drop one more time.
At the last low in May, we even had a run higher above the 10sma, and then it dropped down to a higher low below the 10sma , but stops under the May 3 low were not hit. Then the strong rally took place. We are expecting a similar run here, so if you are more conservative & wait for the 10sma to be regained, you still have great gains ahead if this runs like I expect it to.
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AUY – If you were looking to buy something like AUY, you could use a few different methods on day 30 of Golds drop.
1. You could start a position with a tight stop under the reversal, but you may get stopped & recover quickly.
2. Do something similar to what Darvos did – build on your starter position.
3. You could Start a small position here at this reversal, since this has been the lows 4 or 5 times. Add as it breaks key areas. You could add above the 50sma. Add again as it leaves the box to new highs, etc. This would eventually build your small starter position into a full position.
Now look at the June lows. If you started small on that reversal when GDXJ bottomed, you’d be in at $1.85 ish. Then as it broke the 50 sma, you’d add at $2.10. Finally going full position at the 200sma, you’d top off at $2.40. Your average cost would be $2.11. Not too Bad if you sold up near $3.80 & re-entered now using the same method here at $3.30 ish!
