Wednesday October 14th – Did You See That?
SPX- The markets paused, but we see that all the time. It can become a buying opportunity ( or a place to add to current positions) if we get a reversal in an area of support. Many charts remain Bullish.
NADSAQ – We may see further selling that gives us something like this (if the selling continues).
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THIS IS WHERE I WANT TO SPEND A LITTLE EXTRA TIME AGAIN: Day by day things usually get clearer when we have a mixed picture. In the weekend report I mentioned how the Precious Metals picture was a bit mixed, and the USD may help us. Well, it did and it didn’t. Lets take a look.
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USD – I said that I expected the USD to put in a low ( DCL) and bounce higher. This kind of a pop should drop Gold & Silver. Well, we DID get that USD bounce, and it DID drop Gold & Silver. So normally we’d say that this is playing out as expected, but the problem is ( as you will see) the Miners. Next we’ll look at Gold & Silver, but to be clear….
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To be clear, a dcl can now push the USD higher for at least 2 weeks, right? What should we expect that THAT will that do with GOLD & SILVER? Lets look at Gold & Silver.
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THE DAY IN A SNAPSHOT – Here you see that that USD pop ( Up $1 at one point) caused GOLD & SILVER to sell off sharply. So GOLD & SILVER dropped and stayed at the lows. The Miners dropped & recovered??
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GOLD – GOLD DROPPED as the USD POPPED. Plain and simple. Gold was basically rejected at the 50sma and we would now be inclined to expect a sell off in a 5th daily cycle down into an ICL as the USD runs higher. Right? Right!
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GOLD – This is our snapshot of Gold. I put it here to show you what this looks like, so please keep this in the back of your mind:
1. It looks like it is rolling over as the USD rises.
2. The USD should move higher for weeks.
3. High volume selling took place too, so
4. I would expect this to sell off into an ICL.
SILVER sold off with the USD bounce too. If I did a measured move on Silver it would drop it down to the $20 area. I have been saying for 3 weeks ( see weekend reports) That Silver could drop to $20. HOWEVER…
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HOWEVER… The MINERS ARE NOT SHOWING US THE SAME KIND OF PRICE ACTION. This continues to give us a mixed picture.
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GDX only dropped to the 10sma, filled most of the Gap, and reversed higher closing down Just 1%.? What? Miners always Over-react to Golds selling, but Gold was down $34 and GDX was down 1% after bouncing off of the 10sma?
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GDXJ – Let me be perfectly honest with you. I’m here to tell you what I see, and as you will now see, the picture is Not clear. Please study this chart of GDXJ. What do you see? I’ll tell you what I see …
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1. We’ve seen a DCL in the USD and it looks ready to move higher .
2. We’ve also seen GOLD & SILVER drop when the USD moves higher.
3. yet I also see Miners acting quite Bullishly.
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If you worked all day and couldn’t watch the markets trade in real time, you might look at the USD plus GOLD & SILVER and just think that we are ready to crash down. From here I want to show you the price action taking place in some of the Miners and you will see why it is unclear as to what will come next. Above I have pointed out to you that the USD Bottomed & Popped ( as expected). Gold and Silver dropped (As expected) , so now lets look at a few more Miners which we would also expect should drop (right?) …
BTG closed green after bouncing off of the 50sma. That is considered Bullish action and it closed green with Gold down $30?? We are discussing a possible Gold sell off, yet this looks bullish.
EGO is blasting off to new highs with increased volume, EVEN ON A DAY WHEN GOLD DROPPED $34? Yes. Is this chart Bullish or bearish?
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MGMLF : MAPLE GOLD is another extremely Bullish looking chart with Gold down $34. It is overbought & could pull back now if gold drops, but this was also exceptional with Gold down $34.
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RGLD is a major royalty company that dropped from $150 to $115, and has now reversed. With Gold down $34, RGLD closed green? This does not look like a weak 5th daily cycle, it looks more like a fresh low.
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HMY could not even drop enough to fill this gap and it suddenly reversed higher , closing down 8 cents. Again, Gold dropped $34. Hmmm?
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VGZ closed green too.
VGZ WKLY – I see a big 1 week drop, so maybe some Miners have simply ‘bottomed’ before Gold.
