Friday Sept 25th
Note: If you have received 2 email alerts, both reports are the same. I changed the Thursday in the header to Friday, and that will often automatically trigger a ‘new report alert”. If that happens, both reports are the same, except for the day & date.
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We are waiting for Daily Cycle Lows to form in the General Markets and the Precious Metals sectors. Are we there yet? Well, we do see reversals, but at times reversals on the way to a dcl or ICL can be false stops. We just saw that in the SPX & NASDAQ recently, right? So let’s take a look at what we have…
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SPX – I look at this chart and I just have to wonder: Daily cycles are usually 40-maybe 50 days long, so …
1. Did we have a dcl at day 52 that popped & rolled over? If so, each bounce will continue to drop lower.
2. Or are we really at an extended day 61 low as a dcl? If so, this should push higher.
3. We are still waiting for a close above the 10 sma to confirm a low
SPX could still be a reversal that failed and then the next one sticks, as mentioned before. We have seen that in the past, so we’ll just have to see if Buyers step in or not. If not, that may have been a very weak dcl bounce & a sell off would follow (Use Stops) .
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SO FAR THESE MARKETS HAVE LOOKED WEAK – NO FOLLOW THROUGH.
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WTIC – I am still not interested in oil as a trade. Oil moved above the 200sma, but the XOP & XLE are at lows. I will just continue to watch these sectors for possible clues.
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REVIEW: We are within the normal timing for a DCL (Daily Cycle Low ) to form in the Precious Metals Sector, so…
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1. This may bounce at day 31 & drop into a dcl in a few more days on say day 34 or so, similar to what we’ve seen in the General Markets.
2. If we are forming the dcl here on day 31, it can also bounce for a 5-10 days and then ‘peak’, becoming a L.T. Daily cycle that rolls over into another deeper low 2 weeks from now that is known as an ICL.
3. This could be an ICL, and we rally higher ( but it really does not appear to be an ICL type sell off really).
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SO WITH GOLD – We have a reversal at day 31. It can be bought with a tight stop this late in a daily cycle, but just know that it may roll over. I would start with a small position if you choose Miners.
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SILVER has a pretty good looking reversal candle on day 30 here. It could be the DCL too…
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THIS IS THE REAL QUESTION, AND IT WILL ONLY BE ANSWERED BY TIME: DCL OR ICL?
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SILVER – If this is a DCL is it also The ICL? If so, it can lead to the next run higher like the Magenta line, but if the ICL is still ahead? It could become a choppy daily cycle just like the last daily cycle & then drop into the real ICL as shown here with a purple line. A reversal candle like this can be a ‘buy’ in technical analysis, but use a stop under that reversal candle low. If you are using Cycles rules – you wait for confirmation with a close above the 10 sma.
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GDX #1 – We also saw a small gap down and then a rally (maybe even some short covering) into the close. In technical analysis, you can buy this with a very tight stop at Thursdays lows. With cycles, we wait for a close above the 10sma to confirm that there is some strength behind the move.
GDX #2 – So for 2 visual aids, we see…
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#1 – A run higher that eventually breaks to new highs and indicates that we left behind an ICL, as seen here with the Green Arrow ( this kind of seems less likely because the drop was mild-ish). Or…
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GDX#2 – Or this could be the dcl, and the next daily cycle would be like the last one. A choppy sideways daily cycle, and then we drop into the ICL. –
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So these reversals do look to be the lows and the timing is right for a dcl, but to be sure (using cycles) we usually wait for confirmation by waiting for price to close above the 10sma. That has not happened with the SPX & NASDAQ as they struggle to gain upside traction ( Buyers). That same thing could happen in precious metals and it is a bit frustrating. When we have a dcl in place, usually it is a buy and then we have to wait and see if the upside indicates that we have left an ICL behind or not. Another thing that could still happen is a 2 day bounce and then a 4 day crash that brings us to the ICL, but that drop would be swift and usually recovers quickly too.
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So this is not the safest ‘buy’, but I did do a little buying yesterday. I (we) can either use stops and continue to add after the DCL is confirmed or just ride out a few small positions with any immediate downside if the dcl is still ahead on day 34 or 35, or 36? Small position size is risk management too. Yesterday in my report I pointed out that some miners are down 30-50% off of their recent highs, so we are seeing sale prices. Then we look for upside follow through and see if it is strong or weak. I do not want to ride another whole daily cycle that forms as L.T. & rolls over indicating that the ICL is still ahead, because the selling into the ICL could get swift too, as drawn here.
I just want you to know that we may have a dcl here, and I will do some buying, but it could become a short term trade, The chart below is an idea that definitely would not surprise me. It would be another boring daily cycle that falls apart, but time will tell. Do not look at the ‘time’ of the ICL, it would likely be in October, I just drew this as a quick visual .
Enjoy your Friday trading!
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~ALEX
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CDE– I think we could see CDE hold this area as support because it did not get very overextended to the upside. I added CDE yesterday near support.
JBL – I really liked the JBL Set up yesterday and mentioned it as a buy, but obviously we would need to use a stop since the NASDAQ has not closed above the 10 sma to confirm a dcl.
Has MARA bottomed? It looked like it with this reversal and it was very oversold, so I took a starter position. It does look like it wants to move higher here, right? However…
MARA also might just chop sideways for a bit and form a long boring base. If it does this, it also could break a bt lower so I started a position and we’ll see if I get upside or chop. That will decide whether I stay in the trade or cut it loose. I do think that if Bitcoin rises, Mara , Riot, and others will follow.
