May 1 Weekend Report

Week after week we are seeing very good action and even fairly clear predictability in the various sectors. We have experienced some great gains in Miners, Energy, and Commodities for all of 2016.  I have to keep reminding myself, and so I want to remind the readers here too, that pull backs and corrections are expected and keep a market healthy. Lets review our markets and discuss that idea further. 

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I’ll start with the NASDAQ WKLY  – The NASDAQ hasn’t been as robust in its recovery as the SPX.  It almost looks to be rolling over,  so lets keep an eye on it.  

The SPX Daily  began  rolling over, but I see bullish signs too. Remember that corrections and pull backs can be healthy.  Is this a healthy pull back?

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This chart points out strengths  and weakness.  A reversal candle is bullish, but last fall many of them failed  ( red arrows) so we can be cautious here until we break down or break higher.  The cycle count is late,   so a DCL is due.  Did it happen on day 38 and this is day 16 breaking down?  or is this the 1st daily cycles low Friday?   We need a bit more time, however…

SPX WKLY –  This chart remains bullish . When I called for a rally in February,  some went long (bought UPRO or TQQQ, etc) and have asked how to play this going forward.

  We are now is a decision point.

-Will the market roll over and break down ?

-Or break out and the Bull returns?

I would lock in my profits and wait for clear signs.  This is semi neutral to me, it could go either way.  I also might just  sell some of my position and keep a stop right under SPX 2000 with the rest.  

Again- I am basically neutral now. Why? Because the SPX is near last Mays highs, the NASDAQ is lagging.  The NYSE WKLY looks quite Bullish  (see below). And Banks?

I mentioned that banks breaking down were a concern to me in February and I posted this chart.  Bank stocks looked very ugly. A weak economy could hinder the bull run, but then…

 

BKX   – In Mid March -April  I said that Banks were now recovering.  Many bank stocks improved. I used this chart over a  week ago.  How are Banks doing now?

BKX Currently is also neutral.  It recovered the red support / resistance line at 65 , but has turned down at the blue line over head.  So far, this could be a larger pattern of lower highs and lower lows.  Will 65 hold?  

SO I AM NEUTRAL ON THE GENERAL MARKETS, BUT THE WEEKLY CHARTS REMAIN BULLISHLY RECOVERING.

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USD APRIL 1  –  I mentioned that the DOLLAR was due for a rally, so maybe GOLD would finally pull back. 

USD WKLY NOW– That was a WEAK Bounce in April ( sideways) and it ended with the dollar down on that trend line again!  SO we are due for an ICL ( A low that produces a bit more of a rally)  in the USD,  and that could cause a pull back in Gold.    I drew a red box similar to the other sideways move this summer, because I do not expect a strong rally. Next   is what I really think of the USD…

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Important:

USD –  I called for a double top LONG AGO, way back in the Spring of 2015.   I think that the Dollar is most likely ‘Toast’.  If this  drops the same way that it rallied higher in 2014, it would look like this in 2016.  Why did I say this was ‘Important’?   STARE AT THAT 2014- 2015 RISE for a moment.

 

CRB –  Now look at Commodities in 2014-2015.  When the US Dollar rallied strongly,  The CRB fell fast.  So if The USD drops, The CRB should Rally  🙂  Read the chart for the shorter term thinking.  CRB 190?

I drew the CRB as inside of a channel last week and posted this chart in the report.  You can see that 190 is at the top of the channel too, and I’m thinking that my red line should be higher as shown in the ABOVE chart at 190.

I’m going to re-post this chart that I posted 2 weeks ago –  it is the CRB coming out of the 2008-2009 lows. I’m showing that the move out of Feb 2009 lows didnt peak until June,  but there were pullbacks along the way. Price simply went higher / sideways / higher.  We may be seeing the same now coming out of 2016 lows.

Our Commodity Stocks  ( X, FCX, AA, VALE, CRB, CENX, TCK, HBM, AKS , ETC)  are acting very well. Long term I think they will eventually move a lot higher.  They do not go straight up, but pull backs can be healthy and this has been a nice sector for us to be invested in.

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WTIC –  OIL

Again – The Left side of the chart, Look what OIL did in 2014-2015 when the Dollar rocketed higher.  It dropped quickly, so if the dollar is working its way back down,  I’m anticipating a recovery . 

 

NATGAS – I mentioned that NATGAS would probably pause at the 200sma and drop to build steam for a push through it. We saw a nice reversal Friday. It looks ready to go.

 

PRECIOUS METALS

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So much to say when dealing with crazy strong recoveries  🙂

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GOLD – As of Friday, Gold very convincingly broke out from the sideways consolidation. This could have a price target of over $1400, but we have seen that POP & DROP head fake in the past (see the chart) .   In a few ways, this looks a little different this time , however. It looks Bullish. So let me show you something that I have been looking at…

 

GOLD TIME TABLE – I have mentioned this is prior reports months ago, but for newer readers, I will repeat. 

