The Runners

Yesterday we saw some of the Energy and Mining stocks running swiftly. There are some small bases that have formed in the past few weeks, and now they may be starting a small leg up. Some had Gains of 20 % in one day, which could just be a mix of short covering and a little buying, but they may still continue higher.  We’ll take a look at some individual stock set ups like the one below.

SGY – A break above the 50sma, we see a possible Inverse H&S forming.

First Lets review the markets …

SPX – This is an area where I’d be watching if I were long or wanting to short the markets. This move was actually stronger than just a pop. The 50sma is close and the 200 sma (Not shown) is just above it, and these may act as resistance. Expect a pause and then it may try to break through upside.  If it fails, it could be a short candidate. 

Much of the commodity action seems to be closely related to the Dollar, and I thought that the dollar could pop above the 50sma soon.  It may still do that, but it seems like it will tag that trend line and roll over at this point.  That would be bullish for Gold and Oil .

USD –  Supported by the 200sma, stopped at the 50sma.

I have a lot to cover in individual stocks later, so lets quickly just look at Oil & Precious metals  ( NATGAS = no favorable change so far. )

$WTIC– This hasn’t changed much either.  A Bullish looking flag that is continuing sideways, but the move in energy stocks may be indicating that a break out higher is in the cards. Oil is riding above the 50sma currently.

Oil didnt break out in an obvious manner, but take a look at what we were looking for  in the weekend report.

2 charts from the wkend report: We wanted XLE WKLY above the $64.81  & on the daily a break out was looming.

XLE –  We got the break out from a LONG downtrend. This had capitulation lows in Aug and may just move higher from here.   Again I have been saying that it is possible that we seeing commodities bottoming and markets topping. Things seem to be pointing that way with what we see here.   As time goes on, the picture will continue to get clearer.

Gold did not go higher yesterday, but Silver and Miners did. That is what I like to see, Silver & Miners leading the way.

Silver –  As mentioned before, Silver can run swiftly once it gets going in the 2nd daily cycle.  

NOTE: Similar to what I showed you in the weekend report regarding 2012’s confusing  bottoming action in Gold Silver & the miners,  Gold bottomed in July this summer, but Silver bottomed in late August. That confuses expectations a bit when it comes to timing, so I am just allowing things to play out, expecting Silver to do its usual run up, stall, and then roll over into a daily cycle low.  Trailing stops may work best in that case.

GDX– We have a break out .  Please note that in Dec/ January when GDX broke out , it paused and went sideways to the 9EMA. This is a buying opportunity if it occurs ( NOT a sign of weakness). 

GDX could pause because its first target was reached yesterday in an A-B-C move, BUT individual Miners do not all pause when this happens.  You may see some just run higher like SA did in August when GDX pulled back.

GDX can also just keep going and extend to a 1 :1.382 or other Fib extension, so I dont sell on this A-B-C-D assumption.

I wanted to draw up some charts of a few Energy and Miners charts to show what I’m looking at and what I look for in this area. That takes a lot of time and I would be releasing this report after the market open if I gather those now, draw them up, and then post, so allow me to collect and draw up a few more and please check back later.   I wont post a new report, so you wont get an email alert,  just refresh this report ( Check back after 9 a.m. Eastern) and they will be added here.

 

Again an example is SGY– This is a base that has formed a possible inverse H&S and is breaking out above the 50sma.

~ALEX

ENERGY STOCKS –  You’ll notice that most of these are still near their bottom, and they have formed a few false starts, which gives us a base.  Bases are important for a nice run higher, because it allows weak hands to get frustrated with false starts, and encourages bears to go short thinking it is weak  (think of the miners from the last 2 weeks).  

BBEP – Many of these have formed double bottoms.  They are everywhere. BBEP is quickly up 20% in 2 days, but is still at the lows. A stop below $2 should be safe.

BAS –  Another double bottom. This may run to the 50sma, pause , and then break through.  Look at the run in August – it ran higher for over a week.

