Friday November 3rd
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Today we have some data that could move the markets, so that bears watching. Yesterday’s jobless claims caused a large gap open & a surge that never filled. Maybe this data adds to the surge or starts a dip that slowly fills the gap? We’ll see at 8:30 a.m.
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THE SPX was up almost 80 points yesterday. I am thinking that we have a 5 wave drop into the ICL and on day 48 we see our lows. The General Markets ripped out of those lows, adding really good gains Wednesday and Thursday with the FOMC Meeting. We do have a gap that could fill before we see a breakout, but it doesn’t have to fill. If we do get a pullback, it should be a buying opportunity.
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The NASDAQ was up 232 points. It reversed at the channel lows and the 200sma (not shown). It also gapped open yesterday and continued higher. The 50 sma is a resistance area here too.
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The USD dropped quite a bit, as expected, but what wasn’t expected was the weak manner in which Gold, silver, and The Miners reacted. Yesterday was disappointing in that area.
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This is all we got out of GOLD with the USD dropping sharply? That was very disappointing. I can’t say that Gold is weak, because Gold is actually quite strong, since it hasn’t even dipped down 38%. The problem is …
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GOLD – The problem is that if it doesn’t take off higher soon, this daily cycles’ timing will cause it to get heavy and dip into a dcl first, breaking out higher in the 2nd daily cycle. By this time, I think we will all HATE the Miners and then they’ll take off without us. I’m hoping that Gold can push higher during the day 20-30 count.
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SILVER is also still just crawling along under that 200sma. This was also disappointing with the USD dropping, but we can’t tell the markets what to do, we just have to try and be patient and wait for the real move to unfold.
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The Miners dipped down to red and then started to recover midday. So here we see The GDX ETF trapped under that 50sma and it could remain that way, churning sideways, if Gold doesn’t break out higher. We’ll see. Maybe Miners will start to lead the way and break out first.
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An email from a reader has helped me to see a problem with some trading, and that is that some are jumping in and out and in and out, but the timing of those ‘buys’ and ‘sales’ are faulty and causing losses to rack up. This is because the Precious metals sector has been quite choppy. Let me explain further, in case you are seeing this take place in your trading. I hope that this helps…
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It is hard for me to recommend buying Miners here, even though we are encouraged to buy the dip, and I’ll explain:
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1. Owning a basket of Miners out of the lows was the original plan and then adding on dips to build it up after an ICL is in place is normal. Then when the Miners run higher on their next leg up, gains multiply.
2. That doesn’t work when traders trade in & out frequently, buying high and selling low though. There has to be another plan when that happens. Unfortunately, some may be jumping in and buying on Up days when Miners jump, and then selling for a loss when they dip lower in the chop (and that can happen daily in choppy markets).
3. For example, in a choppy sideways market, that will cost money every time someone jumps in and let’s say they buy 3000 shares at $5 and sell out at $4.75, again and again and again. That is called buying high and selling low for small losses, and if it repeats over and over it can chop up funds until things really start to run or trend higher again.
4. So let’s examine that: That would be buying 3000 shares at $5 ($15,000) x $0.25 /share loss = -$750. Then it runs back to $5 and we buy 3000 shares at $5 again, and then it dips and we sell at $4.75 (another loss of $750) and repeat, repeat, repeat in the choppy sideways moves. Then you look at the chart and that stock simply popped and dropped a few times from $5 to $4.75 and back to $5, but it cost the trader $5000. Anyone that did the buy & hold basket at the lows lost nothing, but the one jumping in and out loses $750 per trade.
5. My point? If you find yourself buying a basket at the lows and holding it ( & I was recommending GFI, HMY, EGO, NGD, etc)- you are likely fine with those gains, but you’ve given some back. Note: If you owned Silver stocks (I did), you may have additional losses from those, being stopped out with their weak performance. However, if you are buying and selling a choppy sideways market, you might need a new plan? Like maybe only buy when GDX breaks above the 50sma and Gold makes new highs or something until the chop passes. Or start small and add on dips only after Miners run higher again? It’s up to you, but there definitely needs to be a different plan. It may even be to buy a basket at the next DCL around day 32 or so, if we continue to just chop. Then you can ride that basket higher. The second daily cycle should be strong if we are going to see Gold break out.
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I want to start putting more trade set ups in the reports, but the choppiness in Miners has made it difficult in that sector. It looks like we have an ICL in the General Markets, so I want to post some more trade set ups there. I have discussed AMD, CVNA, GRPN, AI, etc, but I want to just add more set ups as they develop out of an ICL. All in all, we are seeing a strong move in the general markets and those stocks like CVNA, AI, GRPN, AMD, etc all made strong gains yesterday, TQQQ, SOXL, and SPXL also did well, and there will be more trades along the way. The Crypto Stocks looked to be bottoming and they did pop yesterday, so I’ll discuss a bit more below. Miners are choppy, but they should eventually break & run higher, we’ll just have to wait for that trigger. I thought that it would be the USD dropping, but so far Gold stood still. Time will tell on that one, whether the second part of this first daily cycle has a rally, or will it come in daily cycle #2?
The weekend report will likely not be out until Sunday afternoon this weekend. I will be away and busy all weekend long this week. Enjoy your Friday trading.
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~ALEX
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In the final hour of trading Wednesday, I saw the TLT start to ramp up and it is starting to look like a bottoming process. Just a little higher and it would be pushing on the 20 ema and that downtrend line, so I posted this in the comments and now…
We did get that break out with the TLT, so Bonds look to have bottomed and we may see a short term relief rally.
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On October 26 I mentioned in my report that when the General Markets bottom, AI may be a winner, because it was forming a flat base and no longer dropping with the general markets. Well…
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AI was up 12% in the morning yesterday, so it does appear to be breaking out and may put in a strong run over time ( or a nice quick trade if it moves higher and then back tests the 50sma when the general markets put in a dip). Something to keep an eye on.
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CVNA also broke out and was up 16%. They released earnings last night and it looked like they really killed it, so we’ll have to see how it trades on Friday. I saw it pop up $5, and then it sold off to red , so it may need to be watched and see if it stabilizes over time.
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MARA – Yesterday I mentioned that The Crypto Stocks finally looked to me to be forming a bullish low with higher lows and divergence. Mara and others did push higher. These can be very choppy and not for everyone, but it appears that they may want to start to catch up to Bitcoins recent rally (they lagged very much, holding back at the lows). Again, these can be very choppy, so be aware of that.
