Friday March 22nd: Expectations Postponed?
DATA – The Data due today ‘seems’ like it could affect the markets, but it really may not amount to much. Fed, Fed, Fed chatter.
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In the headline I wrote ‘Expectations Postponed?”. What does that mean? After Thursdays trading, we did see reversals in the Precious Metals sector. I did think that we put in a dcl on Wednesday as Gold broke clearly from that bullish pennant, but that was followed by a large drop. I have mentioned in the past (and recently) that at times you will get a strong 1 day reaction on Fed Wednesday, but then the opposite takes place on Thursday or Friday and it needs monitoring. Well, we need to discuss that possibility after Thursdays trading in the precious metals sector.
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The SOXX had a cleaner looking dip to a low that was followed by a reversal on Fed Wednesday. Thursday we gapped open and then started to fill the gap. I drew a possibility of filling that gap Friday and then continuing higher next week. The General Markets were overdue for a dcl, so I am still thinking that we now have that in place.
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THE SPX broke from a triangle consolidation and based on cycle timing and the look of the SOXX and DJIA, it would appear that the General Markets do have a dcl in place. We could see a gap fill or even a back test, however.
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WTIC – Oil broke out and also looks as though it may do a back-test. Notice that it climbed along that green 20 ema, so that may be where it lands.
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This surge in The USD this morning could be a short-term problem for Golds set up. THIS is the main reason that I mentioned ‘Expectations postponed?” This placed the USD above the 50 & 200sma. This stockcharts version often varies from the real deal, so…
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The USD 6 a.m.:
I think that this is a more accurate version of the move higher this morning. It is less dramatic looking, but it still gives us the same push to new highs out of the recent low. WILL THIS JUST BE A SHORT-TERM Pop that rolls over, allowing Gold to do a small back test and then continue to rally? I do think so, since Gold is set up for a 2nd daily cycle run, but HOW LONG WILL THIS LAST? That determines the ‘expectations postponed’ part.
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GOLD live Friday morning. I will say that it is not uncommon for a bull flag or bullish pennant to breakout and then reverse and back test that breakout, but IF IF IF we don’t have a dcl in place yet, this could drop lower than expected. What I did on this chart is marked that Fed surge as day 25 and not day 1 of a new daily cycle. THIS would align with the having a 33 or so day daily cycle.
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Looking at the bigger picture for GOLD, we see that it is still fine. The question is: Will expectations of a strong right now be postponed?
1. Are we in the 2nd daily cycle following another short first daily cycle? If so we can rally now, but…
2. Are we going to have what we used to have for daily cycles? That would be 33 or so days long, daily cycles. If we do, we have more time left in the first daily cycle & we could see a false break out from the pennant and drop for another week or so into the 30+ zone.
3. We could drop all the way to the blue 50sma and back test the consolidation zone if that happens too.
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SILVER actually did what I expected and that was that it should run back up to the highs, but I did notice something yesterday with Silver and that is:
I do NOT see a dcl with Silver. So…
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I do NOT see a dcl, so we could see something like this if the USD continues higher and Silver dips lower. Please ignore that it lands in ‘May’ on this chart, I just wanted to draw it clear enough to see the downside target. I am only talking about maybe a 5-8 day dip to get us near day 33.
I just notice that we had that surge higher on GDX in November too, and it then dropped into a dcl 5 or 6 days later. The Miners looked very good on Fed Wednesday with a surge, so this may not drop very much…
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The Miners looked very good on Fed Wednesday, so this may not drop very deeply.
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PLEASE REMEBER THIS JUST IN CASE WE DO SELL DOWN: Yesterday I showed that many Silver stocks landed on or reversed around the 20 ema, and that is bullish. I will be watching that area like a hawk if we do get a drop from here.
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KGC REVERSED THERE…
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IAG reversed at the 20ema, and so did other Miners. Even a shake out at the 20ema & recovery next week would be a great buying opportunity next week.
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So just to wrap up this mornings thoughts: Wednesday was a strong day for the Precious Metals sector, Gold broke from a bullish pennant, and the USD dropped sharply. That has reversed on Thursday, so we honestly do not know if we have a dcl in Gold & Silver yet or not. Heading into the Fed Mtg, Gold & especially Silver were ignoring the USDs dcl, so that could happen again, but these are all of the things that we need to watch going forward. Let’s see what Friday brings our way in that area. Enjoy your Friday trading and weekend!
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~ALEX
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BITCOIN dropped $3000 at one point yesterday, but on intraday charts it looked like it may only be a back test of a breakout. I used a 4 hr timeframe for this chart.
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BITCOIN 6:30 a.m. Friday: Bitcoin sold off a bit more overnight and has pulled back from roughly a $68,000 high to $64,800. It has now dropped $4000 from the reversal high, we’ll have to see what happens to Crypto-related stocks with this drop. Yesterday though, I had an observation that I shared in the commenting section…
JUST AN OBSERVATION: BITCOIN DROPPED $3000 Yesterday, and you may recall that I was looking to see if the crypto stocks firm up or stabilize before Bitcoin or as Bitcoin bottomed in the 60 day cycle. I saw Crypto stocks bottom before or with Bitcoin, and several did not drop when it sold off $3000 yesterday, so that is the start of what I was hoping to see. Buyers stepping in at the dcl, no matter what Bitcoin itself does. Now we’ll see if that can continue. I’m posting 3 examples below.
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Bitcoin was down $3000, CIFR was up 8% in the final hour.
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Bitcoin was down $3000, CLSK was trying to break out.
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Bitcoin was down $3000, CWULF was also trying to break out.
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So I’m monitoring that going forward. They did all drop into the Red, but some recovered while Bitcoin did not. That is what I’ll be looking for going forward.
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JUST A ‘TRADE IDEA’ OR A ‘BUY & HOLD’ A SMALL POSITION TO CONSIDER:
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I traded or scalped Cardio Diagnostics (CDIO) with small positions at the end of last year, and it was a bomb. I kept it on my watch list. There were days when it rallied up 100%, up 123%, etc. I saw it Pop yesterday and when I looked at the chart, I see that it has consolidated and dipped back down to the 200sma, where it flipped higher.