CRK –  Comstock ran from $1 to $4! Boom!  It is back above the 50sma and a stop could be placed under that . The entry was yesterday, but since this could easily double, I dont consider it too late. This is not a double bottom, because it did not sell off back to it’s lows.  This may look to some to be forming a H&S.  I dont think it is, but remain cautious.

OAS – Imagine the frustration of a base running from $8 to $12 and giving it all up again? Imagine the potential once it breaks free. Look at how it ran from March 24- it was almost up daily for 3 weeks. THAT makes this tough to enter.  It just ran from $8 to $12 and finally broke above the 50sma, but it could pull back before running higher or it may just keep moving higher.  I would wait for a pullback and if it doesnt come, we missed it.  

AREX –  this is a solid looking base, but it has reached resistance. I think that it can break right through and that is a buy  ( or start a position here with a stop below the lows, add on a break of the 50sma). 

So you get the idea, there are many Energy stocks to look at and choose from based on various set ups.  Look at a stock like GDP.  I bought this on the last run. I sold some for profit and got stopped out on the rest for a loss, so it was not a good trade, but I cant let that tarnish or bias me if commodities are bottoming.  There could be some real potential if things get long term bullish .

This is what proper perspective can do for you.

GDP – looks like a mess.

GDP — Now step back and see the potential if commodities are bottoming and this company survives the recent downturn. This was a $30 stock just last summer. So traders and investors will make great returns if we are looking at a major change in the markets. 

See also

WPX, CHK, XCO, LGCY, RES, CPG, KEG, HK, EXXI, REXX,AXAS, PACD, WG, and other familiar names that we looked at last spring.

 

MINERS

When it comes to Miners , we see the same base action.  A few false starts out of lows cause many to get stopped out and others to go short.  Unfortunately, many of us ( me included) got stopped out. We need to be resolved to get back in when the charts remain bullish.    The problem is that some have been reluctant to re-enter Miners based on fears that it is another false start.  The weekend report was designed to show that this is real  ( GDX:GLD  – Other indicators that never went to a sell and I’ve used for 3 yrs , etc).

GDX –  The largest components of GDX are  ABX, NEM, and GG .  I have been saying that they are bullish.

 

ABX – Before and currently

NEM–  Before ( bullish wedge)  and currently

NEM –  Suddenly a strong break higher.

 

NEM – Ran like a cheetah last spring.

GG – This is just getting going. I am NOT predicting this, it is to show that a break from a wedge often leads back to former highs.

SO in my opinion,  GDX looks set up to move higher based on those stocks. Yes, there will be pauses and pullbacks.

AEM –  This is a leader , I often watch leaders for clues of future miner movement. It may or may not be helpful.

Lets look at some Juniors.

IAG– A wedge break out.  Possibly back to former highs.

Again, showing potential if the Bear market is actually turning to a 3rd phase of the Bull market. We will be amazed that we didnt want IAG at $1+.  I actually bought IAG & EGO in 2008 in the $3+ area  and just rode them.  They went toward $20 over time.

EGO– Break out from a consolidation, but I wanted to show resistance. It may cause an inverse H&S or just follow the orange path. I like this stock longer term  (When the bull resumes).

I love the set up on many Silver Stocks- they are breaking out from bullish Descending Wedges

CDE

EXK –

AG –

HL– I mentioned in the comments section yesterday that I liked  HL & PAAS as laggers with potential. I bought them in the morning and they look ready to break from their bases too.  

 

SO these are examples of a few Miners set up as Bullish.  They are almost all set up this way.   RBY  took a fall yesterday with the release of some bad news, so I recommend baskets of stocks.   They are trades for now, but as mentioned in prior reports, we will be watching to see if these lows become meaningful long term lows.  If we are beginning to see the start of the next phase of the bull Market in Precious metals and Miners lead the way, we will have PLENTY of opportunity to enter trades on pullbacks and the upside potential is huge.  One step at a time for now. 

 

~ALEX

 

P.S.  I am rushing to get this out by the open, so please excuse typos and possibly even sentences that only I can understand  🙂