That Was Different – Weekend Review

The Dollar was ripping higher this week and we saw the Markets break out higher too. Oddly enough, Gold, Silver, and the Miners were staying green during that run higher too. That was different. Lets take a look at the weeks action and discuss what we are seeing.

SPX WKLY –  This was pretty impressive, I expected at least a pause at overhead resistance.  Notice the break above horizontal resistance / Magenta line  too  ( I will discuss that in a moment). 

I had this chart in a report last week, to show that the SPX broke down from a long term channel and may struggle a bit ( Just a Back Test or break back inside?).  We are very close to breaking back inside.

So here is what I wanted to look at next…

Longer term using a Log Scale – I have actually been pointing this out for over a year as it slowly reached the apex. We broke down and may just see a back test soon.  This will keep us alert to possible bearish longer term implications down the road.  If the markets are racing higher into the Fed Mtg,  what will they do after ?   It may pause and drop, but what about that Break out above horizontal resistance/ Magenta line in the first chart?

Notice that SPX broke above a horizontal line in OCT 2011 and then dropped back for 9 weeks of consolidation.   A break out that sucked in many to the long side,  and then ‘nothing’.   Could that happen here as the Fed Speaks?

NAZ WKLY –  We have Earnings results and many seem Bullish , yet others are quite Bearish ( esp retail ).  Add WMT to this list of bad.  Right now the NASDAQ has been very bullish coming out of those lows.

Looking at a couple of the Bullish break outs, they do look in danger of dropping back.

AMZN –  It often Gaps  open from Earnings and stalls or drops. It put in a reversal Friday similar to July.

MSFT –  Thats a reversal candle too.

So if we bounce around here ,  the VIX may bottom as the markets top . If the Markets back test and drop, the Vix will likely put in another huge spike –  see the Spike in Oct 2014, July 2015, and picture another huge one not drawn in.

Summary :

Right now, It was a bullish few weeks for the markets as they recovered from the recent slam down.  We are somewhere in the middle of a full blown bullish recovery or a back test and drop again.  Could we be entering a Final Blow Off top to the bull mkt that we have had for the past 7 yrs or so?   With that in Mind, let me show you  the NASDAQ blow off top of 2000.  It did a similar shake out , crash right before the blast off.  Red arrows are where we would be now.  If we just keep moving straight up, this could play out in blow off fashion.  

The USD WKLY – Strong move heading toward the Fed Mtg. Will the FED kill  or will we get a break out here?  Other strong weeks did turn down.

USD DAILY –  The daily is up against the Bollinger Band & Resistance, but that doesnt have to stop it from moving higher. 

UUP  –  I thought that the USD ETF   showed a strong move without strong volume,  so I wanted to point that out. It may be a false sign of strength.  The UUP tracks a bit off, so it shows a break out where the USD doesnt. Again, I’m wondering, “Is the Dollar going to roll over at the Fed Mtg Wednesday?”.

 OIL has not found its daily cycle low. It is due, but I must say that the chart ‘looks’ weak, so I will start with  the XLE first. The XLE  (Energy Sector) Looks strong. A weekly bull flag is possible.

This was my Chart for Friday mornings report.  It closed down a bit, but looks the same.

WTIC – DAY 43.  That is getting late for a DCL.    It “appears” weak and volume seemed a tad heavy on the selling days, but a low is due . I’m pointing out a bullish falling wedge in red.  Maybe a stop run / false break down and reversal higher?  Again, The XLE & many Energy stocks look pretty good, I expect OIL to break higher soon.

WTIC WKLY –  Losing the 10MA on a wkly basis is not what you want to see. I’d like OIL to be higher this week to re-gain it .