 

Using cycles from LOWS to LOWS,  I noticed that ICL to ICL  ( The deep lows before a rally ) used to run about every 6 months.  Lately they are shorter.  The ICLs fall about every 4-5 months,  with the last 3 under 4.5 months. April 3 would have been 4 months. May is now 5 months from the Dec 3 lows.  WAS THAT A STEALTH ICL at the dip in the sideways consolidation? (see chart)   It came at 4 months?  Or …

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GOLD –  I have been expecting a drop into an ICL, so this is what the same chart would look like if we got a quick sell off into an ICL this month, month 5.   Maybe Gold breaks below $1200 and then higher to $1400+.

 

I also have shown a chart similar to this showing a break out and back test of a downward sloping channel. This run would lead Gold to $1450 -$1500 also. It is bullish and possible.

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Review of where we were and are now:

 In Gold way back on Feb 23rd, I said that using Technical Analysis, we have a $1400+ target in Gold several times, but might flag or pull back first,  due to CYcle expectations  (ICL) . I used these 2 charts below on Feb 23rd and again on March 4th.  Using cycles, however, you should wait for a good dip to get a safer, lower risk entry. As seen in the charts of Gold above,   GOLD is now  breaking out from a multi-week long consolidation with a small dip in it at 4 months.  Tricky.

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Another Pullback in Gold  (and Miners)  should still come, but will GOLD break out now, head fake , and drop to a deeper ICL before another strong run higher?  Or will we just break out and run above $1400 and then pull back later?  It is almost impossible to know for sure.  The set up is Bullish either way.  Lets look at Miners, I’ll show possible pull backs.

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GDX WEEKLY – This has been a strong move, almost straight up on a weekly chart with a small sideways consolidation. An initial price target of the $20 area found the sideways consolidation and now a move to $27 is likely. (read the chart) I hope we pull back there so we can buy at lower prices and do not just have another sideways consolidation. 

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GDX WEEKLY – I changed the count and this would put a crazy big move in place.  I only did this because on the left side of the chart,  price dropped from $50 to $22 in 8 months.  Read the chart.

 

Big Review

  So here at chartfreak,  we bought Miners in Mid January and rode them for weeks. Expecting a pullback,  we sold 1/2 , kept some as ‘core’, sold more as they went higher.  I then noticed that Gold was going sideways as OIL & the CRB bottomed,  so we traded Energy & Commodities and did very well there. The SPX had also made double bottom lows, and I mentioned a rally there was expected, but I really needed to stay focused on mainly Energy & Commodities. 

    Miners keep  ‘setting up’ properly too , so I pointed that out in different charts and mentioned that experienced traders or those in front of a screen may still want to ‘trade’ these set ups until Gold dropped.  Gold still hasn’t really dropped, so we’ve traded some Miners.   We were also still waiting for ENERGY STOCKS  and Commodity stocks that had good rallies  like CLF, VALE, AA, CENX, HBM, etc to pull back & set up again. We have now re-entered those areas and I think they continue to look good.  Some Miners still look good too, like the trades that I mentioned in BAA, TGD, etc. I am actually seeing a few more that look like good trade set ups, but only for traders .  Many other miners do look quite extended.

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  So I’m  remaining mostly  focused on Energy and Commodities this week, since these sectors have been acting correctly and have allowed low risk entries.  Look at charts of SM, SN, CNX , LPI, and many more energy stocks recommended here –  they have tripled.  The best part is that they had pullbacks along the way allowing re-entry.  Our commodity stocks have done that too.   Please consult last weeks reports to see some of the newer charts of the energy and commodity stocks recommended.  I will cover more in the week day reports.  As always , Thanks for being here and I hope all are having a great weekend!

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~ALEX

 

P.S.  For traders, Interesting set ups in Miners right now are EGI, GFI, MGH, TRX, HMY, NSU (?).  I got stopped out of NSU last week.

 

MGH – Posted April 18 as a nice set up.  It has starting to move higher.

 

This was one of my BAA recommendations April 19th.  It hit $0.38 Friday and the target is around $0.40, but it might actually continue to run if Gold is breaking out for real.  If you took this as a trade,  you may want to sell some near $0.40?

As a core position, which I own it since $0.15, BAA looks very promising in the longer term if you can ride the wiggles. That goes for the TGD trade too.

 

  Energy stocks that have interesting charts CIE ( I recommended this 3 weeks in a row – lol.  Sideways so far). MEMP, EVEP, BAS, SDRl, etc.   I also like the charts of HBM, VALE, CLF, AA, CENX, etc as mentioned in other reports. Some have popped & pulled back. Many are waiting for LGCY to pull back or flag.   THAT was a superstar in short time. 🙂   I will discus more in the weekly reports.