Thursday May 11th: CPI – PPI – and EXK?
We had the release of the CPI Numbers on Wednesday and they pretty much indicated that we still have inflation, but it has improved. Oddly, we saw 3 Silver stocks crash, and it is hard to understand why, since the earnings were not terrible and Silver itself held up. On Thursday we have the PPI Numbers, so let’s get to our charts and see how they acted with the CPI Release…
When you look at the SPX, you probably think to yourself at first glance, “Well, we had some type of a reversal candle and more sideways chop.”, and you’d be correct. This could still be chop out of a 1/2 cycle low or a day 38 DCL, but let me show you what our day really consisted of…
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Grey areas are pre and post market action, dark black is the Wednesday trading day:
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SPY INTRADAY – When the CPI Numbers were released, the futures Shot higher. After the open, the markets chopped lower and lower and lower, bouncing on the way down. It felt like we were going to start heading into a dcl, but Suddenly the markets bottomed and rallied back into the close. This is why these choppy markets are difficult at times. Thus as they say, “The trend is your friend.’
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So back to the daily chart: We rallied out of the lows and are in the timing for a dcl. Day 38 could be one, so that is considered a buy, but we have to see if this can start trending higher. I see a similarity when the 2nd daily cycle topped.
THE USD is chopping sideways , but still has not been able to get above the 34 sma. I personally do not like this set up, because it looks like a bullish wedge that wants to pop higher at a time when we need the USD to drop, but it gave us a doji (indecision candle) with the CPI Numbers. We’ll see what happens with the PPI Numbers too.
GOLD is on day 15. If the $USD sells off, Gold should rally, but what if the USD pops or continues to just chop? It is rare, but I have seen a choppy 2nd daily cycle and then a strong 3rd daily cycle. So…
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The First rally in March was obviously strong, but now it has been chopping sideways. It could continue to do that, as shown here into day 33. It would need to stay above the dcl though, or it fails technically. Why do I think that this sideways chop is possible?
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Gold has rallied out of the lows to the all-time highs. A consolidation may be needed before it can break out and run. It would look absolutely normal in the bigger picture, as seen here.
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Silver had a very strong rally out of the March lows and it has a day 33 dcl in place. We need to see price stay above that $24.50 area. I say that because yesterday 3 Silver stocks ( EXK, HL, FSM) broke down in a big way. That March run higher was very bullish, so at this point Silver remains bullish, but it cannot break that day 33 low or it technically fails.
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With GDX selling off on the CPI Numbers, I noticed a smaller cup and handle forming with our larger one. These are bullish, and so far the dip has been mild. We also need that April low to hold as a dcl.
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GDX actually bounced into the close and gave us this bullish looking reversal off of the 20sma, so GDX stayed healthy looking. THIS and many Gold stocks still look very good, but we need to cover what became ugly in this sector today too.
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First, The stronger Miners that I’ve mentioned in past reports like HMY, DRD, GFI, KGC, OR, EGO, etc are all still very strong looking Miners, up near their highs.
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KGC actually released earnings and declared a qrtrly dividend, and then decided to break out to new highs, so many things about this sector remain rock solid. That said, we saw some cracks appear today…
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I saw EXK release earnings and it actually moved higher pre-market.
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But then, EXK 15 minutes into trading, I wrote this:
EXK: about 1/2 hr into trading was still a slow but steady drop, so I mentioned the highlight of their report and posted what you see below. It just seemed odd that it would keep selling, because Gold and Silver really weren’t looking bad at all.
SO TAKE A LOOK AT EXK INTRADAY: Premarket with the early release of earnings, EXK actually started to rise. When the Market opened it just slid down with minimal bounces to the 8 ema. This closed at the lows, making the daily chart of EXK look like its a piece of trash…
EXK – This is just Ugly. HL also sold off and FSM, but not quite as badly as EXK. I bought the bulk of EXK at the 50sma area and got stopped out. This can drop to the 200sma and find support, but I just don’t trust it. This selling seems overdone, but I just want to watch this from the sidelines and see if it can stabilize.
HL was not as bad (down 5% alone isn’t bad), but it did break support and therefore it could also drop to the 200sma. These could possibly recover fairly quickly with a Silver rally, but I personally like to exit a trade when something breaks an obviously important level and I can always get back in when it is in safe mode, not selling mode.
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I don’t know why Silver stocks sold off the way they did, since the earnings reports were not that bad, and Silver was holding up. The set up that we have in Silver should be strong with that March rally, and as pointed out, many of our stronger Gold stocks are still at the highs despite the chop. The DCL is not a deep drop and that is the problem. If the USD bounces and causes the recent DCL to be broken, it triggers our raised stops. It would take us out of the trade. I owned EXK and HL and I sold my silver stocks until the dust settles ( I use raised stops to lock in gains). It allows me to get out and watch what happens after the selling. If they gap open higher I just have to find a way back in, but I mentioned that I needed to go and have blood tests Tuesday – that was for my yrly check up today at 8:30, so I also don’t want to be in my Silver stocks while I am away from my computer this morning with a doctors visit during PPI.
The CPI numbers showed that we still have inflation, it is higher than the Fed says is acceptable (they are shooting for 2%), so nothing really changed there, except that the Fed may pause rate hikes and see how things go for a while. Again, we have PPI Numbers today at 8:30, we’ll see what happens.
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~ALEX
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Bitcoin: I drew this chart 3 days ago showing how we could get a 5 wave down in Bitcoin to break that day 45 low and give us a dcl closer to day 60 (normal timing for Bitcoin). This would be a clearer dcl and helpful when it reverses higher.
BITCOIN LIVE 6 A.M. ET YESTERDAY : So I showed that the day 45 low was still holding up as possibly an early dcl. I said that I am really hoping for a much clearer DCL near day 60 by seeing Bitcoin drop below day 45 and then reverse quickly higher. That reversal swing low would be a buy for me, but so far the day 45 lows was holding up…
Bitcoin: Everything was normal and suddenly Bitcoin plunged and tried to recover. That gives us the 5 waves down that I was hoping for, and it DID break the day 45 lows.
Bitcoin: So now we do have a day 61 low, and it is a DOJI, so it tried to recover. We had a doji on the day 45 low too. That said, this alone doesn’t guarantee that this is The DCL, but you could buy these with a tight stop at the lows. At day 45, that would have worked. So
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So this would still be right translated and Bitcoin may run to my prior target of $35,000.
I was showing a couple of Crypto stocks yesterday, because several had earnings and also Bitcoin either had a day 45 dcl or was going to drop and give us one closer to day 60. These could become a buy or an ‘add’ if they act correctly. I already owned starter positions on a couple, so I would be watching to add or sell – depending on how things acted.
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CIFR released earnings already and broke down & looked to be recovering. This could be a ‘shake out’ buy with a stop at the recent lows.
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I pointed out CLSK at $4.83, up 13%. It was not selling off with Bitcoin and looks like a stronger one. It did close at $4.90, even when Bitcoin broke to new lows.
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RIOT was pointed out in the final hour, and the reasons why are on the chart. Bitcoin had already broken the lows from 2 weeks ago, but Riot did not. They released earnings after the bell and dropped 1%. Please read the chart.
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MARA was rising up in the morning, but I posted this and mentioned that they also had earnings after the bell. As the day went on, Bitcoin broke down and broke the day 45 lows, but MARA did not break the lows on the 34 sma. In after hrs, it sold off 1-2% with earnings. IF BITCOIN reverses higher and leaves behins a day 61 dcl, this may be a buy too. OR, buy with a stop at the 34 sma. That is still a $1 drop though- these move Very fast and are higher risk higher reward.
