Tuesday December 15th
I have received a few emails where our friends that pretty much ONLY look forward to the big trade of the Gold Miners are lamenting the current set up. “It looks too weak! This can’t be an ICL if it hasn’t blasted off, right? What do you think?” I totally understand that feeling. The recent chop obviously make it look weak and can bring up those concerns, so this report will have something special for you. I will address those questions as well as review our market sectors and offer several sock picks, so lets get right to the charts!…
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THE SPX closed down 16 points, but we have been discussing that a pull back may be necessary to adjust sentiment and give us a dcl. On this chart I am again pointing out the 20sma & 34 sma as likely downside targets. We are already on the 2osma, but more selling is possible. The set up remains Bullish so opportunities to buy the dip come with a reversal at support.
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THE NASDAQ actually closed up after bouncing off of the 20sma area. The Tech Sector has been strong and dips can be minimal as seen on this chart all year long. If you went long on the ‘buy’ pointed out at that higher low in early November ( TQQQ or SOXL, ETC) you can add on the dips.
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WTIC dropped and recovered yesterday, but Oil stocks did NOT recover. Oil Stocks may be ready to pause, chop, and dip down into their dcl, we need more time to know for sure. After that DCL forms, it will be pointed out as a buy the dip opportunity.
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So you can see that even though OIL recovered, THE XOP closed at the 8 ema without a bounce. It is day 31, so I have drawn a possible path where a ‘deeper than the recent dips’ lands on the 20 sma or 34 sma & reverses. I’ll be looking for clues along the way to signal that the selling is drying up.
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Welcome to the choppy, boring, frustrating part of the Market: The Previous Metals
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GOLD would be on day 10 and we are overdue for an ICL, so this is a November dcl and should be the ICL. The inability to break out above the 50sma & run is frustrating many and is causing many to feel that this looks too weak to be an ICL. I will address that shortly. For now we are going to look for a break above day 6 to add to our confidence that this is an ICL. The MACD is encouraging.
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SILVER honestly doesn’t look weak to me at all, it just looks sideways and choppy at this point. Since we are at the Apex of what I am viewing as a triangle, I would expect a move higher as soon as this week. The MACD & RSI here are encouraging too.
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GDX – This is where our readers are getting fed up. Silver looked fine, Gold is a bit choppy, but Miners sold off on Monday on Day 13. A day 13 sell off with a day 8 peak is obviously discouraging, but is it the death sentence for Miners? No, and I will dig a bit deeper in this report to show you why I say that.
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I have discussed several Miners in recent reports over the last couple of weeks. As GDX & GDXJ pull back, you can look to see if these set ups are pulling back too. Are they just landing on support? Are they remaining Bullish? Or are they even resisting the selling? For example:
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I have mentioned several times that I own & have treated AAGFF as a BUY & HOLD. I have owned this one for a long time actually. It was up 10% at one point yesterday and is near the highs, even with GDX & GDXJ selling off. If it does pull back to the 20 or 50 sma again, you may want to buy it. I may want to add again.
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I also mentioned that I own CDE and CDE did pull back a little yesterday. So if you see Miners that remain bullish but may pull back a little during the selling, you can buy the dip at support with a stop. This may back test the triangle and the 50sma. If it does, I may want to add there if it reverses. Others may want to start a position?
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I will cover a few more things below, including several stock picks that may offer a good short term trade or swing trades. Enjoy your Tuesday trading!
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~ALEX
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We are getting a pull back in the Precious Metals and so far it may just be a higher low with an ICL in place. As mentioned, I am getting emails of concern about the apparent weakness. Basically the question is, “Can we see this kind of weakness if we have an ICL?” I wanted to address this sector a little further to help possibly alleviate concerns. The short answer is “Yes, I’ve seen worse and so have you.” 🙂
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GOLD ICL APRIL 2019 – I remember this ICL because it literally stayed at the lows for 1 month! This was a choppy trial that always had us thinking that it could break down on any given day. I remember someone saying to me, “There is no such thing as a triple bottom, so this is doomed!”… And off it went higher.
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GDX ICL AT THAT TIME – GDX COULDN’T EVEN GET ABOVE THE 20 SMA HERE FOR ALMOST 20 DAYS! THEN IT TOOK OFF LIKE A ROCKET! Please look at this chart as the GDX chopped along at the lows for 19 days, and then look at the blast off higher. So this shows you that it IS possible for a first dily cycle to hold the lows and look very weak before pushing higher. Also…
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Just in case you think that was a 1 time rare occasion? GOLDs ICL at the end of last year came in early Nov on November 11. The price chopped at those lows on day 10 and then continued to chop sideways into day 27! The ICL was Nov 11, the rally started Dec 21.
Now for something that you will REALLY hate! 🙂
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GOLDs Summer ICL in 2018 was horrible. After a high volume spike down low, we bought that as an ICL. The entire first daily cycle brought us back to that low, it was unable to get above the 50sma. The 2nd daily cycle was No Better! We broke out above the 50sma and then chopped sideways and lost that 50sma again, dropping down into a dcl. DONT YOU THINK PEOLE HATED & DOUBTED THE GOLD BULL THEN? 3 weeks at the lows and we had 2 weak looking daily cycles. Then the 3rd daily cycle took off to the upside.
After discussing those ICLs, lets take another look at what could be our current ICL, since it is a dcl that is over 8 months forward from the March ICL. Does this really look all that bad? Does this look extremely weak on day 10? Too weak to be an ICL?
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I hope that this review has at least helped everyone to see that in the past, we have had similar or even much worse set ups that eventually rallied very strongly higher. I cannot guarantee that this set up will take off upside and rally this week or next, but the set up is such that we buy the DCL, look for it to prove itself as an ICL and the current lows for Gold should not be broken. Unfortunately they can be tested as seen above, and this is why I have also been trading other hot sectors in the markets. It is time that will tell how this all plays out, but for now the lows should be in place.
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In the live area I mentioned IPOC & IPOB as a trade that I took a while ago and I am still in the trade. IPOC did not take off like IPOB yet, but it is finding support and bouncing off of the 8 ema so far. I am expecting a full cup to form or it may do what IPOB did (New highs). Even from here that would be $11 to $13+ or more. So far I see High volume up, light volume pull backs.
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In November I bought and recommended MAXN as it was in this base. It broke out as shown here around $21 as a buy too.
I sold my MAXN to lock in good gains ( my position was good sized since Solars have been very bullish) and now I think that it is a buy again. It back tested that break out and is a buy.
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I still own NETE and recently it was dropping down to the 20 sma, now it tagged the 10sma & bounced so I grabbed this chart in the morning and mentioned that it bounced off of the 8 ema.
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NETE then closed under $14 yesterday and I still think that it has good upside potential.
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OPTT is a low risk / high reward possibility entry here, since you can place a stop under the 50sma.
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PZZA – This is possibly a covid proof company, as long as they deliver. Papa John’s looks to be breaking from a base and ready to move higher
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RKT – I will say that this is probably the best set up in todays report. In August it ran strong and then pulled back and formed this base.
This base is an inverse H&S pattern with recent volume pops as it breaks out. I think a set up like this has little downside risk and a $21 to $34+ possible run. That is a great set up. To keep it low risk, You can put a stop under the right shoulder.
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