October 28th Weekend Report
FROM MIDWEEK: I stated…
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SPX DAILY – So this is either day 48 and we should be ready to turn higher at an ICL imminently, or this started a new daily cycle at the day 30 low and can continue to chop lower. Basically, we would not take long positions unless we get a solid reversal and can use a tight stop. IF this is day 18 of a final daily cycle, it can chop lower for a couple more weeks as shown here.
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SPX DAILY – This is the other view, with us on day 48 because day 30 seemed too early for a dcl. Day 48 would now be later on in the timing and a dcl (ICL) should appear soon. After this review of both views, lets look at the weekly…
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After this review of both views, let’s look at the weekly, and it actually looks a little concerning…
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SPX WEEKLY – In prior bullish runs, the 30 week ma was supportive on the deeper dips (see green arrows). This week the SPX sliced right through that as the selling continued. When I see this, it makes me wonder if the next rally will only back test that uptrend line and then start to roll over again. We’ll see, but the strongly bullish view in the big picture has weakened for now.
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WTIC WEEKLY – I still expect a dip lower in Oil, maybe to the 30 week ma.
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USD WEEKLY– The USD has been bullish and this set up continues to look bullish, but is the daily looking weaker?…
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USD DAILY- The daily does seem to be chopping sideways after a break down of the uptrend and a back test. This can roll over and drop over time, but it is good to note that even with the USD holding up here, Gold is now at 5 month highs…
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GOLD & SILVER were pretty boring all day long on Friday, until we suddenly hit the final 2 hrs and Gold (& Silver) just rallied straight upward. It closed with almost $22 gains.
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GOLD, SILVER, AND THE MINERS ARE FORMING BULL FLAGS AND BULLISH PENNANTS, SO I WANTED TO POST THIS FIRST:
A bull flag slopes downward,
A Pennant is more of a triangle.
GOLD DAILY BREAKING OUT – That meant that Gold was breaking out from that bullish triangle or pennant that I have been pointing out. Again, Gold is suddenly at 5 month highs again.
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GOLD WEEKLY – After reversing off of support, Gold has now ralalied back up toward those prior all-time highs.
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SILVER DAILY – Silver formed a bull flag and also pushed higher at the end of Friday, placing it back above the 50sma. Notice that Silver was making lower lows all week and then it was bought back up off of those lows daily, but it did NOT make a new low on Friday. To me, the selling seems to be drying up & buyers are taking over.
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REMINDER FROM FRIDAY: We were at levels where buyers would normally step in so I pointed out that the volume was high, but the drop was minimal (That would likely be buyers accumulating at this level). This should be the 1/2 cycle low. I then showed a few Miners that looked quite bullish with their pullbacks too.
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I grabbed this chart at 2:27 p.m. of The GDX ETF, because I had posted one earlier of a bull flag. Here it was looking ready to break out as Gold started to move higher too. We had that high volume reversal at the 50sma and the 38% retrace on the chart above too. Miners look ready to make the next run higher.
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GDX DAILY – So we had the bull flag with…
1. A Back test tag of the trendline,
2. Capitulation type volume with minimal selling
3. A reversal at the 38% fib level, and the reversal at the 50sma. This can easily be bought with a stop at support.
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I had this in Fridays report: This hardly pulled back, so I view any charts like this as a strong Miner.
AU was a Miner that surged from $15 to $20 recently. I would have expected that it could dip down to $15 or the 50sma during a sell off, especially with all of those gaps below, but so far it is chopping sideways. Every time it has a red sell off day it finds buyers and pops higher again too. AU is still at $19, so it is holding the gains fairly well during this consolidation phase.
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The following are a few Miners after Fridays trading: These are bullish reversals, and I believe that the 1/2 cycle low has now already taken place. Several Miners have put in a Bull Flag or a Bull Pennant, so I wanted to show you that here.
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IS GFI A PERFECT BACK-TEST? – Using a 20 ema, price dropped on Friday and bounced back into the close when Gold ramped up $20+. This is now a breakout from a downward sloping channel and a perfect back-test. GFI is a buy in my book, but technically some wait for a breakout of the top of the bull flags down trendline.
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HMY also dropped to the 20 ema (most of the stronger miners did), and reversed on Friday. This is a bull flag and it almost tagged the 38% Fib level too. I was hoping that we would see a 50% drop and a perfect gap fill at the 50sma, but to be honest, we may just move higher from here if Gold runs next week.
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BTG could be a bull flag after a run higher too. It has reversed at support.
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HL – The silver Miners have lagged, but I do think that they will eventually catch up or even surpass what many Gold stocks can do over the long run. For now, Silver stocks like HL, GATO, SSRM, FSM, and AG are reversing out of a sell off to the 50sma area.
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GATO is a bit tricky. It has dropped when it released the last 2 earnings reports, and I think it releases the next on in 2 weeks. That said, it almost doubled out of the June lows and is now on an uptrend line and at the 50sma. It is a bullish set up with low risk, high reward that way.
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I think that the focus next week should really be on Gold, Silver, and The Miners. Last weekend I said that we should expect a down week where the Precious Metals would likely drop down into a 1/2 cycle low. We have seen that take place.
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That means that we had one nice leg up out of the ICL, we would then see sentiment cool off with a pullback, and that should be followed by another run higher. We would look at support areas along the way, like the 20 ema , 34 or 50sma, 50% Fib Levels, back tests, etc. We have seen all of that take place, along with bull flags and bullish pennants forming in many Miners. We then we had a surge higher on Friday in the final 2 hrs of trading. So naturally the question would be, “We are looking for a 1/2 cycle dip and a reversal, are we there yet?” I think that we are and we can at least buy with a stop at last weeks lows. The timing is right with Gold on day 15, for a run higher for a week or 2 and then a dip into a dcl around day 33.
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I’m really looking forward to seeing what next week brings, since I am thinking that it should be a bullish continuation in the precious metals sector. Check your charts of your favorite miners. DO you see Bull Flags and triangle shaped pennants at support areas? That can be a buy if we move higher next week. Enjoy your weekend!
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