Tuesday November 7th – Buying The Dips
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The SPX opened green, drifted into the red, and closed green on day 6. That gave us a back test of the 50sma and a doji candle of indecision. Basically, we may be seeing a pause after that strong burst out of the ICL. This could continue for a day or 2 more if the USD bounces.
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The TLT put in a reversal on Friday up at the 50sma and pulled back on Monday. It broke out of the down channel last week, so it may be either drifting back down to back test that upper trend line or it may reverse around the 10sma. Right now that 10sma is at the downtrend line & rising. Notice the difference between the buying and selling volume.
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WTIC – Oil is in the timing where a dcl or reversal takes place. We are due for a dcl here and a drop to the 200sma is what I have been expecting.
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The USD put in a small reversal candle on Monday, but I do not expect a large bounce. This is a failed daily cycle that has been chopping sideways with a weak MACD, so it can bounce but it should resume its’ drop lower over time.
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I DREW THIS IN A PRIOR REPORT:
1. I see 2 strong daily cycles out of the ICL for The USD.
2. Now we broke that uptrend and started the 3rd weaker daily cycle, and that is breaking down early as a failed daily cycle.
3. We can have 4 or 5 daily cycles lower from there, so this can push The Precious Metals Sector higher for months.
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The TLT dropped, The USD reversed higher, and GOLD dropped on day 21.
So far that only gives us a day 15 peak, so that leads me to believe that 1 of 2 things should play out…
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GOLD can drop to support and reverse, but I would expect that this scenario would produce a shortened daily cycle, to keep it right translated.
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This would be my preferred scenario…
Sometime this week the USD will dip lower again and GOLD will make a higher high to really give us a right translated daily cycle. So here I have put down the idea of a rally into maybe day 28 or so, and then a dip into day 32 for a dcl back testing this area.
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This was in the weekend report:
SILVER has been struggling under the 200sma, but really it is crawling along under the 200sma building energy to break out and run. That could happen this week.
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SILVER ‘paused’ on day 23, but again, it is likely preparing to break out higher. When it does, it would be nice to see Silver stocks join in on the rally, since they have been lagging lately. Notice the heavy buying volume Friday and the light volume selling Monday.
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This was in the Weekend Report:
THE WEEKLY GDX can be viewed as a breakout of the wedge downtrend line and a back test with the recent correction. This is a bullish weekly set up. Take a look at the weekly MACD and volume. Got Miners? If we dip this week, it is a buy the dip market.
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GDX dropped slightly, but it obviously can drop even lower if Gold does. This is day 23, so I really would expect a higher high above day 12 before we drop into a dcl. If this doesn’t push higher on Tuesday, it could drop to the 10sma on Tuesday and then run higher later this week.
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Monday was a boring day in the markets with all of these small moves, both drops and bounces. Unfortunately, that could continue today if the USD bounces a little bit higher on Tuesday. If you wanted to be heavier invested in Miners, this would be an opportunity to look for Miners that have been strong and are now dipping down to a support area. You could look to add at the 10sma or 50sma or wait for a reversal to appear first in various support areas. Enjoy your Tuesday trading!
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~ALEX
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KGC as an example: In the weekend Report I wrote this about KGC:
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KGC is about to make a major long-term breakout.
KGC stalled on Monday, and this could easily drop to the green 10sma & magenta trend line. A reversal in that area would be a good place to add (or anywhere in this area really, if you just want to go heavier and you aren’t worried about the ‘wiggles’). KGC chopped during that 2 week consolidation between roughly $5.50 to $5.10, and yet it is already back at new highs.
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NGD is a Miner that already released earnings and it really is responding well. After offering an entry by dipping down for 3 days during the correction, it erased all losses in 1 big day Friday. If it dips down with Gold to the 10sma and reverses, that may be the next best opportunity to enter NGD lower.
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So KGC, NGD, GFI, HMY, EGO, etc are the strong Gold Miners that you can buy on dips, but what about laggers? I do see some that look like they may be ready to try to play catch up. Let’s look at SAND for example.
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SAND is a lagger that is showing signs of strength. After the rally in October, Sand did pull back a bit more than 61.8%, however it then Surged on Friday and almost erased all of the loses very quickly in just 1 or 2 days. So now it is at the 50sma and may crawl to build energy to break out. I like this price action because that 1 day pop almost erased all of the losses last Friday. This looks ready to break out.
