Wednesday October 4th – Is That The Bottom?
I’ve been pointing out the 13sma as a resistance point for The QQQ. On Tuesday we saw price reverse there again.
THE SPY MIDDAY – The 10sma has held down the SPY
So now with The SPX we closed down near the 200sma, but I have been thinking that we will do a shakeout and break below that 200sma. We are only on day 30, the last daily cycle was 38 days, and they can run longer than 40, so this may have further to go.
In the weekend report I showed how this area has acted as support in the past, so it is possible that price chops sideways and drops a little more too (rather than a deep crash).
WTIC – Oil has a Doji that closed green, but I think that Oil will fall further.
The XOP MACD is weak at this triple top, and this can fall further too.
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FROM TUESDAY
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THE USD should be coming due for a dcl soon. I want you to notice that yesterdays candle formed right after the smaller reversal candle on the 10sma, because…
That reversal candle shows up again today and The USD simply extended that same candle a bit higher.
1. I looked at cycle counts and feel that day 27 was the first dcl out of the ICL (very mild).
2. We are now on day 19, so this upper resistance may held to drop the USD down into its next dcl.
So while The USD was rising higher, GOLD didn’t continue to drop. It paused and put in a small doji candle at day 31. That small candle can shorten the parameters for a swing low to form and since DCLs come around day 32, this very well might be the lows. Waiting for a little follow thorough higher is the safer way to proceed.
GDX – Last Thursday we had a reversal candle just like the one that formed on Tuesday, and those lows fell apart, so we have to keep that in mind. This small candle also allows us to easily get a swing low in place if price moves above $26.28. The hard part is that we usually wait for price to close above the 10sma. (I accidentally have the 12sma here, so please see next chart)…
GDX – The hard part is that we usually wait for price to close above the 10sma, and we left that behind much higher, so it is the obviously your choice as to how long you want to wait before you buy, but again, this may not even be ‘the bottom’, since Gold was only on day 31 yesterday.
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Let’s look at a few charts of Miners yesterday. Remember that the USD was higher and Gold was a doji.
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NGD popped up 7.7%, so I posted this in the comments area as a good sign.
NGD then closed up about 11%. That relentless selling over the past few weeks can be quickly erased when Miners move like this. This is suddenly a 6 day high.
AG was reversing and breaking above the 10sma, and it also had a higher low already, so I captured this over an hour before the close. It is a bullish set up and it actually closed a little higher than this too. This low is similar to the June low and I decided to buy it yesterday.
EGO was looking like it might put in a ‘Bullish Engulfing candle’, so I captured this midday. It did close up slightly higher than this, but did not close above Mondays lows for that bullish engulfing to complete. It still looks good.
HMY has a swing low and was up 6.21%. It dropped all the way down to fill that gap & then reversed on Monday. In March, June, and August, the rally out of the low was profitable quickly, so I like HMY as a ‘trade’ at dcls, or ‘buy & hold’ when we have an ICL.
EQX is likely putting in a low, since it stopped dropping and started chopping as Gold approached day 30.
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So the General Markets continued their selling, the USD continued its move higher, and Gold put in a small reversal at day 31, possible trying to form a dcl and possible ICL. Miners started to reverse too, but we do not have a confirmed dcl.
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The big question is always: Should you buy? We are near that point and the lows very well may be in place, but there is risk that we could see one more slam down and then that becomes the final low, since we do NOT have a confirmed dcl. Buying at this point has risk, so it honestly depends on whether or not you wish to completely wait until price is higher and the lows become more obvious (confirmed), or do you want to buy and take a chance that we could get one more quick shake out? One option is also that you can always start small and add as things confirm too, and that is yesterdays approach for me. I was not going to buy and hold, until we got to about 3p.m. and price was holding up. What I did was I went in heavy in the morning with a stop, and sold 80% at the close (& leverage).
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So for you, take a look at a few of the Miners in this report and see if you like those reversals and you can see what happens today too. You do NOT have to buy the very lows to make money. When the lows are in, you can already see how Miners can move out of the lows, so there will be weeks of days to make gains in this sector once it bottoms. That bottom is either now in place or very close with Gold finally reaching that day 32 place that I like to look for a dcl. Enjoy your Wednesday trading!
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~ALEX
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This is GOLD, SILVER, and The USD just before I release this report.
GOLD LIVE 7 a.m. ET – trying to make a swing low (So far).