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The above Miners do NOT look like the price action of Miners in a weak 5th Daily Cycle:
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I feel like we are in unprecedented times here with the Precious Metals Markets. I have been trading this sector, both Bull & Bear markets, for over 20 years and I don’t recall ever seeing such a big difference between how the Metals and USD are set up verses how the Miners are set up or acting. I think that you’ll agree that we need more time to know for sure, but the Miners USUALLY do lead the way. If they break down and gold holds up I am usually pretty confident that Gold will follow. Right now buyers are stepping in and buying Miners, so Miners are acting bullishly with Gold and Silver being rejected at the 50sma. I am not seeing what I would expect to see in a late stage of the Intermediate Cycle – a 5th daily cycle. A 5th daily cycle usually has Miners so weak that even when Gold Pops they won’t follow. What is my advice? In the weekend report I discussed how things looked a bit mixed in this sector, but it was more of a 50/50 idea as to whether or not the ICL could be in place. Now I’d recommend going back and read the weekend report on the Precious Metals with a slant toward the ICL probably being in place.
I did say that I have add a few Miners recently, but I also am happy trading in other areas while I wait for the lows to be confirmed. For those that only trade the Miners, I have said that as long as you are using stops, I think that holding a basket of Miners is a good idea. If Gold breaks the lows, we would remain very cautious, but if Gold & Silver break above the 50 sma, I would think that the ICL is in place. Personally I would NOT be shorting the Metals or Miners at this point while the Miners are acting bullishly.
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We’ll see what the rest of the week brings our way and I’ll just mention a few more trade ideas below, that go along with the many trades already in place. Enjoy your Wednesday trading.
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~ALEX
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I have discussed ( and recommended) BNTX, MRNA, NVAX, and a few other trades in what I call the Covid biotech Treatment or Testing area. They are doing very well and are still a ‘hold’ if you bought them, but NVAX is also a buy again. Let’s review this Covid area again briefly.
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BNTX & MRNA were ‘Buys’ with BNTX reversing as a shake out at $55. The idea was that it was going to return to the highs. That would be AT LEAST $55 to $105.
BNTX – I recommended it a few more times as it made progress and said that I bought it . NVAX looks very much like BNTX looked here and…
BNTX – You can see that it is returning to the former highs . Now lets look at NVAX…
NVAX looks very much like the BNTX charts above and as mentioned, it returned to the former highs. NVAX was already mentioned as a buy, but now it may be ready to pop & run at the 50sma. This would be a $115 to $200 run ( or more).
Many of the smaller Covis treatment or testing companies also look set up to run again. I have mentioned in recent reports that with what is expected to be a 2nd wave of Covid, these could run again. I will keep an eye on these, and I did already mention several of these in past reports as forming what looks to be a low. I mentioned companies like BIOC, NOVN, RGLS, CHFS, CODX, COCP, HTBX, etc. THESE HAVE TO BE CONSIDERED A BIT HIGHER RISK, DUE TO THE POSSIBILITY OF AN FDA REFUSAL OR FAILED TRIAL, so position size regulates the risk. If we trade a risky area, we need to keep it reasonable.
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Like many of these Covid stocks mentioned above, HTBX has popped off of the lows and look to have put in a higher low while consolidating sideways. I bought a position in HTBX yesterday as it crossed the 10 sma. I (we) Rode this run from 70 cents to $4 in July, selling on the run higher. These were Excellent gains! Now it looks ready to possibly move higher again.
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I made excellent gains in CHFS on that choppy difficult run higher, but it has since seen the same sell off that many of these had when Covid cases started to diminish. CHFS makes respirators and has had news releases describing their use in Florida hospitals with good results. Well,
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CHFS looks to be bottoming too, with a strong rise in the MACD. I DID NOT BUY THIS YET, it was always very very choppy, but if it continues to make progress, a run back to the highs would be very profitable. I am keeping an eye on this sector.
BY REQUEST: This was in yesterdays report. I mentioned that IGC is a Medical MJ stock with great potential. I was asked if there is something wrong with it based on the chart now?…
Absolutely nothing wrong with this. IGC looks great and that was simply a dip that closed down less than 1%. This CAN drop further, it could tag the 50sma too. When we buy a stock in a base like this you have to expect wiggles. The entire sector dipped yesterday, but the stocks ( CRON, CGC, HEXO, etc ) all look fine so far.
By request: Buy , hold, or sell. LLNW is an interesting chart to me. It is very choppy and a ‘Buy & Hold’ over the past year may have made the rider very sea-sick, but if you time it correctly you may catch the run higher.
At this point, this could run from here to prior highs at $8 or even new highs near $10. Volume yesterday was strong, even with markets dipping a bit.
