Friday August 11th – Still Waiting
YESTERDAY I POINTED OUT THE LONG & THE SHORT DAILY CYCLES: This one is at the point that the short one bottomed. I wrote…
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THE NASDAQ is obviously having a bull run and surprises can come to the upside, so the next step is what happens with the CPI Numbers at the 50sma on day 32 today. That is a short daily cycle and then a long one. What will this be?
THE NASDAQ made a slight new low on day 32, but is still holding on to that 50sma and this is a type of reversal candle. A dcl can form here at this time, but this really could still go either way. When I see that this has a longer 3 week drop into the lows than the June dip (lasting 1 week), I see that as a break in symmetry as a sign of weakness.
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NASDAQ POSSIBILITIES: Usually we get a dcl around day 40 or so, and this is day 32, but we can get them earlier in a bull market. You can buy any dcl with a stop, but we still could see it form as choppy and Left Translated and drop into an ICL later, especially since this drop into a low recently has been a little more prolonged. More sellers showed up over the past 3 weeks, but it does resemble the April sell off to the 50sma too. The MACD looks weaker though.
THE SPX ran up, tagged the 20sma and dropped again too. The MACD is widening out, so even if we got a dcl here, it seems that we will drop again later into that ICL.
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I have to point out that THE USD has a dragonfly Doji, which is a reversal candle, and it is a large one. That said, I also want to say that I do not always find that these have the best reliability. They are viewed as reversal candles, but they are a bit more reliable at the absolute high or low of a long rally or long sell off. This would be saying that the rally should reverse and go lower in a day or 2. Along with that Dragonfly Doji…
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Along with that Dragonfly Doji, GOLD has formed a bullish ‘gravestone doji’ on day 29. These are also reversal candles at the lows. I do find these to be fairly reliable, but not always. In fact…
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We saw a gravestone doji in late June too, but it took 4 more days of chop to completely bottom. GOLD is on day 29 so it can put in a dcl here, but a few more days may also bottom this like in late June.
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SILVER is on day 33 and the selling appears to be drying up (unless we are forming a bear flag for one more drop). This could be a shakeout low at the 200sma that recovers soon and we are due for a dcl.
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GDX actually closed green over the past 2 days, with Gold and Silver down for most of the day. GDX popped higher after the CPI numbers showed that inflation reversed higher for the first time in months, and today we have the release PPI Numbers.
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We are now within the timing for a low (dcl) to form in the Precious Metals Sector, so it should happen at any time. Everyone has a different style of trading, but many find that it is usually best not to try to catch the very bottom by jumping in and out each time there is a pop, since the lows can be choppy and that is frustrating. It is very hard to just buy and hold a position without the confidence of a conformed low in place.
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Waiting for a swing low and a move above the 10sma for further confirmation does make it easier to just buy and hold. I do like that some Miners seem to have already bottomed. AG, KGC, SSRM were pointed out for example. Yes, if Silver slams down 1 more time, AG could make a new low, but with the earnings behind it and with price trying to hold the 50sma? A miner like this may have the lows in place already.
It is good to know that if you look at past rallies you’ll see that you still make good gains if you buy 2 or 3 days off of the lows too (since it runs for weeks & even months). Look at the lows in AG in June. You could have bought that a week after the lows were in and still made great gains with no frustration. We’ll just have to see what the market reaction is after the release of those PPI Numbers, but I think that next week could be when we start to see some nice moves higher with the Miners. Enjoy your Friday trading.
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~ALEX
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Bitcoin has not actually hit day 60 yet, which is where I often look for a low to form. If we do get a low around day 60, then we are 4 days away (Monday). It is possible that a low formed with the recent chop in that 29,000 area, but so far price has still been contained under that upper trend line. Come of the crypto stocks really took off with earnings release yesterday though. See CLSK & SDIG, up 13-22%. Meanwhile MARA and RIOT dipped yesterday with earnings released this week.
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USD 6 am: I am looking at the USD this morning and even though it is slightly down after that dragonfly Doji, I see a triangle or pennant that makes it look Bullish too.
