Tuesday May 5th
Now my Theme Picture a Moon and Triangles and I’m sure that you can guess why. We’ll discuss that a bit more in the Precious Metals sector, but for now lets cover our various Market sectors…
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SPX – Question from reader: Is that your dcl above the 50 sma? Answer: That is a Good question, but I’d have to say ” Most likely no”. I expect more selling and would expect it to be longer than a 29 day daily cycle. SPX daily cycles have run 40 + days, so I’d expect more downside at this time.
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SPX – Monday was an example of why I mentioned that it would be difficult to ‘short’ the first daily cycle. In my experience, there are still pockets of strength in the first daily cycle until it gets older. We are on day 29 and I would say for those that want to try to go short? Maybe this bounce can be shorted when it rolls over, but the downside may or may not be as big as the 2nd daily cycles drop should be. It may only drop to the 50sma. I personally may short the 2nd daily cycle peak, but I wont short this one.
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WTIC is on day 9 and continued higher. I’m watching to see what happens at the 50sma. Oil could strengthen now that that panic FLUSH is out of the way, but
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WTIC – Oil also may try to consolidate for a while between the 2 moving averages . I have seen this many times after a sell off, and even NATGAS recently did this type of bouncing around.
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I’m only showing you this NATGAS chart as an example of a choppy bottom. Look at the move from February all the way to Mid April. Oil could do this, and these moves are very hard to trade successfully long or short. HOWEVER…
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XOP – The Energy Stocks can run smoothly and that is exactly what we have seen over the past few weeks. The XOP is actually acting ‘correctly’ or ‘Bullishly’ while Oil struggled and sold off. The XOP has been riding the 10 sma perfectly.
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USUALLY I have a list of these stocks at the end of the report, but at this point I just want to show you the continuing progress in this sector here.
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APA broke above the 50sma, back tested it & the 10sma Friday and Monday morning, and pushed higher. THIS IS A BULLISH REVERSAL, and stops can be raised to under that 50sma. This has tripled off of the lows, but it also can be bought with a stop, since this may run to the 200sma at $20 ( 100 % gains again). I own it, I added.
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OAS was up 6%. Several of the energy stocks, even these smaller ones like OAS, LPI, DNR, etc, are acting correctly coming out of the lows. I own OAS too.
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CVI gained 9%, and you can see that many of these Energy stocks from our list are acting exactly the same, dipping to the 50 sma & reversing. I do not own it, but it is excellent looking.
HXL dropped and tagged the trend line from the descending wedge. It closed at the 10sma again.
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MRO, OKE, TUSK, BE, etc. are bullish at this point. Just be aware of when they may release earnings to keep those sell off surprises to a minimum.
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In the weekend report, I identified some triangles forming in the Precious Metals Sector. When you have triangles developing, the low of that triangle can be as low as price goes. Cycle count may become unimportant, because price can now travel toward the apex of the triangle before breaking out.
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GOLD has not broken above the 20sma and this can chop sideways for a bit longer, since the APEX is ahead.
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I THINK WE NEED A REMINDER: I did get some questions asking “Why didn’t Gold break out today? I though you though the lows were in place? Does that eliminate what you wrote in the weekend report?” My answer is, “No. that does not in any way nullify what I wrote. The lows can still be in place in the triangle, so let’s review what I pointed out”…
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I said in the weekend report I wrote: Well guess what I am seeing now? GOLD is possibly forming a triangle. You can compare on this chart that 2019 triangle with the current one. I circled where we look to be now. That triangle had a day 28 low. This has a day 25 low (so far). EDIT TO BE CLEAR: DO You see where I said we could be? In the middle of a triangle like 2019, and then it eventually broke out. Notice that Gold broke out days later & dropped and chopped for 2 weeks also. This is saying that THE LOW may be in place, but the break out can be ahead. Even after a break out, it MIGHT back test & chop. 
I HAVE ALSO MENTIONED THAT “INDIVIDUAL MINERS CAN RUN DURING THAT CHOPPY TIME” . I’ll discuss that with Miners.
SILVER is on day 32 and it can drop below the day 23 low to complete the daily cycle. A break above the red 50sma line should signal a Buy.
