Never A Straight Path

The twists and turns of the markets continue.  There is so much going on , that this is like a weekend report, with 22 charts.  Lets take a closer look.

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SPY –  After hitting some overhead resistance , yesterdays sell off remains within acceptable parameters, however…

The BANKING INDEX still looks ugly.

This is GS for example. 

Will markets keep rising with an ugly banking sector?  Lets dig deeper…

The NASDAQ set up looks a bit more bearish  than the SPX.  It has formed a  Bearish wedge so far. A break down from here breaks the wedge. A break higher can negate it.

CPCE –  The Put Call ratio and Vix are  pretty neutral

XLU – There are times when Utilities do well in a bear market, and they have been doing well through the Jan sell off and now.

THE VIX, CPCE, Patterns above and so on leave me rather 50/50 on the markets rally .  I was looking at this recent bounce as a multi week rally that would roll over later ,   but it “feels” like it is rolling over now.  ANYTHING can happen here, but I still expected higher prices before rolling over,  so its a tough call. 

I was thinking that  we should see something much more drawn out like this, but a break of recent lows would change things.

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THE USD Still looks weak to me  (No chart, it didnt change much). I expect a drop and that could help Gold & Silver  here.

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WTIC –  Another conundrum.  I was looking at this low as a possible longer term low, because it finally broke above the 20sma  (Something that it was unable to do in the down trend). I did not think that it would lose the 20 sma again if the lows were in.  IF This is another daily cycle that fails ( breaks lows)  we have possibly 3 more weeks lower cycle wise!!

It was time to do detective work.  AM I thinking that this could drop to the teens now?  Chart-wise,  Maybe.  I pointed this out in November so the yellow zone is possible. Another failed daily cycle could put it there.

Time to do even more detective work.  HAS THIS HAPPENED BEFORE?  I looked back at a prior lows.  We actually finally broke the 20sma  and then went sideways at the lows for a “Shake out”.  HMMM. Sideways for weeks at the lows after breaking above the 20sma.  Thats no fun for longs or shorts. We might be there.

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NATGAS –   From bust – to Boom – to Bust.  This is doing its own dance.  It is a tough read at this point and I dont know how anyone could make good trades consistantly on it lately.  It has been short term unpredictably volatile.   Not really acting correctly for me.  This is what I see,  but that MACD, volume, & RSI  set up say “Ugliness” to me.

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GOLD –  Gold has been acting very nicely.  It is Bullish and not experiencing the short covering type of rally that falls apart, it has been a nice round bottom low.  Gold could POP or pull back here, since it is forming a wedge.  A surge higher over the 200sma   ( $1132) also negates the wedge & forms a cup.  

If my count is correct, we are on day 12. There are several ways that this could play out and remain very bullish,  even with a pullback.  I would also love to see a semi mild pull back in Gold and Miners sideways or higher  ( they are earlier in their cycle count).  This would improve GDX:GLD.

  A continued run higher would just continue the cup / round bottom look and that is possible too.  I just wanted to mention the possible pullback so that we expect it.

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SILVER – I was emailed  a public report ( from 321Gold I think it was)  where a semi popular report writer said that Silver remains weak and is ‘set up for a final break down’.  It cannot gain traction, etc.   I was asked to comment on it.   I   see Silver as building strength , consolidating at the lows.   In mid January Silver went from $1375 to $14.50 and hasnt pulled back.  If you are in Silver –  just watch the 20sma on this chart for now.

Again – Jan 15 chart –  this is why I think Silver will continue higher. The pattern of Basing & the surge, even in bear market rallies.  We’re basing,  how about the pop?  🙂

Steven asked about CDE in the last reports comments section last night, but I didn’t see it until this morning .  ( Sidenote: I am in a band and I leave at 5 p.m. for practice some nights   and cant get back to the questions – so I will answer it here).

I like Silver stocks ,  they are acting like many of the Gold stocks did when Gold broke from that triangle.  I think that if Silver POPS,  They will too.

CDE –  This broke down & recovered.  The RSI is above 50%, but it doesn’t look super strong,  so I’d either wait for a break above the 50sma,  or I would buy with a tight stop, it sits above the 2 moving averages as support. a STOP ( mental or hard stop)  is important when a stock is in a tight price range.  

GDX –  On day 10 and at resistance,  it is strong but stalled for a moment. I’d love to see it break out.

The possibility of a  bullish GDX break out is helped when we look at other miners.   ABX didn’t hold back  🙂

DRD – I pointed out in the comments section that strong miners like DRD, HMY, SBGL simply ride the 8 ema in their bull run. Can you imagine this happening in GDX / GDXJ?  It is possible when the tide turns, so I post this to visually remind readers of the possibilities once the tide does turn.

Yesterday I posted the bullish set up in PLM,  after someone asked me to keep an eye on it last fall.

It broke out .  I think it could have a lot more upside, with a possible target  being the former high volume highs getting  tested.

Yesterday when many Miners were selling off a little, we saw another small Junior breaking out.   This is encouraging to the overall big picture. I am starting to wonder how quarterly earnings will be for many miners with OIL & NATGAS  holding at lows for so long now.  Much of the cost of Mining is due to energy –  so low costs can add to their profitability .

So thats where we stand at this point.  There is still a lot of ups and down and volatile, but for a change,  Precious metals has been the most reliable and predictable.  We can get a pullback after the current run higher, and that is to be expected-  nothing really goes straight up forever.  A stair way higher ,  putting  in higher highs and higher lows though? THAT would be a stairway to heaven for many tired precious metals traders! 

We may be there 🙂  I forgot to put this in my Weekend report. HUI is on support and has been consolidating there for 6  MONTHS.   A break out higher will eventually bring us the best trading that we’ve seen in years.  I have been there in 2000-2008 and 2009 to 2012. Look at 2003 – 8 months of gains .  2008 – 2012  $150 to $630+.   

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I believe we are close to some very profitable trading for years to come.   Thanks for being here!

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~ALEX