Wednesday May 10th – Shop The Chop?
Unfortunately, we are pretty much seeing sideways chop in most of the various sectors of the markets, and that can be boring and difficult to make money in. It is often a good time to go shopping or buy the dips in the more bullish set ups. Gold , Silver, and The Miners were trending higher in March, but have yet to resume that trend. As they chop sideways, consolidate those gains, or dip, they can offer buying opportunities or places to add to current positions. Biotech is also still performing well, so we’ll discuss that today. Uranium Stocks were mentioned as noteworthy in April, we’ll follow up on that here too. These periods of sideways chop in the other sectors won’t last forever, but for now we have to just let things play out, so let’s take a look at what we have…
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The General Markets continued to have a day with a small trading range, as seen here with The SPX. Usually daily cycles last around 40 days and day 38 slightly undercut day 32, so it is possible that we have a day 38 dcl. That would be normal timing, but the last 2 daily cycles sold off into day 50, so that keeps me a bit cautious.
What you see on this chart after day 38 is that the market surged Friday with the Jobs Report, so that might be day 1 & You could buy these reversals with a stop at the 50sma.
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It may be helpful to discuss Biotech again, for the next dip.
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THE XBI was just breaking a downtrend during the steep sell off into March, and I posted this chart on March 29.
1. You may recall that THIS is when I was looking for the ICL drop in the General Markets & Precious Metals due to a USD bounce, but that sell off was cut shorter than normal in the General Markets & Precious Metals when the Banks failed.
2. They reverse higher, but BIOTECH did not have the ICL drop cut short. XBI & IBB continued to sell off into an ICL. It bottomed here, so …
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APRIL 19 – THE XBI was pointed out as having that ICL, and LABU was the buy / trade and buying the dips was working out too.
On May 1 I posted this chart of a dip: This dip & higher low at support was the next dip to buy as the XBI tagged the 50sma, LABU tagged the 34 sma. How is that trade working out and is it too late to buy?
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So again, The XBI ( & LABU) was mentioned recently as a possible ICL in March, since it did not have the sell off cut short with the Banking crisis. It is trending higher as a sector, so this is where Money is being made. We even had a buy the dip at the 34 sma for Labu.
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XBI ( & LABU) continues to perform well and The XBI is running strong. LABU has moved from roughly $5 to $7 after the dip. If you didnt buy it at the 1/2 cycle dip on the 34 sma dip, you could buy the next dip into a DCL, but this can continue higher from here before that dip too.
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With that strong reversal, we had a buyable low (Oil has been very tricky and choppy though).
I discussed this in detail in the last couple of reports with 2 very different charts. One showed that the last lows WERE broken (seen here) The other does not show that. Either way, Oil is recovering from that strong reversal nd Oil seems to have bottomed with an ICL, but it sure has been choppy and difficult!
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This was that second chart where oil is shown as NOT breaking below the lows that I thought was an ICL. It could be a bullish ICL and one is definitely due, but the choppiness of Oil has been brutal.
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THE USD is chopping sideways and bouncing, and that is causing much of our chop in the Precious Metals sector. I expect the USD to drop again and that is when we should see a nice Rally in Gold, Silver, and The Miners. I am watching the RSI at the 50 % line and so far the USD bounce has not shown any extra strength.
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This is the same chart:
I just want to note that The USD did bounce yesterday and Gold basically ignored it.
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1. Here you can see that GOLD ignored that USD bounce and was higher too yesterday.
2. Gold surged with the Fed Mtg last week, but dropped sharply on Friday. We are not getting the follow through higher that we hoped for after that Fed Mtg, and again, that is likely due to the USD not following through to the downside. This does remain bullish.
SILVER dropped to the 8 ema and bounced with the USD higher yesterday too. This is a really bullish looking chart, but you can see that over the past couple of weeks it has just churned sideways. Yes, that is very boring for our Silver Miners, but it is consolidating that strong run out of the March lows. It is boring when it chops sideways day after day, but I would expect that we should resume the climb soon. When it starts trending higher again, we will make money in Miners.
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GDX was certainly trending higher in March into April along that 8 ema, and Miners made good gains then, but it is also consolidating here. We have discussed stronger Miners and laggers in past reports, we are just waiting for this run to follow through higher too.
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This is the same chart:
I just wanted to review for you that…
1. That strong move higher was the run from the ICL.
2. GDX is consolidating those gains after a dip into a dcl, similar to Gold & Silver
3. The dcl is in place, and that surge last week was FOMC related. We are just waiting for follow through and This is when people buy or add to current positions if they’d like to ( The dcl and with the dip of the last 2 days).
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After a strong run or trend out of the March lows, The Precious Metals Sector has paused for a dcl and consolidation. This is normal price action, but when we are not trending, it can be boring. The expectation is that the USD will eventually roll over and we should get continuation higher after Gold, Silver, and The Miners. That will be the time to make money, but until then we can look at adding to Miners as they dip down lower. In past reports recently, I pointed out some leaders like HMY, DRD, AU, GFI, etc and some laggers. My next report will be less of a review and more coverage of some of the Miners during this period. Bitcoin is below and a couple of other charts. Enjoy your Wednesday trading.
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~ALEX
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Bitcoin: I drew this chart yesterday 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. SO FAR we have not broken that low. Lets look at Bitcoin Live…
BITCOIN LIVE 6 A.M. ET : So you see that day 45 low is still holding up as possibly an early dcl. I was 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 stand.
In April I pointed out that Uranium stocks were bottoming or basing out. They looked like a good set up so I mentioned UUUU, DNN, NXE, UEC, CCJ, etc. This was also the ICL SELL OFF INTO MARCH. I did not take the trade personally, but I wish that I did, because…
UUUU and other Uranium Stocks are breaking out for ICL bases. This would have been a buy at the 50sma. The good news is that some of the others are still in that area, UUUU is leading higher.
DNN, for example, is just now breaking out. We do need to look at each Uranium Stocks and find out when their earnings will be released to be safe, but I would say that break outs like this are a buy. Again, look at UUUU after it broke out.