GOLD SILVER & MINERS

Again, What can I say? The dollar took off higher and the Precious Metals completely ignored it.  That makes Precious Metals look strong.  I was asked last week if I was concerned about the C.O.T. readings and I said that they are not a good timing tool at tops, better at lows.   This weeks C.O.T. are  even higher, so I would expect ‘something’ to come of it.  Gold will probably drop soon, but IF we re-entered a bull run I dont expect it to return to the COT Lows of prior ICL’s.

  P.S.  It is a Fed Week, so I am giving us 2 scenarios to watch for heading into the Fed Wednesday/ Thursday reaction.

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GOLD –   Cycle count is difficult, as I’ve mentioned. I have heard 2 differing views, shown below.

1.    I think that day  purple day 17 on the chart below is a DCL.   We have time for 1 more pop and then we’d drop as shown ( Fed Wed?) .  OR with this Cycle count we would be on day 16 now . I see a bit  of a cup.  A sideways move could form a longer  handle until a DCL forms and then we could get a run higher after consolidation.

2.  That Big reversal day on OCT 2 looks like a dcl to me in Gold & SIlver, but For this chart  I want to do the  Cycle count as though it is not a DCL.  This way would expect a dcl soon.  Even on the FED WED MTG.  Day 33  would be FED WEDNESDAY.

One reason why I was thinking that maybe OCT 2 was a DCL for Gold (with a shortened daily cycle), is the way that SILVER looked on OCT 2.

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 I call this SILVER FED idea #1 and SILVER FED idea #2

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SILVER  FED idea #1  –   OCT 2 looks like a DCL.  This puts us ready to fall into a dcl later this week. The chart shows what I feel we could see if we rise into the Fed Wednesday.  Keep in mind that this early in a daily cycle ( day 16),  we could fly through the Fed Mtg and run up higher to day 25.  WHY? The First dily cycle for Silver out of its lows was not really long, so the next one could be.  If it runs for 33 days and we are on day 16, it is only 1/2 over  🙂

SILVER FED idea #2 – A drop now Mon,Tuesday, Wednesday , and a blast off after fed Wednesday. a 3 day steep drop has happened in the past.

GDX –  First a quick review of my thinking as of Thursdays report.   Then I am giving us 2 scenarios to watch for heading into the Fed Wednesday/ Thursday reaction too.

1st chart  –   GDX – My Thursday chart. A bump higher and a drop, 1-2-3-4-5 style.

2nd chart –  How similarly GDX acted in 2008 coming out of a Bear Sell Off.

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GDX 2008 and Now. GDX made a marginally new high to suck in “Bulls” and then dropped into a dcl to the 50sma.  Could we see that this week?

GDX  FED IDEA #1 –  Rise into the Fed Mtg and drop to the 50sma , 1-2-3-4-5 ? Increasing volume from Thursday to Friday.

GDX FED IDEA #2 –  Drop going into the Fed Mtg, and take off higher Thursday.

GDXJ – Pop & Drop like we saw in August?

I posted Bullish looking charts of AUY, IAG, SA and EGO Friday a.m. to show why I think Miners look like they want to go higher.  They all improved.  This was IAG Thursday for example, and Friday .

**ATTENTION**

    I just found out that I am going to be on a plane during the Fed Meeting Wednesday!  

That is so difficult for me at such a pivotal point in the markets, but it is unavoidable at this time.  That is why I tried to give 2 scenarios to look for this week as the week plays out.  Hopefully this gives us  an idea of what can happen by the time Wednesday arrives.     I will still be writing a report on Tues, Wed, & Thursday morning, but since I am traveling all day Wednesday,  Thrsdays will probably have to be a little shorter and to the point.  I will be focusing on what seems to be  important in the markets post-Fed.    I have a feeling that I will be focused more on the USD, WTIC, and Precious Metals.

 This weekend report is extensive and with the 28 charts included, I am hoping that you may be able to look back on this report Tuesday night or Wednesday and get a good idea of how things are playing out by then.  Again, I will still have reports Tuesday,Wednesday and Thursday Morning.

Thanks for being here and have a great Fed week!

~ALEX