Pre-Fed Syndrome Again

Monday we saw a little more selling in the general markets as we approach the Fed meeting Wednesday. I have been bullish for a possible break out to new highs,  but recent action is less bullish and it may be that we wont know for sure until after Fed Wednesday. Tuesday may also be a little bit boring ahead of the Fed.

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The SPX –  This looks a bit better than the DOW, NASDAQ, And BKX at a glance, but notice that it looks to be dipping into a daily cycle low. MAYBE the Fed Wed decision will hold it at the 50sma and set a new trend line, but right now, this warrants caution.

The NASDAQ  is a tad weaker

WTIC –  As expected

NATGAS – Natgas is strong and had a $2.70 target, but timing calls for a dip soon. Support may land on the 200sma/ trend line.

GOLD – Gold is just continuing higher out of what I suspected was the ICL.  In the weekend report I mentioned 2 scenarios. A constant drift higher that leaves everyone behind  ( The FED MTG would cause a break out to new highs).  Or the Fed Mtg drops Gold  to the 50sma  could give us a an inverse H&S ( Not drawn).

From the wkend report , the 2 scenarios mentioned above

Also drifting higher, but Silver has visible divergence as it nears the highs. I dont worry about this early in an ICL, as I have mentioned before. 

GDX – Miners were so strong in the Jan – May run, that I have a feeling they will be tricky to play at a time when they should be bullish.  After such an extended run.,Volatility could very well pop up, with the Fed Mtg and the Brexit vote coming up.  Let me say here that I do not think that the 1st gap at $23 has to fill.

This is what you see in volatile markets. Some Miners were up 8-10% today,  some up 3 & 4%, DUST was up 3% at the same time, some were down 5%.

  Tricky BULL

Going back to 2009 is important as we approach the FED MTG & BREXIT.  2009 ICL was also volatile, it was not easy.

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This is the GOLD WKLY CHART 2009s ICL – 3-5 weeks at or near lows

HUI 2009 ICL –   5-6 Months after the first ICL.  Notice that Miners took off (like now) in March, and in April almost dropped back to lows but didnt break them. THEN the HUI ran from $275 to $400.  A move like that due to BREXIT would fill both of the gaps of the GDX chart above.  I personally do NOT think the first gap in GDX will fill. 

I got some mail for IPI .  A few HATED IPI after last week, one person saying it a the worst trade of last week  ( you know who you are 🙂 ).  Guess what?  It was actually basically break even last week.  It ran up and back Monday to Friday.

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So I drew this chart for another reader ( I had just received a kind request from him Monday a.m. to see if it was still ok) , and then it ran up Monday 18%  and everyone loves it again.  Wait till Friday, it may be back at $1.27! 

Miners Ideas and thoughts

I had been mentioning for the past 2 weeks that you may want to add to your Miners if you didn’t have any, and then with the Fed Mtg Wed, we may see a reaction one way or the other.  Some may or may not want to buy Miners the day before that meeting, but I wanted to point out some thoughts on Miners here.

Depending on what kind of a trader you are (some just cannot stand to ride the ups & downs of a consolidation), you can decide to add a position or wait.   Others have already started buying some miners  ( And hold a core).

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MUX WEEKLY– I’m using this to again show that Long Tight Bases can lead to explosive moves.

MUX started moving up and I mentioned this one over a week ago as a Miner that looked to be preparing to break out again. This is, of course, is overextended now. If you didn’t buy it yet, You could look to buy a pull back after a possible Fed reaction,  and also we could look for similar ideas.

So- VGZ is a long tight Base, and is breaking out again.

VGZ close up –  VGZ is currently attempting to break out, and this is when they often run higher and then drop & test that break out.  One idea would be to buy a pullback if we get a Fed Reaction. Again, I love that Base shown above.

TGD has been mentioned here as a buy on the pull backs because of the base. Lets zoom in.

TGD –  It also looks like it dropped to the 200sma and is now moving higher, preparing for its next run higher – possible break out again. 

TRQ – This is interesting action and I couldn’t find any news on it.  I view it as a high volume break out, even though price didn’t hold the highs. It looks to be a long inverse H&S.

GSS – This one has moved nicely out of the base and could easily move back to $2 over time. 

GSS DAILY – It filled a Gap Monday as it bounced off of the 50sma.  Low risk entry? It is difficult to recommend buying it the day before the Fed Decision, but I do not expect a rate increase.

EXK WKLY – When you look at Silver stocks, you can see that they ran very strongly.  AG, CDE, PAAS, FSM, etc all near highs.  EXK struggled at the 200ma weekly. If it breaks out on this next run, it has great potential.

Back to the BASES. 

AUMN– I call this the widow-maker for a reason. Trading it can kill you if you are not catching it at the right time. It moves like a 3xETF.  It does have a Long base, and it started to break out on the last run, but gave up the gains. It may eventually start to break higher again now that  (I believe) The ICL is in place.

TRX – This is a great looking base. I have been following TRX and they have had some trouble with their Mines that appears to be getting resolved. I am hoping that they resolve those issues, because this set up looks great. Even with the troubles that they had, it tripled and pulled back.

So for now, these are just a few of the ideas out there, but as I mentioned, it is going to be tricky.   We have a Fed Mtg that may or may not affect Gold.  I have recommended taking positions in past reports, start small if you cannot stand the volatility. The BREXIT vote is next week on the 23rd. I believe the ICL for Gold is in place and Gold has been slowly moving higher day after day. There are many scenarios that could play out, but lets mention 2 possibilities within those 2 events. 

1. The Fed Decision release blasts Gold into a break out, and it pulls back late next week after the Brexit vote.

2. Gold has been running out of the recent lows already.  That could continue Today and Wednesday and then we could see Gold pull back after the Fed Mtg and form a cup/ handle into Brexit and then take off again after that vote.

Those are only 2 of a few ideas, and who can know really? I have been saying that my research indicates that Golds next ICL is in place and should lead to higher prices over the next few months. So far, that has been right on track, the tricky part is trying to ride the consolidations in Miners without getting too emotional.  It is still early in the Move higher, so there will be future trade set ups, there will always be another trade. If you have been waiting until after the Fed Release to do any buying, we are almost there  🙂

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~ALEX