2-2-2016 – Lets Check This Puppy Out

It has only been 1 trading day since the 2 weekend reports were released, but we can still check this puppy out and see if everything is as expected. To the charts!…

SPX – The markets sold off, but were bought back as the day ended. We still have plenty of time for upside to continue. 

I found a stock that I liked.  I have mentioned in the weekend report that I found several that didnt sell off in an ugly way with the markets , so I look to them as possible leaders in the bounce. 

SBUX – Overall acting well. This could break out to new highs.

USD –  I still see weakness in the dollar, despite the ‘BOJ’  surge. I do not see this as a strong climb higher, but it can continue to act like this.

WTIC –  If you’ve been here for the past few months, you know that I had a $26.06 target for OIL and have pointed out that OIL struggles at the 20sma on each bounce  ( Each daily cycle  low).  Oil again lost that 20sma . Was it another false break?  The trend line has held up, but if Oil continues lower, the drop could get even uglier. 

XLE – I have recommended ‘Trading” this sector only for experienced and nimble traders that are in front of their screens, since it has been moving very quickly.  Many stocks jumping 20-40% in a day (in both directions). The Energy sector isnt showing the same weakness as OIL ,  so I am keeping an eye on both.

NATGAS –  Natgas is not finding follow through after that nice POP on Friday.  That can be a problem for the traders here using a 3x ETF.  Caution is warranted until it picks a direction.  It is a fickle chart.

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GOLD SILVER & MINERS

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GOLD –   Gold is acting very well, but is also at an area that it can stall.   I see strength, and it has the look in this set up that it actually wants to break above the 200sma and not slow up.   Noteworthy is the fact that many miners have done this too.  I will have charts below. 

Silver – I hear people saying that  “Silver has no strength.  Silver is weak.  Silver can’t get out of its own way.”  That is not what I see. Silvers RSI almost hit 70% on this sideways move,  that is not weak.  This may become an explosive base, and some silver stocks are beginning to move higher.  

GDX –  The 1-2-3-4-5 is just a guess,  just an idea of strength, it is not a guaranteed price projection. The reason I put it there is because many think that GDX is at resistance ( The prior Jan high and Dec high ) and overbought.  Some are tempted to sell. Locking in profit is fine, but looking at this possibility is also beneficial , because I am seeing individual Miners break right through prior resistance. We will look at examples. 

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 PAAS was approaching a down trend resistance,  and also was pushing on the 50sma.  Since Silver isnt surging higher,  it would probably pause, right?   That crawl at the 50sma was tight,  so instead I projected a possible break out & tag of the 200sma first.

PAAS Feb 1- Silver was lack luster, but the Miners are showing strength. 

GPL –  Another silver stock that is moving against  resistance and looks like it will break out ( from the weekend report) .

GPL FEB 1-

MUX –  This was also at a point where it could have paused and pulled back .  It broke out.  We have been conditioned inside of these 6 month base formations to expect stocks to run up & fail.  Run up & fail.  Run up and Fail. These are now breaking out. 🙂

ABX –   Repeat after me,  “We have been conditioned inside of these 6 month base formations to expect stocks to run up & fail.  Run up & fail.  Run up and Fail.”  That constant selling on the left side of the chart  Might be similar to the constant buying that we are starting to notice on the right hand side.  We wont know until later.   If someone sold at the 200sma and is waiting for a pullback to buy?  Maybe & maybe not.

NEM –  (From the weekend report)  This too reached the 200sma and I mentioned that it could get a pause.  Notice that it is overbought, but often I write  ” Overbought, but it can stay that way under bullish moves.” 

NEM WKLY  ( from the weekend report) – I showed the weekly and it looks ready to break out, so I wasn’t looking for a big pause.  Maybe a sideways crawl along the 200sma.  I also wrote that pushing higher in NEM , ABX, and GG could push GDX higher.

NEM FEB 1-  No Pause.  A break from a base of this size above the 200sma can just keep crawling higher as technical buyers begin to accumulate positions. 

  So when to sell? We have just started a move in Miners out of an ICL.  If you are a trader and you want to lock in gains,  that is fine.   Some will sell one stock that “appears” extended,  and enter a lagger.  THAT is the trader.  If you are a medium term trader and have been looking to buy and hold for more than 2 days,   we have been in that period since the shake out lows last week.  Finally,  a move that is showing stamina.   It wont last forever,  and there are several ways that this could play out. Only time will tell, so to manage positions you could use a rising stop?  Just ride out this first and second daily cycle and see where it ends for you ( Not always wise to do in 3xetfs by the way). 

 For the sake of time, I want to release this report at 8:15 a.m.   Some try to read these at morning break at work or before work.  I will add a few more charts below ,  please come back for those.  I will write in the comments section below the report when I am finished.  I will go back and fix any typos too  🙂

~ALEX

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Below I will show you 2 ideas.  Either could happen, and at this point I cannot tell you which one will,  so you have to trade based on what you want for yourself.  Lock in profits and wait for an entry (  pullback or just another lagging stock?).   Sell partial position and let the rest ride to lock in profit?  Sell an extended stock, enter a lagger?  Etc. That said,  I must say that I expect that this 1st daily cycle in Miners is strong,  the 2nd one will be too whether this is a bear mkt rally or more. Lets review …

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GDX –  Let me start with a BEARISH VIEW. It shows that we are getting a strong move higher now ( but that also happened in March) moving out of the 2nd ICL.    Don’t they look similar?  It ran higher & sideways for 2 daily cycles and topped in may. So we had 2 months higher ( 2 daily cycles) and then she rolled over.  THAT is why I say that we just started a move out of an ICL in mid January , and we have 2 months from there to go. Then we get more cautious.  Now lets see the Bullish view too. 

GDX BULLISH –  Some may think that this is too Bullish,  overly generous, but I have precedence to this type of move.  It is very bullish, and there are other Bullish ideas that are a little less vertical too, but I  have seen this before.  6 months of accumulating near the lows by BULLS is lost in a stop run.   Smart money takes positions .  Those bulls that were shaken out may hesitate to get back in at the ‘shaky’ lows, but they WILL re-enter later and push price higher. Smart money will add too, and the move out of the lows can remain strong for a while.

At this point, I cannot tell exactly how this will play out, but I lean toward the BULLISH scenario where lows could be in place.  How we rise from there needs to be watched, and I will do that.  Those shake out lows wiped 6 months of accumulation off of the slate.  That is how lows form often. Other things that I am watching lean toward the bullish side too, and I will share those in the future weekend reports, as I have in the past.   So for now, I like the set ups in Miners and expect higher price ( and dips) for the next few weeks.

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I wanted to post PLM.  Someone emailed me last fall on the sudden surge and I mentioned waiting for a good set up to develop,  they usually do.  Currently I see a wedge and a break out,  held down by the 50sma. It could be bought here with a stop below the wedge,  or buy a break above the 50sma and place a stop there.