Lets Just Ignore The Elephant In The Room

So lets just pretend that today is just a Wednesday like any other Wednesday.   Things are playing out exactly as expected.  To the charts!

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SPX Monday –  I called the reversal last week a trade-able low, and the Quick sell off Monday just a back test of the trend line.

SPX TUESDAY –  It’s only day 4 , so I expect this run higher to continue.

IWM – I’ve  discussed this market move higher as probably just a bounce.   It can last for weeks, but  I believe that the markets will draw in the “Buy the dips” bulls, and then drop again.   Time will tell.  For now I look at the IWM, TRAN , RUT, BKX, and other areas and cant see this bounce fully recovering.  Notice how the IWM never recovered from the summer slam.   It went sideways and was rejected at the 200sma, 50sma, etc.    THAT could be what we see for the SPX next.   The IWM may only recover 1/2 of this last drop.

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USD – Ok, I cant ignore the Elephant anymore. I think that the dollar will react one way or another to the FED MTG, so we’ll have to see how this looks by Thursday/ Friday. I drew in a drop because the dollar looks weak to me. ( Chart should say ‘weakly’).

WTIC – Oil was stopped at the 20sma ( Again) .  I am looking to see if OIL breaks out higher here, we may have more than a daily cycle low.  This may be THE lows and only time will tell. Many beaten OIL stocks will put in some serious gains if Oil continues higher. 

I want to re post my NATGAS chart from the weekend showing higher price possibilities.  THIS is still possible, but..

NATGAS – The delay  looks like a bear flag, so I want to show this version to add caution.  If you trade NATGAS  ( UNG, UGAZ, ETC)   use stops.  The chart looks “O.K.” for the bulls, but we need to move higher soon.

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 Did you notice today that almost everything was looking like it wanted to go higher?  The General markets, Oil, and commodities like Gold, Silver, Miners,Copper, etc?  I saw set ups in Commodity stocks that looked good too, so I will mention that in here.

Copper –  Strong divergence at lower lows.

The CRB ,  along with FCX ( Copper), X, AKS, CENX, AA, etc all may be bottoming.  Their charts have various things that give them a  bullish look.  I’ll be watching these too.  Here is an example:

X– Looks like a small move, but it’s up 12% and looks like a bottom.  When the markets crashed in January, US STEEL bottomed.

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GOLD –  I’ve been bullish on Gold for weeks and we are getting our next leg higher.   I see a channel  when I look at Gold, but we can break out higher if the dollar drops. 

SILVER – Breaking out (Finally).

In my weekend report 2 weekends ago and as a reminder on my Jan 20 chart, I pointed out that SILVER goes sideways while Gold runs higher lately.  The indicator reaches the zero line right before it pops.  It was reaching the zero line, so we should expect a POP in Silver. 

SILVER WKLY –  We are there, and we usually have 2 or 3 weeks higher.  Now will we make lower highs again, or break higher?  ( This chart should say  lower highs in blue- sorry)

GDX –  GDX  surged above the 50sma.  This is usually bullish, but in the past we have seen it drop back down.   THEN I NOTICED : In the past it was already in overbought area of the stochastics, but not this time.  Miners  just did a shake out, so we are not overbought currently and that could be bullish for follow through.

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For newer Readers here, I always mention that when we are looking at bottoms forming,  not all bottoms look alike. SO lets look at a few bottoms and examine the differences. Not these bottoms…

…These Bottoms in GDX

May 2014 GDX –  Lingered at the lows for a week and then took off. Above the 50sma it ‘paused’ but it never dropped below the 50 sma again during that run.

GDX 2013 lows –  This had a shake out too.  It also moved above the 50sma and continued higher until day 23.  ( we are only  on day 6 today ) .  It also only went sideways until the next daily cycle.

I wanted to show this bottom, because it shows that even when GDX couldnt break above the 50sma on the first daily cycle,  it was able to put in a strong run higher on the 2nd daily cycle after a deep dip.

  So currently we are in the first daily cycle on day 6 and we have sliced above the 50sma.  I wanted to show that we should have more upside in Miners,  no matter what happens on Fed Wednesday.

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  SIDEPOINT:  I have pointed out some Miners Bottoming out already in past reports.   NG, RIC, LSG, etc etc .   I also wanted to show that a few more Miners are starting to look better longer term.  

ABX broke out recently. Almost a 100% move, but lets look at the bigger picture.

ABX WKLY – Formerly a $50 stock, the recent 100% move looks tiny.  This could have a lot more upside when things turn around,  and this break out is a nice start.  

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MUX –  I also like that this junior has been rising since last summer while Miners just broke to new lows.

MUX WKLY –  This is the real pretty view.  This looks like a 1 year base that could be ready to move higher. 

RIC – Huge Base in a bear market .  This former $13 stock has ignored the selling to new lows too,  so we do see early signs of some Miners that are trying to buck the trend.  We should expect them to out perform later on when the Gold Bull reemerges.

  SO for the FED WEDNESDAY,  we all know the kind of volatility that the markets can experience short term during this time. From 2 p.m. through Thursday we can get a lot of action. The above report lays out what I expect going forward longer term , despite the short term possible shaking around with  the Fed speech .  Thanks for being here everyone!

~ALEX