Weighing The Evidence

Bull? Bear? Bias?  We caught The Lows in Miners a few weeks ago, and the rally has surely gone beyond my expectations.  I now see many are calling THE END to the 4+ year bear market and calling the start to another phase of the Bull market in Gold.   So was the action of the past couple of weeks a guarantee of the Bear Market lows being in?  It’s best to weigh the evidence and try to allow the facts to speak for themselves.  Lets continue to look at all of the markets and weigh the evidence. 

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SPX BIG PICTURE – My readers know that I have been calling for the bear market drop in the markets since early last summer. We just landed in a very interesting place this week. Notice the dance around the 200 ma on a wkly basis since the 1980’s.

Zooming in…

SPX WKLY – I have been calling for a small rally in my daily reports  ( See last weeks reports) , and this shows that it is natural to get one here. We currently have a double bottom on the daily.  That happens all the time to get people bearish and then shorts must cover. I’m still expecting a bounce.

I wrote the above to show since 1980’s, the markets react this way, repeat, repeat, repeat.  I get emails asking me to explain the ‘Government intervention’ and how they step in to  save the markets today, etc.  I can go back as far as possible and see that the markets live & breath and react to human emotions the same now as they always have. Patterns really haven’t changed.  Constantly writing about the  fear of manipulation could hinder ones ability to read what the charts are saying.

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USD – I am looking at the big picture here. I still see the dollar as weak on the daily/ weekly. This shows that after a strong run up, the USD paused and flagged. It could drop & back test the trend line, that would help Gold further. As a bull flag, it could run higher.  That might not be so good for Gold.

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WTIC WKLY LONG TERM– Oil looks close to putting in lows, but it has for a while now. Read the charts.

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Oil looks ready to bounce again.  I had mentioned last week that the XLE & Several Oil Stocks were not breaking down with Oil  (usually a sign of sniffing out some lows).  Again, I’m watching the 20sma and that trend line. Oil stocks are for experienced traders only at this point, in my opinion.  

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GOLD SILVER & MINERS

 

I HAVE WAY TOO MUCH TO SAY HERE, so I am going to try to be concise for now.  Brief but comprehensive.  I will cover more as time unfolds. 

In a prior report, I showed a whole study on the XJY vs the USD and in harmony with Gold and Miners. I was looking for a break out here in this Feb 4 chart, since Gold & Miners looked ready to  break out too.

XJY VS USD FEB 5 –  Miners breaking out, and the XJY vs USD looked ready too.  This is good for Gold.

We got that break out and follow through with the miners.  So this evidence still favors Lows in Gold, Silver, and Miners.

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GOLD  2 views for now.  What a bullish explosion last week! Gold is now rallying in all currencies. It has been a long time since I have said that. Further evidence that the bottom may be behind us.

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1. Gold took out 2 former cycle highs.  THIS is how an uptrend starts, higher highs and higher lows.  If Gold had another week like the last 2 weeks, it would even hit the next cycle high at 1307.8 and the 100ma, forming a huge cup from Jan 2015. A handle would be the daily cycle drop.

    2 .    Gold could also be ready to drop into a daily cycle low now and that would be normal. A test of the 200sma? (That could happen or it could come later as the 200 rises). A  38% retrace back down to the top of the cup shown is near $1180.  A 50% retrace is $1154.65.  All are possible, time will tell.

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In the comments / chat section Friday, Son Of Gud ( thx  S.O.G.) reminded me of a possible Bullhorn pattern . I agree and a bottom purple line would have shown this better.   I was looking at the SLV in a similar manner, with   Gold & Silver Cups. This would put SILVER & the SLV only about 1/2 way there.   This can come immediately, or after a pullback and in a 3rd daily cycle .

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GDX  MONTHLY UPDATE –  I posted this to keep an eye on. A close above $16 by February end. This break out could add further evidence that The Bull is reemerging.

Last week we broke out and volume was good for the 1st week. Bullish longer term.

Currently –  The break out strengthened above that $16 area.  2 weeks into February the volume is as much as it was in all of January already.  We may end Feb near 2 million in volume. BULLISH. Look at 2008, the first month higher was followed by 3 or 4 more.  🙂

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GDX– Just plain ole Bullish looking, and seriously,  if THE LOWS are in?  Do you see the gains we have made with Miners on this tiny move?  Multiply x10 and more in the coming yrs on a trip to former highs. 

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So that is a very bullish looking fact sheet above us  for GOLD, SILVER, and MINERS.  In fact , take a look at this 30 yr chart if you missed this move and feel that maybe you somehow “Missed THE Move”.   You missed ‘a move’, but THE move can last for many months and years  ( with pull backs along the way to enter).  That move that we just put in looks tiny from this view.

