On The Right Track?

I wanted to post a picture of something where glue was just melting and everything was becoming unglued, because Wednesday morning I saw quite a bit of Green on my screen and by the close things become a little unglued.  So it raises the question,  “Are things still on the right track?”  Lets look at the charts.

DJIA – Wednesdays rally hit the 20sma and back tested that down trend line, and then promptly gave it up.  I actually think this type of action could lead to a nice post Fed rally next week. For now it is difficult to trade.

SPX – The SPX also hit that 20sma and after regaining the 10sma and downtrend line, it headed lower closing below both. We could test that high volume candle at the lows with a higher low, or possibly drop down and do a stop run. The markets may be shaking off the longs and preparing for a rally Post Fed Wed next week.

USD – I still see the weakness and I feel that the dollar might just roll over.

$WTIC – Oil was acting very well, and it still looks ok in the MACD, RSI area.   I dont like that it lost the 10sma so early in its daily cycle and is still capped by the 50 sma.  It may be nothing, but obviously in these markets we want to monitor closely.  Many of the good looking energy stocks also started to fall back.   I bought PACD Wednesday and I am in the red.

JAN had oil move 3 strong days up to the 50sma, and then sideways for a month. ( Hmmm).

GOLD,SILVER, & MINERS

Let me start by saying that todays drop in Gold concerned many.  I actually had to leave for the day at noon Eastern, so when I returned after the close I was pretty surprised to see  that the markets had reversed, Oil had dropped below the 10sma, and Gold was down around $20 and recovered to down about $15.   I have mixed feelings about things for several reasons, but at this point I am just going to discuss the facts. 

FACT 1 –  This chart was from my weekend report.   The drop was not entirely unexpected using technical analysis.  I didnt show traditional H&S projection from the neck line, I did a simple  A-B-C-D from the head to neck, shoulder to $1095.  Measured form the neck line the drop would be deeper  ($1070 area again).

FACT 2 –  From the weekend report, cycle timing allowed time to drop & run the stops.  Notice my blue writing in the left corner.

GOLD TODAY – looks exactly like the chart above.   SO I cant say that this was a total mind blower that came out of nowhere, but I do have concerns.  I looked back at all of the recent ICLs and after the initial surge higher,  none had pulled back as deeply as this one already has.  Most went to a 61.8% retrace max in the 1st daily cycle. This is deeper already.

That said,  I need to see this reverse and close higher on a weekly basis.  We need a weekly reversal candle Friday .  Cycle wise, we are LATE in the timing for a daily cycle low and we should move higher soon.  I did write an unlikely thought on the chart about a possible DCL.  The ICL was right translated, so we should make new highs in the 2nd daily cycle , that is why it is unlikely that we are rolling over in the 2nd daily cycle here and now, but I wanted to mention it.    I own a position in JNUG and am now slightly in the red. 

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SILVER – Silver doesn’t look too bad, but it needs to move higher a.s.a.p.  It shows signs of weakening.

GDXJ – Notice that GDXJ never broke to new lows like GDX did, so the GDXJ cycle count could be the same as Gold.  GDXJ could start a new cycle with Day 1 matching Golds day 1

GDX– We know that GDX broke to new lows, but if it does that again now and then reverses higher, it would also finally be in sync with Golds cycle count.  It would start day 1 along with GOLD and GDXJ.  At this point, I am just using Golds count.

  SO how do I wrap this up?  Are we still on Track?  Basically we are, but there are signs of a little  extra sliding going on. We have to admit that we are in a tricky time for the markets as a whole with this volatility.    I believe and have stated that I think  the Markets are in a topping process and commodities could benefit from that.   The CRB, OIL, and Precious Metals had solid looking lows put in on weekly charts recently. I took positions based on prior ICLs and bottoming that took place in the past in these areas, the timing appeared right.   Wednesday was a bit more volatile than I expected,  so we need to honor our stops if we face the unexpected until the dust settles.  

  Frustrating?  Absolutely.   So many ‘set ups’ were proper and though they may still play out properly, the volatility that we are experiencing is causing a jittery reaction. 

Look at AKS for example.   Before & After.

AKS – Double bottom, breaking above the 50sma and the RSI is breaking higher.  Looks great.

AKS – Market sell off dragged AKS down below the 10sma too, with very big volume. There was some buying in the end  so we have a reversal candle, but it causes jittery trading. 

   Lets stay alert, the short term volatility can be tough.  Step aside if you are unsure or uncomfortable. Jump back in when the 10 or 50 sma is regained.  We have the BIG FED MEETING next week,  and that could also affect many things.    I actually thought we would see Gold run up heading into the meeting, and then we’d sell off after Wednesday.  Now we have a trickier set up that needs attention.  Its always tough to catch a bottom, but this isn’t even about catching a bottom, we were above the 10sma and some Energy stocks regained their 50sma and gave them up today.  Stay alert and honor stops, step aside if you want to wait until there is more clarity.  A swing low in Gold & Miners today or Friday this late in cycle timing will be a welcome sight! Best to all.

~ALEX