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GDX – Now we see that Miners are ahead of Silver & Gold. That is Bullish and that is what we want to see. This could be day 1 for GDX since it broke the 10sma & recovered in a similar manner that we saw in the summer of 2019 (as explained in the weekend report). Monday I saw more than just GDX & GDXJ trying to break their flags…
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MORE THAN JUST SEEING GDX or GDXJ BREAKING FLAGS, I SW SOME INDIVIDUAL LEADERS …
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GTBDF popped 16% higher after reversing off of the 10sm on Friday. Doesn’t that give us confidence that the Miners are bullish and can have surprises to the upside?
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VNNHF has been pointed out here as Bullish and after a quick drop to the 10sma & reversal Friday, it was up 11.5% again on Monday. Honestly? I expected a back test of that break out, but Buyers are stepping in.
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On Friday I saw the volume pop on WLBMF and was thinking of buying it. It Popped about 14% Monday – I don’t own it 🙁 but … do you see that somewhat flat topped consolidation break out?…
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NSRPF – I saw this right as the closing bell sounded, another flat topped triangle. I would have bought this and if it hangs below the 200sma for another day, I will- this is a buy set up.
IT SHOULD BE NOTED THAT WE ENTERED AN EARNINGS WEEK FOR MINERS
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NEM, KL, KGC, FNV, GOLD, and others will be releasing their earnings, but so far those that have already released theirs have either had a bullish reaction or a quick drop that recovered.
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NEM – read the chart
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FNV also has an earning release May 6th, but it broke out ahead of time. If I owned FNV I’d view that as great, because it either signals that buyers want in now and it is breaking out pre-earnings or even if it drops with earnings- the drop may now only be only back to last weeks price. We’ll just have to wait and see how earnings go, but…
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DRD -Other Miners are also not waiting around for GOLD & SILVER to break out. DRD is at new highs Again and this is $3 to $10 in a little over 1 month.
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EGO is a bullish set up as it forms another bull flag at the 10sma. I like this set up as a buy.
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IAG is breaking out from a ‘bull flag’ or ‘sideways box consolidation’ too. Some Miners are just climbing higher and higher and this is why it is important to keep holding positions, and add if we get a dip. Lately…
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Some Miners are just climbing higher and higher and this is why it is important to keep holding positions, and add if we get a dip. Lately I am just seeing these miners ignore Gold & Silvers cycles. Several Miners are just bullishly running higher, chopping sideways to the 10sma ( flags or boxes) , and then continuing on. We still own some Miners from the ICL buy areas, and you can add when possible. We are late in the first daily cycle, so if we get a dip, it should really be brief and a second rally should follow. I had this chart below in my weekend report:
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This run is not all that different from 2016, is it? This looks like the first 1/2 of the 2016 run, and the next daily cycle is how it should continue.
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At this point, we do not have a confirmed swing low (DCL) in Gold or Silver, but GDX & GDXJ are leading the sector higher. As you have seen in this report, many of the smaller individual Miners are blasting off, and the others can also just steadily climb along. It is also important for me to mentioned that this is an earnings week for NEM, KL, KGC, FNV, GOLD, and a few others . The ones listed here are due to report Tuesday & Wednesday , and that can be a catalyst for a blast off in the Bigger Miners, or a quick shake out drop & then a run. Recent earnings reports in other companies have been shrugged off or embraced, so either way I believe we go higher soon.
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As a side note: I sold my Biotech Stocks to lock in gains ( Some on that list included VXRT, INO, NVAX, VIR, NNVC, IBIO, etc etc ). There is really nothing wrong with them, they still look very good, but I just wanted to be heavier in the Energy & Miners sectors. I own Miners and Energy stocks, along with some USLV that I will add to when Silver gets above the 50 sma.
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Enjoy your Tuesday trading!
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~ALEX
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As a side note, I see several stocks that look like Bullish set ups.
ROKU, SHAK, & SHOP Look like BUYS right now. TSEM & AMD also look bullish, so the general markets may be in for another multi-day bounce. so there are several Individual Stocks in the General market look bullish too, even if we do have more selling ahead- they may resist.