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For a review of recent Miner activity, lets look at the bases and break outs in Miners now.  It started with some great moves out of 5 month bases in ABX and NEM shown in prior reports.  We’ve seen  DRD, HMY, SBGL, SA, etc with huge moves doubling and tripling as they moved higher.  Now we see many junior miners & explorers breaking out too.

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MUX– Look for the base.

The run has begun, and can mimic the multi week drop on the left.

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XRA was breaking out at $0.37 from a triangle base. Then over the 200sma with no problem.  

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These types of melting up moves can  ( may not, but can) simply consolidate at the top & form giant Cup & Handles. The ride down on the left of the cup can be repeated on the way up under current conditions.

 So by looking at prior opportunities / set ups  and how they moved, we can anticipate future set ups.

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LSG –  Feb 4th ,  and this was a Great set up,  much like RIC.

This looks rather explosive with that volume pouring in.  TAHO  had a shake out from a wkly base and then flipped higher last week.  It looks ready to run higher, and that would send this one much higher too. This could be a strong company with the combining of the 2. 

EGI –  Even those Babies are now following the leaders. I posted this Feb 11.

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A bigger picture was still bullish, still a buy in my opinion. This can easily double if it breaks this base.

This closed the day at $0.27

TGD – Back test at 7 cents and then broke above the 9sma at 10cents. It closed at $0.23  now.

I also posted this at 13 cents, so these juniors are running now,  and you can see the possible upside in time. Their earnings came out on Feb 5, and the rally took hold.

 Timmins (TGD)  released earnings Feb 5th and this baby Minor tripled in 3 weeks.

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 Think of this :  We have had low Oil / Energy prices since Oil sold off from $100 to the $20’s/ $30’s.  Energy is a big expense for Miners.   This could give the expenses that Miners deal with a break when it comes to future earnings reports. The price of Gold rising would also help earnings when they can sell product for greater profit. There may be a bit of a bullish domino effect here. 

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So we are definitely seeing many reasons for believing that the Big Picture is changing as expected.  The Bear market lows could definitely be behind us with that classic shake out move in miners in January. We see Gold and Miners breaking above prior Intermediate cycle highs.  Many that were stopped out and left behind may now have to buy later and that could push this higher too.  The set up is very encouraging  and we will be trading it and following it to the best of our ability here.  Some “Mining Stocks” may act individually and set up even when Gold itself is pulling back,  and that will be noted too.  We saw this type of action when several Miners bottomed months, even yrs ago.  Other may now have reason to do the same.   I will be hunting for and sharing trading opportunities in this sector with that in mind.

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~ALEX

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Final Note :  People are already asking about  “ buying the dip next week “.  I want to show you something here.  We could get a buying opportunity soon on a pullback, but I also have been studying extensively prior lows and bottoms, the following  run up higher,  and then the pull backs that follow.  I have a folder full of charts and  I will gradually share these in future reports to help us with our expectations. I will start below with  1 note here,  as we anticipate a possible pull back to a DCL ( Daily cycle low) soon. 

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  I wanted to point this out in case we get a sideways consolidation now, instead of a large drop.   Either could happen.  Notice that movement Inside the red box is Not as easy to buy as it looks.  Notice the 2 month run higher and then it  just had a long sideways consolidation.  These get Exhausting watching them day after day.    It lost the 50sma in Oct ( sell?) , Then regained it in Nov (buy thinking it’s breaking out?), loses it again in November to a lower low ( sell?),   regains it in December (buy),  drops to new lows in Dec (Shake out) and then takes off in January .  Then if you bought that late , it stalls sideways and consolidates again -to make us nervous, and off it goes higher again.  Not Easy.  How do we handle this?

This is not as easy as one may think, so IF the lows are in,  it may be best not to sweat the wiggles of GDX & GDXJ.  Instead it may be time to just  add to individual miners on dips starting small positions, and not be jumping in and out of 3xetfs.   (  of course that is your personal choice if you want to trade them, I’m just saying that this can be tricky).   Often we think a run out of the lows is straight up with only small pullbacks.

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1987 lows Again –  These are the same lows,  but this chart is  focusing on that Nov – Dec shake out at the 50sma.  It then experienced a 3-4 month  “Melt up”. I mentioned these type of runs in my last report. People just get locked out. Lets break it down.

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1. After the shake out lows in Dec , a 12 day run higher began

2. The ‘pullback’ then only lasted 2 days and then it went sideways for weeks. This would have been good to accumulate positions in favorite Miners  ( This would be No fun in NUGT or Dust until March)

3. The run from Febs break out to April was relentless and did not allow those waiting for a pull back to get in.

 

 I just wanted to include these lows form 1986-7  to point out the difficulty that they presented.  I do this  to prepare us for the many possible moves ahead.  There are other lows that I will present too, in future reports.