Watching Paint Dry

Tuesday was a little like watching paint dry in the markets. Not a lot has changed, but it is important to watch how the various sectors set up going into the Fed Mtg next Wednesday. How they approach that Dec 16 decision might give clues as to which direction the next move will take.

SPX – This was Dec 7 and the markets dropped a bit, but remain above the 50sma for now.

SPX – Tuesday it is still holding the 50sma,  but at this point I see signs of  internal weakness , not strength.  

Look at the DJIA chart.  Price appears to be climbing slowly in a bull flag, but that MACD & RSI are not  healthy at this point. I’m concerned that unless it improves,  it could roll over next Wednesday.

NASDAQ – So I decided to look at the NASDAQ chart.  At a glance it looks good with a reversal Tuesday, but it too appears to be weakening with this sideways move and not strengthening. It could become a double top if it doesn’t strengthen soon.

IWM –  SO a closer look here at the Russell 2000 shows much less of a reversal higher Tuesday than the above charts.  At this point I’m monitoring weakness.

USD – From Monday .

No change – price rising and MACD falling.  This should be good for Gold & Miners.

OIL –  I am not recommending new trades in this area long or short. It may bounce, but I have pointed out that it cannot get above the 20sma. I’ll be watching that ( it may be a short opportunity).

.

$GOLD VS $USD –  This is a Buy ( For gold & Miners) and looks to be just getting started. These are ICL’s.

$GOLD – Gold bottomed on day 43!!  Very stretched.  This should be day 3 of what could be a 20 – 30day cycle, and it  should start to move higher soon.   Tuesday it held the 10sma. The MACD tried to cross higher while price was still dropping.   So far – so good.

GDX –  GDX is already 13 days into its daily cycle.  In bullish times, I have seen GDX put in a short 14 day cycle and then move higher. I have also seen a move like we just saw turn into a 1/2 cycle low  ( A dip mid way through the cycle) and continue higher.   HOWEVER,  to keep us alert we should note that IF GDX followed the Aug path,  it already ran up ( green arrow) – dropped for 2 days , and would make a new high before dropping into a dcl.   The drop in AUGUST was drastic. Would this one be?  I think it is less likely.  In August, Miners dropped to new lows after gold bottomed.  Miners have now held those lows with Golds recent big sell off, so I view that Miners are acting  stronger so far. 

So there is not a lot of movement to report today, not much changed from the last report.  As I have mentioned, I believe we are seeing the ICL in Gold. That means that the pull back should be selectively bought in miners with  stops at support areas.  For example…

SA -After buying at the 50sma, you could add on the pull back.  It may not pull back to the 50sma again at this point, so I wrote this in the last SA chart.  When I pointed out that ‘we are probably similar to right here’  … I said that it then drifted to the 10sma. That could be a place to add.

SA –  It tagged the 10sma Tuesday. I believe that SA will move a lot higher once Gold starts rising, so I would add around here and keep a mental stop somewhere just below  $7.50. I think a drop to the 50sma would be another great buying opportunity, I just dont know if we’ll see that again yet.

NGD –  This ran up from $2.00 to $2.60 (30%)  recently. Now it dropped 50% to support. NGD  may still go sideways or bounce around, but I view it as a buy if it remains above support. I would think that it will run higher when Gold gets some traction.

ABX – A semi low risk entry since it tagged and held the 10sma Tuesday.

   So we are 1 week from an important Fed Wednesday.  It is possible that that decision is basically already known and could be ‘baked in’.  If that is the case, then it doesn’t look all that bullish for the dollar (As many have said it would be), and it doesn’t look bearish for Gold, since we are only on day 3 of what looks to be an ICL.  We expect these ICl’s to give us several weeks of upside, but we really need a little more time to confirm 100% that this is an ICL.  

As noted in this weekly chart: Even in bear market bounces, movies from ICL’s last for several weeks. We’d be on week 1.

   I think that traders can trade any good looking stock set ups  in various sectors of the markets. As we head into that December 16 Fed Wednesday decision, however, it will be important to keep an eye on how the markets act.  It may give clues as to what the next directional move will be for the SPX, QQQ, IWM, etc.

Have a great day and thanks for being here!

~ALEX

.

3 charts that I wanted to add to the report for traders looking at interesting set ups.

YHOO looks rather bullish after this pop & drop back to the 10sma

I have been pointing out DANG for weeks when it tagged the 50sma.  It remains bullish and slowly rising higher on its 10sma, even with shaky markets.

I also pointed out GDDY on Dec4.  It looked ready to break out to all time new highs.  Often there is no resistance if this gets running.

It has popped and dropped back,  but still looks like a long candidate. It may dip lower to the 10sma??  So it can be bought with a stop below that 10sma ( Give it a little wiggle room). 

KKD –  The 50sma is below $14, so the stop should actually be below that a little bit,  maybe $13.75