Jan 16 2016 – Weekend Report

As expected, we have seen quite the sell off in the general markets.  Oil & Commodities have been selling off too. Gold , Silver , And Precious metals are holding up, but are they ready to run now, or will they sell off?  I actually spent a part of this weekend digging in to older charts and making some new ones, so lets take a look. 

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While digging into older charts, I actually found this warning chart that I posted in April of 2015,  when I said I thought we were seeing that rising wedge forming.  Also by counting the months of the Bull market, we looked to be late in the bull.   I am re-posting it because it had a logical target to me at that time. 

SPY – We topped in May 1 month later. Now drop to Test the break out?

SPX – We broke the Aug lows Friday and recovered. This is a failure, but we can get a solid bounce soon. Lets discuss a couple of possible scenarios .  One is a flash crash right now, the other is a believable rally that rolls over eventually. 

2 Scenarios   We could get a sharp sell off / crash here,  straight down to a normal fib area, or an ICL soon that leads to a multi week rally. You can see below an idea of a rally first.  We broke Aug lows, shorts pile in, and we get a ‘shake out’  for now. OR we have a H&S breaking down and we just plunge quickly for a few days.  It is not easy to call short term, but you can see that we easily could have more downside, lets look closer.

SPX –

Cycle wise, we are in the timing for a low.  Yes, we could get a flash crash type low where we drop Tuesday and Wednesday BIG, and then bounce back.  We’ll have to wait and see.  If you are planning to go long, it is best to wait for a reversal (Swing low) and a break above the downtrend line.

The VIX says that we could drop further.  The VIX at 45 could be where the lows come in.  I pointed out on the 6th that the vix was breaking out ( Markets drop)

The VIX 5 year chart –  The VIX really isn’t “Topped” yet  at 45,  it even went there in our Summer crash.  Lows can occur in the 30 area,  so according to the vix, the Markets may or may not have ‘Bottomed’ yet.

This Put Call ratio seems to be saying that the market is at lows.  So was that a shake out and an ICL?

I hear some saying how during this bounce they are ready to flip short quickly after a 1 week  bounce or so.  I want to tell everyone to be careful about jumping the gun on shorting without a good trigger point.  I think we could get a multi week rally that is believable and gets people to become Bullish again. Let me show you how that looks. 

SPX 2008 –  The crash was a solid drop and a break down, and then a couple of multi week rallies that sucked people back into the Bullish side before that final drop.

SPX 2008 daily –  the top & drop was prolonged and choppy. WEEKS of choppy action.  Sideways for months.  I am just pointing this out for those that say , ” I’m shorting the bounce next week“.  It may not be that simple.

2000 top –  We see more serious selling right away.   A serious drop into the 2000 year end, then a bounce in January for a few weeks to test the WKLY MA above , then a serious drop into April.   A believable Rally followed to test that weekly MA into June.  Then a drop.

So all I am saying here is that a 1 week bounce may not be all we get if this is an ICL here.  I want to wait and see what kind of bounce comes of this and look for overhead targets to go short if one is planning on going short. IT may get frustrating to go short and watch the market rally & drop and rally and drop for a few weeks. 

USD WKLY –  I have made my thought on the USD clear for months now. No change  (yet).  Possible double top forming,  time will tell. 

USD DAILY – It could pop to former highs or even break higher and roll over, but I think it just rolls from here. There is a lower trend line.

WTIC –  I am writing my report Monday, but captured some of the charts Sunday night.  I had a short term target for OIL that had not been hit yet,  we broke $29 Monday according to CNBC.   My live Oil chart does NOT show that we broke $29. Odd.   I think OIL may be  close to putting in short term lows, but I have had a $26 price target since Oct, and I believe it still may get hit. 

NATGAS –  This was acting very well right out of the lows.  I even called that I thought it could from a bull flag and hold above the 50sma.  It did, but now that flag is broken and the 50sma has also been taken out.  Fib #’s are shown as possible support,  but this needs to act correctly before it gets interesting again I.M.O.

NATGAS WKLY – And that isn’t what I call acting all that beautifully. It needs to reverse quickly. 

GOLD, SILVER, MINERS

GOLD DAILY–  Continues to look Bullish to me .  We may have a DCL in place here, so we would expect a rally higher now.

GOLD WKLY –  We usually see the 2 legs higher out of an ICL,  even in the bear market rallies, so again, I expect a run higher now.  We are still in the oversold area  (Stochastics) on a weekly basis, the 2nd leg pulls us out of there.  The 2nd leg higher usually starts at the zero line  (We are there) , and the RSI moves above 50% during the 2nd leg.  I still expect higher Gold price. 

SILVER WKLY –  I expect Silver to join the move once it starts.

GDX WEEKLY – I thought that was a pretty ugly candle for such a bullish looking Gold chart. This chart actually looks bearish with the sell off closing at lows.  SO I searched for other weekly ugly candles that changed the following week.  There are some on the left of the chart, and they actually were right before a rally.  Wouldn’t we expect Miners to move higher if Gold & Silver rally? Yes.

GDX DAILY – So we see that GDX is still inside of its giant triangle. It still has a series of higher lows, it would be nice if we went higher Tuesday and kept that pattern in play. We finally reached an oversold area,  so this week may move us higher.

A False break down is possible the way GDX is acting, but I still have to expect that GOLD, SILVER, and Miners will all move higher together. This week should clarify things.

~ALEX

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As a side-point, you may recall  the 2004 HUI chart that was in my last report.  I was pointing out that a second daily cycle actually broke to new lows  (Normally a failure) , but then rallied higher. I pointed that out because GDX had just done the same break down.   That chart is below…

WELL- I went back to that time to see if we closed at the lows with an ugly down candle like we did this past Friday.  What do you know…we did close at the lows, and the dip the next day was the start of a rally.  Sometimes it’s the little things that keep us hopeful 🙂